By John MacLean, Director, Michael Page Legal
The legal market has changed significantly over the past few years against a backdrop of globalisation and subsequent law firm merger and acquisition activity that has dramatically altered the local market. Now that, for the most part, the dust has settled, the focus has shifted to other issues for legal employers, particularly around hiring trends and talent management.
The attraction and retention of the best quality talent has become increasingly important for legal employers as high calibre professionals weigh up their options among the new, and newly structured, law firms. Similarly, the tolerance for poor performers is at an all time low as competition in the legal market intensifies and productivity is essential, and employers are engaging talent management strategies to help shape the teams they need to be successful.
The local market after globalisation
The impact of globalisation on the domestic legal industry is now well and truly embedded – it has amplified the competitiveness of the market with the increased number of legal firms in addition to those that have re-structured to incorporate global ownership. These global firm names that are now operating in the local market have come from the United States, United Kingdom and Asia, and have increased the sophistication of the local market. While this activity has created more job opportunities for legal professionals, the changes have taken place within a legal market that has essentially stayed the same size in terms of the demand for services.
This changed environment has resulted in legal leaders taking an even closer look at how they are operating in their organisations and adapting to the altered landscape. The focus has been on more scrutiny, leaner structures, greater efficiency and better cost management. With people management being a significant contributor to operational business efficiency, the impact of globalisation has created change here too. The focus on cost control and maximising efficiency has led to employers paying close attention to their team structures and the aim to hire highly productive people. The pressure on individuals for results has therefore intensified, not only for underperformers and junior lawyers who typically do not bill a high sum in their early careers, but also for established lawyers who now more than ever need to prove their worth.
Talent management is key
With staff performance a high priority business focus, legal employers are facing new challenges with regards to talent attraction and retention. Overall, fewer promotions are being handed out and salary increases have been minimal, if at all. In response, firms are losing their top performers or their up-and-coming talent, who look elsewhere for career progression opportunities if overlooked for a promotion. This is being confirmed by the increase in jobseeker activity at the mid to senior level of the market.
A more recent strategy law firms are turning to is to implement a stronger link between performance and bonus payments. With the tougher business operating environment and the pressure on individuals to perform, linking performance to pay and awarding the best performing staff with bigger bonuses is an effective way to reward and retain top talent.
While good talent management is an important part of any effective organisation, within the climate of globalisation it has become even more important for law firms to build strong teams and effectively manage their people. Firms that will be successful in the future have a strong long-term talent management strategy that includes rewarding top performers, managing underperformers and creating a leadership development pipeline. This involves identifying up-and-coming future leaders among the junior and mid level staff, and providing them with training and development so they can excel in their career.
While awarding strong performers through promotion will always be part of a good talent management strategy, successful companies are also going beyond this and implementing a balanced mix of promoting from within and looking externally for quality talent at the mid to senior level.
An engaged workforce
Staff engagement remains on the agenda when looking at talent management in a post-globalisation domestic legal market. Employers have to continue asking the right questions – are employees happy in their jobs and do they want to work at the company? It is then important that they act on the answers.
The response to these questions often comes down to the leadership of the team and the organisation’s management. Managers need to be leading by example and working to keep their people engaged. Even in a competitive, cost-control environment, employee engagement initiatives are important, and in some cases even more crucial at this time than when the market is not quite so challenging.
Amidst the focus on increasing efficiencies and reducing costs, and alongside the renewed fervour on workplace issues such as talent management and staff retention, technology, and the systems that support people, has also received strong attention from the legal community. Firms are increasing their investment in technology in the short-term, with the view to improve efficiencies and costs in the long-term. The majority of investment into technology within law firms is taking the form of Legal Process Outsourcing (LPO) and document storage and review systems. Technology advancements in these areas are further refining internal processes and improving productivity – all leading to a better performing bottom line for the business.
The future is people
As the market has changed, it is clear that the leaders within law firms are increasingly looking at how they most effectively manage their biggest resource; their people. The drive for greater efficiencies is not only having an impact on technology and broader support functions but it is also a driving factor for the investment in people to ensure a long term, sustainable future. The firms that have the most robust talent management strategy will benefit from having a highly engaged workforce and will be the ones that grow in an increasingly competitive environment.