Slowdowns in demand and looming economic uncertainties are driving reports of hiring freezes and stealth layoffs in the Am Law top 50. This and other rumblings of a diminishing legal job market contrast starkly with the all-time high rates of lateral hiring and associate turnover of the past 18 months.
During that time, associate salaries jumped by more than 22% in less than two years — a talent attraction tactic that, paired with several rounds of bonuses, led to a nearly 12% rise in direct expenses for Am Law 100 firms.
Firm leaders now must balance new compensation realities with traditional profit expectations. At the same time, today’s shifting power dynamics could signal an end to law firms competing for top talent through offering flexible and remote work options and other perks and benefits.
Will partners start demanding 60+ hours of in-office work per week? Or will firm leaders seek to maintain the positive changes the talent wars created, including fully remote work options and responding to associate feedback?
One thing is certain: As legal demand and firm capacities fluctuate, firm leaders must find ways to provide clients with swift and responsive legal services and prioritize lawyer work-life balance while maximizing the use of their resources and protecting profits.
Allocate work objectively in a hybrid environment
It appears the legal industry may eschew fully remote positions in favor of hybrid work environments, which were adopted by nearly every NA and UK firm during the pandemic, with nearly 9 out of 10 calling it a permanent change, according to a recent BigHand Legal Resource Management Report (that also provides the additional insights below).
Hybrid working is an increasingly popular practice that allows employees to work flexibly and manage their own schedules, but also benefit from traditional face-to-face time in the office. When asked about the biggest opportunities of hybrid working, 35% of firms cite the removal of lawyer preference or bias for specific support staff, for better work allocation to the most appropriate resource.
These are key factors for leaders looking to engage all their lawyers and staff in ways that motivate and reward their contributions. Because though firms may be regaining the upper hand in the job market, these truths remain:
- Many lawyers will not commit to eight years of billing 2400+ hours per year to earn partner status.
- However unintentional their biases, the apprenticeship learning model suffers when partners merely shout down the hall or only seek members of their “tribe” (e.g., sex, color, race) to find associates to work with.
- Relying on personal judgment and anecdotal evidence does not allow firms to leverage the full potential of every lawyer and staff member.
Decision-makers need real-time data on lawyer workloads and skillsets, paired with cost-effective matter resourcing strategies, to assign work objectively. Resource management technology helps pinpoint the right person for the job based on data such as skills, experience, cost, and availability. Leaders can also leverage a data-driven approach to talent management to:
- Evaluate the existing capacity and the future needs of each practice area
- Spot career growth opportunities for individuals
- Identify candidates who will be most successful in a particular role or location.
This alleviates the burden on partners—who over a third of firms believe spend too much time resourcing matters—giving them more time to mentor associates on the law and cultivate the expertise and trust with clients that lead to repeat business and referrals.
Move to an equitable and cost-effective legal matter resource model
Firms not moving to a more equitable and cost-effective resource model risk missing out on new business, as 71% of NA and 63% of UK firms report pressure from clients to ensure they use the most cost-effective resources for their legal work.
Yet, 55% of firms have either no data or only partial data relating to the capacity of associates, while approximately 45% of firms report little resource allocation or matter staffing strategies focused on matter profitability.
Analytics on prior matter staffing, expenses, and budget variances lead to more accurate forecasts for resourcing current matters more profitably. Critically, firms can course correct early when they optimize their use of real-time matter data.
With day-to-day insight into matter staffing and resource levels, dashboards instantly reveal who is performing what tasks and at what cost. Supervisors can then act quickly to keep matters within the agreed price and scope of work. As a result, the firm avoids billing write-offs, write-downs, and unpleasant client conversations.
Data turns guesswork into productive strategies to evaluate capacity, assign work equitably and objectively, and control headcount while improving matter profitability. This is how firm leaders empower themselves to find a long-term balance that optimizes work life for everyone.
Ready to rise above the power struggles driven by job market and business need changes? Speak with BigHand about how you can put data into action every day.