Focus on rebuilding loyalty or face attrition when the market changes

I recently moderated a panel of managing partners talking about how the recession has changed law firms. One of the participants summed up the major changes in law firms with one word – loyalty – or lack of the same. He cited a decline in loyalty to the firm from both lawyers and clients. I suggested adding a third leg to the stool: lack of loyalty by the firm to its lawyers.

My comment elicited some dissent, but I stand by it. It’s difficult to preach law firm loyalty after experiencing:

• de-equitisation and layoffs of partners;
• terminations of associates, paralegals and staff;
• freezes in pay; and
• deferrals of starting dates.

The past few years have damaged the fabric of law firms. The cultural damage transcends profits per partner and revenues per lawyer.

Law firms today, particularly the mid-sized and larger firms, look different than they did four years ago. Fewer support staff supporting fewer lawyers has become the norm. This new model has changed the way many lawyers look at their firm.

Much like the playground game, we can debate or yell back and forth “you started it” or “you hit me first”. Did law firms react to Generation X lawyer mobility or did lawyers react to the changes in law firms, including decreased pay? Whichever came first is of little moment: loyalty is now on the wane.

How will the loss of loyalty impact firms going forward? Even though firm and lawyer loyalty has decreased over the past few years, very few people have left voluntarily. Why? Because they had nowhere to go. The job market both at other law firms and in the private sector did not exist. Everyone stayed put, happy to have a job as others were laid off.

Paybacks are hell. When the economy improves and businesses start hiring again, firms will be faced with tremendous attrition. People who weathered the storm at lower salaries and lack of raises will be moving to other firms or out of the legal business.

Smart firms will begin to address the problem now. Others will play Rip Van Winkle and awake to a major change in their lives. What can firms do today to lessen the impact of the possible paybacks?

Restoring lost trust and loyalty

First, and foremost, firms should look at their culture and try to stem the tide of change. Restoring lost trust and loyalty will be very difficult. Once lost, trust can rarely be recovered; but firms need to try.

At the associate level, concentrate on the associates that you have. Increase your mentoring. Put partners to work making associates better lawyers.

People generally leave firms because of lack of attention: make sure you solve that problem. Even if you cannot solve the money problem, you can make associates feel wanted.

To the extent you can, take care of your most valuable people with dollars. Mentoring and talk help, but young people need steady and increasing incomes. At a time when partners’ compensation is down, you must still invest in the future.

Second, prepare for defections. Create depth: make sure that client engagements involve as many lawyers as possible. Relying on a single associate or junior partner to manage a client is always risky; in these times it can be catastrophic. Get other people involved, keep them involved and keep your clients close.

Prepare for future attrition by reopening your connections with law schools. Many firms closed down their summer recruiting for financial reasons. Even though firms may never spend on summer programmes as they did pre-2008, they can reopen connections with law schools. Do on-campus interviews, bring in modest summer classes and sell your firm to future lawyers.

Finally, take advantage of the opportunities in the marketplace. Hire ahead of the curve and look to other firms for bright, young associates. They too may feel unwanted and underpaid. Aggressive hiring while maintaining workflows can be challenging. Unfortunately, waiting for better times may mean hiring from panic, which rarely works.

I am an optimist by nature. The bleak picture I paint above is out of character; but so are these times. Hope I am wrong; assume I am right.

Begin today by taking a hard look at your firm’s culture. If your firm and your lawyers do not have the same values they had five years ago, address that problem first. It is very hard to restore trust and loyalty, but it is worth the effort.