2022's Top 5 Legal Industry Trends: Employee Retention

The legal industry is transforming before our eyes. New technologies and workplace models are reshaping small law firms’ operations. In this five-part series, we’ll analyze the top 5 trends affecting the legal industry in 2022. This week: employee retention.

Employee retention is far from a new or novel concept—but it’s arguably more important than ever before. An unprecedented number of Americans quit their jobs during 2021’s Great Resignation — 47 million, to be exact — leaving 49% of employers with roles they’re unable to fill. And while legal employment is at a record high, firm members are overloaded with work and one in five attorneys under 40 say they’re considering leaving the profession entirely.

Why employee retention is such a hot topic 

Thanks to a surplus of high-paying open positions and a low unemployment rate, today’s employees hold most of the cards. A McKinsey study found 40% of US workers are at least somewhat likely to leave their job within the next 3-6 months, and more than half (53%) of employers are experiencing a lower-than-normal employee retention rate. 

This is particularly true for millennials and Gen Z, who recognize the dangers of burnout and are less accepting of always-on cultures and demand more from the workplace than their predecessors. Nearly one-third (31%) of respondents to a survey of millennial lawyers say they want to stay at their current firm between three and five years, as opposed to making partner. Millennial attorneys say they would trade a portion of their current earnings for more time off (29%), a cut in billable hours (26%) and a flexible work schedule (25%).

The cost of employee turnover 

Employee turnover has a devastating impact on firms. In fact, figures suggest that employee turnover costs the 400 biggest U.S. law firms $9.1 billion per year. Worse still, the average firm retains just five out of 20 associates that it hires.

Smokeball’s Law + The Great Resignation survey, conducted in April, found that of 150 attorneys at firms with 30 or fewer employees, nearly half (48%) reported at least somewhat struggling in 2020/21 due to resignations or an inability to hire. One-third (35%) of that group still struggle with employee retention-related issues today.

Hiring to fill those open positions costs more than actual dollars spent recruiting, replacing and training employees. Members of your hiring team spend hours that could be spent on billable client work searching out these replacements, while your current employees take on extra work. The potential for burnout is boosted throughout your entire firm; 83% of attorneys who struggled in 2020/21 due to resignations or an inability to hire also told Smokeball they’ve experienced burnout since the pandemic began. 

How firms can retain more employees 

Unfortunately, there’s no magic wand here—every firm (and every attorney) is different. They have their own unique preferences and demands, so it’s impossible to implement a one-size-fits-all retention strategy.

However, here are some of the most common tactics that firms use to boost employee retention over the long run.

Increase salaries — and other benefits

Average associate compensation in the U.S. has risen 11.3% over the past year alone, and some larger firms have offered bonuses up to $64,000. But your firm likely can’t give such hefty raises — and probably doesn’t need to, either. Smokeball’s study found 35% of firms that aren’t struggling due to resignations or an inability to hire raised new hire salaries by less than 10% to replace a departed employee; 12% didn’t increase salaries at all.

And while 46% of this group also say they’ve raised salaries to decrease turnover since 2020, that wasn’t their most-used tactic. Sixty percent of respondents said they improved work-life balance. Other popular choices: increasing DEI efforts (30%), moving to a permanent hybrid model (29%) and increasing vacation days (23%).

Want to know which changes resonate with your employees and inspire longer-term employee retention? Just ask them!

Prioritize mental health

Firms are increasingly recognizing the importance of mental health initiatives. Many attorneys struggled to set clear work-life boundaries while working remotely during the pandemic; many felt they were living at work rather than working from home. In May 2021, 37% of lawyers reported feeling depressed, up from 31% in 2019, and 71% experienced anxiety, up from 64% in 2019.

Firms such as Baker McKenzie have introduced comprehensive wellbeing initiatives. These initiatives not only ensure attorneys are looking after their mental health, it shows that firms truly care about their staff’s well being.

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Support your attorneys at every turn

Act quickly to retain your employees. While the decision to leave a job is multifaceted, the balance between stay and go has rarely been this delicate. Truly listen to your employees about the benefits and support they need. 

And make your firm a place for positive growth by arming your team with the tools for success. Smokeball’s productivity features, like automatic time tracking and legal document automation, reduce time-consuming manual tasks and increase organization, so your team can focus on supporting clients — and a culture of retention.

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