The Do’s and Don’ts of Law Firm Referral Hiring

Referral hiring is a practice as old as time, 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 actuality. 

Bear 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 must be evaluated on the same qualification merits and criteria, whether they apply via online job sites, recruiters, professional social media or a referral. If you have two similarly qualified candidates, the fact one has been referred by a colleague (who shares your firm’s goals and values) can be a key differentiator. 

Referral candidates also differ in the way you handle the weight of the referral itself, not the candidate. Has the person referring the candidate previously worked with them in the legal sector? Do they have in-depth knowledge of what the person is like in a professional setting — both from a quality-of-work perspective and a culture-fit perspective? Or are they referring a casual acquaintance who just happens to fit the bill? Make sure you know the answer before proceeding, and consider factoring familiarity with the candidate into the language of your referral program.

Avoiding the pitfalls of referral hiring

Laying an equal playing field for referral candidates helps your law firm avoid these firing pitfalls. 

  1. Going easy on candidates. Even if a colleague waxes lyrical about an attorney, your rigorous interview process must reveal their true abilities. The person making the referral should never be involved in the actual interview process.
  2. 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 has referred them. An unqualified hire is an unqualified hire, and such nepotism can actually increase attrition among valued members of your firm.
  3. Perpetuating existing 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 tread conscientiously.

How to set up your internal referral bonus program

When building your firm’s referral program, make sure it’s thorough and specific about requirements for candidates, amounts and time frames for bonus payouts, which employees are qualified to participate and other pertinent details. (This template provides an example.)

Follow these four best practices when establishing your firm’s referral bonus program.

  1. 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.
  2. 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.
  3. Make bonuses contingent on new-hire tenure. Paying out large referral bonuses for new hires who subsequently leave within the year also flies in the face of your referral-hiring strategy. Stagger your referral payments — 50% upfront and the remaining 50% after the new hire reaches their one-year work anniversary.
  4. Offer additional incentives for employees from minority backgrounds: While it’s illegal to hire based on gender, race or another minority status, 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 — 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.