As the legal services world has emerged from the disruptions of the COVID-19 pandemic, we continue to observe an unusually high degree of "churn" in associate and partner movements in legal markets worldwide. In most instances, compensation has been a significant factor in these departures, although not the only one. Remote working during the pandemic opened new opportunities for discrete lateral recruiting, with the "losing" law firm not finding out about someone's decision to leave until it is too late. Larger law firms with more resources, especially in the United States and United Kingdom have been drawn into what appears to be an ever-escalating bidding war even for newly-qualified lawyers.
The decision whether to remain at one's current law firm or go to another firm or to a corporate legal department usually is driven by an analysis of which opportunity -- leaving or staying -- presents the better business case. As we saw in 2011-2012, as legal services markets emerged from the Global Financial Crisis, migrations of legal talent increase in times of recovery. We are seeing the same signs today. A quick review of the legal press, with its reports of major migrations of partners, associates, and even entire practice groups, provides evidence of this trend almost every day.
Are you offering just more money or better opportunities?
So, is your law firm's compensation system ready for the more intense competition for legal talent in 2023 and beyond? We are already receiving reports from some of our clients who already have identified some key people who have become retention risks. The vulnerability of partners -- especially younger partners, "the future of the firm" -- to being "bought away" by a competing firm is particularly alarming.
However, an intelligent response to this question involves more than whether you are offering more money than your competitors. Instead, the better question is whether you are offering better opportunities. This involves more than just bigger numbers. It also requires an efficient deep-penetrating look into the systems and processes by which your firm provides incentive and reinforcements for the performance that you need.
Time is the great adversary of even the most successful compensation systems.
"Our compensation system has always worked well." Some partners view this as a sign of strength. We see it as suggesting a strategic risk.
As law firms change, so do the expectations of their lawyers. If your firm has not reviewed your lawyer compensation systems -- for partners and associates alike -- within the past ten years, you are probably trying to work with a system that might have become obsolete, no longer addressing accurately the strategic and business needs of the firm and the personal goals and expectations of your lawyers.
How we can help
Our Walker Clark Lawyer Compensation Review is an efficient deep-drilling examination of your current compensation system and structures that looks at the whole system, not just the numbers, to identify refinements and improvements that:
- Will incentivize and reinforce the actions and performance that your firm needs to continue to be successful in the future
- Will realign your compensation system to fit the expectations and aspirations of your people
- Will be affordable and straightforward to implement
- Will be perceived as fair, both in terms of its structure and its implementation
- Will present a persuasive business case for retention of your best people and your own recruiting efforts in the market for legal talent.