Referral hiring is a practice as old as time. In fact, and more than half (56%) of firms in Smokeball’s Law + The Great Resignation survey seek out job candidates via referrals.
There are three main reasons referrals are so valuable:
- Existing employees/advisers vouch for the new hires’ quality.
- Referrals can speed up time-to-hire.
- Referral hires are generally cheaper than traditional recruitment methods — despite some firms offering $25,000 – $75,000 in referral bonuses.
However, word-of-mouth hiring can have its downsides. Sometimes referral hires don’t live up to their referral, or they can be political or quid-pro-quo hires — either in perception or reality.
Keep these do’s and don’ts in mind throughout the process if your law firm is considering a referral hire.
How to assess referral candidates
Should law firm referral job candidates be treated differently? It depends.
Every job candidate needs to be evaluated on the same qualifications and criteria, whether they apply via online job sites, recruiters, or social media. But if you have two similarly qualified candidates, a referral from a colleague who shares your firm’s goals and values can set them apart.
And sometimes, making a hiring decision has little to do with the candidate, and everything to do with the referrer. Have they previously worked with the job candidate in the legal sector specifically? Do they have in-depth knowledge of what the person is like in a professional setting? Can they speak to quality of work and culture fit? Or are they referring a casual acquaintance who just might fit the bill? Make sure you know the answer before moving forward. It might even be a good idea to include a question about how the referrer knows the candidate in your referral collection process.
Avoiding the pitfalls of referral hiring
Laying an equal playing field for referral candidates helps your law firm avoid these firing pitfalls.
- Going easy on candidates. Even if a colleague waxes poetic about an attorney, your rigorous interview process needs to reveal their true abilities. The person making the referral should never be involved in the actual interview process.
- Changing your hiring criteria. Stick to your guns at all times. If you want to hire an attorney with managerial experience, don’t settle for someone more junior simply because a colleague referred them. An unqualified hire is an unqualified hire, and nepotism can actually increase attrition among valued members of your firm.
- Perpetuating diversity gaps. Unfortunately, referrals often perpetuate existing diversity gaps within your firm. Historically, white men benefit the most from job referrals, and women of color are 35% less likely to receive referrals than their male counterparts. While there are no laws specific to referral programs on the books, there is precedent for referral-based hiring practices violating anti-discrimination laws, so be conscientious.
How to set up your internal referral bonus program
When building your firm’s referral program, make sure it’s thorough and specific. Be clear about candidate requirements, bonus amounts and time frames, who’s qualified to participate and other important details. (This template provides an example.)
Follow these four best practices when establishing your firm’s referral bonus program.
- Consult with your accounting team. While this seems obvious, it’s still worth highlighting. Involve your accounting team from the beginning. Using Smokeball’s Law Firm Insights, accounting and HR can analyze both your hiring budget and referral bonus structure against factors like per-fee-earner and per-case profitability.
- Analyze your typical recruitment costs. Referral bonuses should be cheaper than typical recruitment costs. Otherwise, there’s little to no benefit for your firm. Work out your average cost-per-hire when going the traditional recruiting route before working backward to determine referral bonuses.
- Make bonuses contingent on new-hire tenure. Your referral hiring strategy isn’t effective if new hires leave your firm in less than a year. So make sure your referral bonuses account for that. Stagger your bonus payments — 50% upfront and the remaining 50% after the new hire reaches their one-year work anniversary.
- Offer additional incentives for employees from minority backgrounds: While it’s illegal to hire based on gender, race or other identities, it’s perfectly legal to consider these factors in your law firm’s recruiting. Attorneys and staff want to work in a more inclusive, diverse firm. In fact, 33% of firm leaders told Smokeball they’ve increased DEI efforts since 2020 to fight turnover. Incentivizing minority referrals is another step toward this goal.Here’s an example of inclusive language you can include in your job postings:[Your firm’s name] strongly encourages people of color, lesbian, gay, bisexual, transgender, queer and non-binary people, veterans, parents and individuals with disabilities to apply. As an equal opportunity employer, we are committed to diversity, equity and inclusion and welcome everyone to our team.
