Written by Marianna Tuccia and Nicholas Brown (Legal Professional, Sydney NSW)
A talent war has been waging over the last couple of years in private practice law firms in Australia. Particularly in that very sweet spot of 2 to 6 years post admission experience. And especially in the sought after practice areas of real estate, finance, capital markets, projects and infrastructure. Law firms are pouncing on rising stars.
This skills shortage is a result of a number of factors. In the last 24 months, the international market has re-opened its appetite for Australian qualified lawyers i.e. Asia, the Middle East, the US and the UK have successfully recruited first class talent from the major law firms in Australia. Additionally, more and more lawyers are going in-house. According to an article by Matthew Hodgkinson from Eaton Capital Partners, ten years ago only 10% of corporate lawyers were practising in-house; a stark contrast to the 35% that are working in-house now. Another factor contributing to the skills shortage is that lawyers are leaving the profession altogether and going into other fields e.g. business development, journalism, legal editing, policy and government, teaching. A worrying trend is that many lawyers are questioning whether a career in law is for them. Long hours, demanding and unrealistic clients, timesheets, the workplace hierarchy in traditional law firms are contributing to the legal profession loosing talent. These factors are also contributing to the rise in the ‘NewLaw’ firm models. Recent examples of these firms are Hive Legal, Keypoint, Nexus, Marque, Salvos Legal.
Theoretically this skills shortage should be offset by the exponential growth in the number of law graduates vis a vis the number of legal practitioners. According to a November 2015 Australian Financial Review article by Emanuel Tardos, there were approximately 15,000 law graduates in 2015, compared to 11,000 in 2011. These graduates are entering into an industry with just over 66,000 practising solicitors in Australia. Although the number of graduates has increased, this has not converted to a higher rate of employment for law graduates. Additionally, the disruption in the legal profession (which has been extraordinary in the last few years) in terms of technology ie intelligent contracts, E-contracts and E-discovery technology is equating to less and less opportunities for law graduates and newly admitted lawyers. Tasks like discovery and other low level work are being outsourced off-shore and are no longer being undertaken by law graduates.
The question becomes how do law firms overcome this skills gap, particularly at the 2 to 6 years post admission experience level? What can they do to secure that rising star over their competitor? How does a law firm win the talent war?
Trite as it may sound, but retaining your existing talent is just as important as ‘acquiring’ new talent. Managing Partners of the top tier law firms rely on their brand reputation in order to recruit and retain talent. In a October 2016 article in Lawyers Weekly, Ashurst’s head of HR Asia-Pacific, Richard Knox said that the firm’s key point of difference that allows it to attract and retain talent, is that the “firm is well positioned as one of only a couple of truly integrated global firms that brings to the Australian market a full service offering, with a premium client list that sets us apart from much of our competition … The firm provides them the opportunity to work on clients and matters at the very top end of the market in a supportive and flexible environment. We have found our staff really engage with that proposition.” The efforts of King & Wood Mallesons are different. Newly appointed Global Managing Partner Sue Kench said that, among other initiatives, they had “Design Week – a week with speaker forums, workshops, hackathons and events all focused around designing the firm for the future”.
It is interesting to see what other professional services firms are doing to win the war on talent. In KPMG’s report “Being the Best: Inside the intelligent finance function, Talent Management – Playing for keeps” the financial services industry are facing similar issues. With regards to retaining talent, under the heading ‘Engage and Retain’, their advice is to manage performance through 360 degree feedback, and reward innovative strategy. Moreover, KPMG prides open and honest communication in order to make sure that their talent feels valued.
It is, therefore, of vital importance that law firms put talent management at the top of their strategic agenda. Law firms need to work hard to improve their recruitment and retention strategies if that gap in skills is to ever be overcome. The question “Why would a talented lawyer want to work here?” must always be at the forefront of every Partner’s mind. If the answer is not compelling, then more thought needs to given to the improvement of the firm’s workplace culture and practices.
Extensive training strategies, internal learning and development programmes as well as more on the job training by Partners will also assist in overcoming the skills gap. In some instances, the answer to overcoming the skills shortage may be right on your doorstep – retrain the underutilised and under-challenged lawyers already in your law firm. Additionally, law firms need to think creatively and outside the box when undergoing the recruitment process. If that wish list cannot be entirely fulfilled then time and resources need to be spent to upskill candidates. On the job training by Partners and more Senior Lawyers ought to come into play more often than is presently occurring. You just never know how much a candidate will develop and grow into the role within 6 to 12 months’ time.
The war on talent will only intensify. Quality lawyers only want to work at quality law firms – law firms that are emulate agility, cultural cohesion, diversity, open communication and true collaboration. Law firms that do not emulate such qualities will eventually fold.