Anne Harnetty, managing director of the legal sector recruitment consultancy Jonson Beaumont, outlines how you can boost motivation and retention of your key talent. (Updated 1 March 2023)
(You may also want to see/hear the recording of the popular webinar 'Winning the talent acquisition and retention battle', with Anne Harnetty and other experts.)
In 2022 the competition to attract and retain talent in law firms has become a battle. These individuals are essential for any firm’s success as they play a pivotal role in building relationships and delivering client service, but there simply aren't enough high performers to go around.
Compensation can be an important part in all this, but the firms that are winning have taken a much more in-depth approach and a real commitment to their people. It's all about developing a culture that people want to be a part of.
The motivation problem
Too often, efforts at motivation revolve around a bonus scheme encouraging fee-earners to maximise utilisation and recovery rates. While this can have some positive effects, there are three big problems.
First, the bonus scheme encourages fee-earners to focus on their own billing targets – to the exclusion of other desirable behaviours. A fee-earner incentivised in this way will be less keen to delegate to colleagues, to introduce clients to other practice areas within the firm, or to spend time on management activities, mentoring juniors and so on.
"There is … a disconnect between the factors that law firm leaders consider most important in driving growth of their firms and the way those same firms remunerate their partners and their employees.”
Methods of Employee Remuneration and Partner Reward (Armstrong Watson Legal Sector Survey)
In some cases, the design of the scheme may even encourage fee-earners to game the system. Once a target (say, quarterly recovery) has been hit, the prudent lawyer may be tempted to keep some easily collected fees in reserve towards achieving the next quarter’s target.
Second, a scheme like this fails to recognise the wider talent community in a modern law firm. While fee-earners may retain primacy, other roles – for example, in marketing, finance and IT – are becoming ever more important. A scheme targeted solely at fee-earners does nothing to motivate these key people. If anything, reinforcing a culture in which non-fee-earners are undervalued pushes them to seek a more congenial working environment elsewhere.
Finally, an approach to motivation based entirely on money is far too narrow. Different individuals want and respond to different things. In many cases, other motivational tools can be much more powerful – and less costly.
“The way you motivate and retain people goes right to the heart of the firm’s culture.”
Kim Carr, partner, FBC Manby Bowdler
Incentive scheme planning should start by identifying the kind of behaviours and culture that will support your business strategy. Rather than direct financial goals, your most important aims might be to foster a spirit of collaboration, encourage fee-earners to delegate, and focus on delivering excellent client service and outcomes.
This then translates into clear, measurable objectives for different individuals and different teams, including both fee-earners and employees in supporting roles. The aim should be to create a balanced set of targets that cover all the key elements of the individual’s role.
Imposing targets rarely works well. Instead, individuals should be involved in discussing and agreeing objectives that they can realistically expect to achieve. At the same time, aim to ensure that targets – and rewards – will be seen as fair across the firm rather than causing resentment.
A good system will be open and transparent, backed up by publishing appropriate and accurate management information against which performance is measured. Avoid creating targets that are difficult to understand or measure. Handled sensitively, publishing key information can lead to healthy peer pressure.
Crucially, agreeing targets should only be one half of the process. At the same time, you should be identifying individuals’ learning and support needs to help them achieve their goals. Learning and development is key to performance, as recognised in the Law Society’s Lexcel practice management standard and the SRA’s regulations on continuing competence.
“Financial outcomes may be one part of an individual’s targets – but the firm’s success relies more on ensuring that fee-earners’ behaviours match the long-term strategic objectives of the business.”
Andy Poole, partner, accountants Armstrong Watson
Management and support roles
Recognise the importance of effective management and supporting roles such as marketing and IT. It is no longer tenable for the firm’s culture and incentives to be built around fee-earners alone.
- Partners’ incentives must balance their roles as fee-earners with the need to behave as business leaders and managers of people. Junior lawyers must be incentivised to develop into the managers of the future.
- Other professional and support staff must be included in the firm’s incentive scheme – albeit with very different objectives.
- Professional and support staff need to be properly recognised – including them in client teams where appropriate, delegating decision-making power and deferring to their expertise, making a point of thanking them for their contribution.
“The future of the firm may depend almost as much on technology as it does on legal expertise. That’s a shift that few firms are ready to recognise.”
Chris Bull, retained advisor, Kingsmead Square
The working environment
Compensation and incentive schemes clearly have a role to play in motivation and retention. Apart from the money itself, people often see compensation as an indicator of status and how highly they are valued. It is difficult to retain and motivate individuals who consider themselves underpaid, by comparison with either their colleagues or their peers at other firms.
But other factors can have an equal – or larger – role to play.
For many people, work-life balance is a priority. Junior lawyers may no longer be content to routinely put in excessive hours in the expectation of a future partnership. And building a culture that values outcomes rather than inputs isn’t just attractive to your people – it also reflects what clients want.
“Don’t assume that junior lawyers value the same things as an older generation – or that everyone has the same priorities. Ask what they care about and how the firm could improve.”
Shaun Jardine, managing director, Big Yellow Penguin
As law firms have seen, flexible working can be hugely appealing as it allows people to fit their work around other, personal commitments. As well as flexibility over working hours and location, firms should consider how to accommodate individuals who may want to take a career break. Many larger firms maintain contact (and the possibility of future re-employment) through an alumni network.
Different individuals will value different opportunities to develop. For some, the priority may be enhancing their legal skills, while others will be interested in management and future succession prospects. The firm’s support for development should promote a competency-based approach that enables individuals to identify the learning needs, engage in learning and then reflect on how they transfer the learning into their day-to-day work.
Perhaps most importantly of all, people want to feel valued and respected. Positive feedback, praise, thanks and involving individuals in decisions that affect them can be the most cost-effective motivational tools. Fundamentally, the firm should strive to create an open and honest culture that truly values everyone.
“Do you want your firm's remuneration and promotion to reflect an individual's contribution and potential, or a lockstep system that rewards time served?"
Martyn Best, chief executive, Document Direct
Retention and motivation top ten
- Identify your overriding aims and the outcomes you are trying to promote.
- Look beyond immediate financial goals to the culture and behaviours that will support long-term success.
- Include everyone in the firm, not just fee-earners.
- Involve individuals in agreeing their own priorities and targets.
- Share management information in an open and transparent system.
- Give individuals the support they need to achieve their goals.
- Recognise the need for work-life balance.
- Respond to the desire for flexible work patterns and less linear career paths.
- Don’t leave feedback to performance reviews – take every opportunity to praise and thank.
- Build a culture that values each individual’s contribution to the firm fairly.
Why do law firms choose Armstrong Watson?
It’s because this accountancy firm has built an outstanding reputation in the legal sector, working as preferred partner of the Law Society.
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- Pay returns to top of list for attracting new recruits (October 2022 Legal Futures article)
- How to keep junior lawyers happy solicitor Jonathan Hodge looks back at his early career (TLS Gazette, January 2021)
- Using personal development plans – checklist