In the spirit of reflection and the dawning new year, this article casts an eye on some of the most significant events which have impacted the legal sector in 2022. It also observes some of the issues which law firms will have to grapple with as we enter 2023. The ramifications of the pandemic, Russia’s invasion of Ukraine, as well as talent retention and attrition related issues are amongst the most significant events which have contributed to the instability suffered by the markets this year, with some of the consequences manifesting in the rise of inflation and the energy and cost of living crisis.
Taking the energy crisis as an example, 28 energy companies had declared bankruptcy by the end of December last year. In response, law firms have bolstered their energy capabilities encompassing infrastructure, renewable energy, and project finance. This strategic recalibration is exemplified by several significant departures from UK headquartered outfits to US firms, which are particularly excelling in this space. Examples of these departures include Sara Pickersgill and Toby Parkinson who join Kirkland & Ellis from Allen & Overy and Clifford Chance respectively, as well as Matt Hardwick who joins Akin Gump from Norton Rose Fulbright.
The Recession & Inflation
In June, inflation in many countries hit levels not seen since the 1980s. Seemingly, everywhere, poorer populations were squeezed by rising costs for life’s essentials: energy, shelter, clothing, and food. Inflation became the number one concern among executives responding to McKinsey’s Global Economic Conditions Survey, supplanting COVID-19, and geopolitical instability- both of which were higher on executive’s agendas at the beginning of the year. Regarding the impact of on the legal sector, commentators have observed that Britain’s largest international law firms are struggling to attract and retain staff in the US after the crash in the value of sterling compounded by their lack of competitiveness in the world’s most profitable legal market. Furthermore, existing senior staff, concerned that foreign exchange would further erode their salaries, have also asked for their pay to be increased or pegged to the dollar.
The current situation may be particularly concerning for top tier UK firms including the likes of the Magic Circle, which historically struggled to match their American competitors on pay due to lower overall profitability and more restrictive remuneration models that prevented outsized salaries for star partners. For example, Freshfield’s equity partners took home more than $2mn each on average for the year ended April 30. However, its profitability remains well below that of the top US law firms, where partners’ average take home profits exceeded $7mn. The widening gap between the pound and the dollar further hinders London-based firms’ ability to hire top talent.
Key Consideration for 2023
Leading up to the new year, law firms will face numerous challenges, such as the aforementioned shortage of talent, cyber risk, macroeconomic uncertainty, and the inability to recover costs through pricing.
The War for Talent, Retention, and Attrition
The shortage of talent issue has been identified as the leading concern for law firms. Since the end of the last lockdown, partners and fee earners have been on the move more so than at any time in the last two years. Estimates indicate that movement in the London legal market in 2021 has seen 2564 lawyers across 382 firms take the leap departing from their respective firms, meanwhile 2020 saw 2014 across 408 firms make the transition. Presently, the numbers for 2022 stand at 1679 across 318 firms taking this leap. Movement has been most prevalent in the disputes space followed by corporate, banking and finance and real estate. Statistics indicate that the Silver Circle and Magic Circle firms have seen the most attrition, with Kirkland & Ellis leading in the number of hires made in the last 3 years.
However, the same source indicates that both the Magic and Silver Circle respectively have been pushing back and filling vacancies. This is arguably a clear indication that the Magic and Silver Circle maintain their position as premier outfits for associates seeking some of the best training and quality of work. Nonetheless, it is also clear that individuals are now considering the trajectory of their careers, with the US outfits offering an attractive alternative to their counterparts.
The war for talent, coupled with the shortage of supply exacerbated by the so called “Great Resignation” have caused eye-watering staff cost inflation. In response, many law firms have revived and refined their salary offering. A notable example of this includes the likes of Akin Gump raising salaries of newly qualified lawyers from £159,000 in the first quarter to £179,000 for the period covering July to September. However, commentators note that it will take more than remuneration to retain talent, particularly after the pandemic where individual focus shifts to considerations such as the opportunity to work from home and the improvement of work life balance.
With the rapid technological advancement and introduction of new technologies to the mainstream, firms will have to grapple with the changing needs of their clients. However, they will also need to focus on the foundations underpinning this work, and that is the security associated with it. Cyber risk continues to increase as hackers become more sophisticated and implement new forms of attack. It is clear that law firms are responding to this risk with a significant increase in cyber security spend in the last year. The rise in spend across the top 100 bandings is between 50% and 79%. However, commentators note that this spend may have to increase further, and add that in the current year, it only stands between 0.3% and 0.5% of the fee income across the bandings. The focus on cyber risk is and technology more generally in the sector is also reflected on the client side, with statistics demonstrating a growth in IP/IT related work.
The uncertainty in the economic environment has been bubbling for a few years and the onset of the Ukraine/ Russia conflict has seen a significant shift in short to medium confidence. High inflation and the tightening of credit markets have led to nervousness about valuations and slowing of the deals market, although the weakening of sterling will increase the deal flow for foreign buyers. The currency impact on results FY23 looks set to be more significant than seen for a number of years, rewarding those firms with greater international presence.
Predictions for 2023
Commentators predict that demand for legal expertise is expected to decrease for a variety of reasons including rising inflation, new regulations and sanctions, and the threat of a recession, according to data from LexisNexis’ latest Gross Legal Product (GLP) index. The index, which highlights areas of law that are growing or falling in demand, predicts that this will affect the demand for corporate law the most, forecasting a decline of 22% compared to last year by the end of 2022 as corporate transactions and IPOs dry up.
By contrast, competition lawyers are expected to see a strong increase in demand of 17% to the end of the year, a trend that is expected to continue into 2023. This comes off the back of the Competition Markets Authority’s growing interventionism as well as new security and sustainability measures amongst other things. Moreover, the UK and the EU recently extended the reach of their competition enforcement, and companies can expect enforcers to bring more cases. It may become difficult to predict which mergers will attract attention in which jurisdictions, and the costs of navigating merger clearance will increasingly impact which deals get done in 2023. But because the vast majority of deals close, even following intense scrutiny, more review will still translate to a deterrent, rather than a deal killer, in the new year.
The mergers and acquisitions market continues to be described as “slow” and “uncertain,” and those trends are likely to continue into the new year. Despite this outlook, the 2023 deal forecast may not be as dreary as some predict. M&A activity in 2021 reached historic levels, and it’s hard to beat records year after year. So, 2023—even if slower than 2022—could represent a return to normal in the M&A market.
Additionally, the rise of ESG over the past several years has cemented investor interest in incorporating environmental and social impacts into the financial investment equation. Next year, human capital management will be at the forefront of the conversation, and we’ll see investors looking for more disclosures to ensure that they are investing in companies that align with their values.
Financial Times, UK’s ‘magic circle’ law firms struggle to grow in US amid sinking pound, https://www.ft.com/content/fab70e6e-52fb-4f70-ba82-5f4880545426.
PwC, Agility through turbulent times, PwC Law Firms’ Survey 2022, UK law firms demonstrate their agility through turbulent times – PwC Law Firms Survey / Law+Firms+Survey+2022.pdf (pwc.com).
McKinsey & Company, What just happened?, McKinsey Publishing’s year in review, What just happened? McKinsey Publishing’s Year in Review | McKinsey & Company.
Legal market to ‘cool substantially’ following post-lockdown boom, Legal market to ‘cool substantially’ following post-lockdown boom – Legal Cheek.
ANALYSIS: 2023 M&A Market May Reveal a Return to Pre-2021 Levels, https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-2023-m-a-market-may-reveal-a-return-to-pre-2021-levels.
ANALYSIS: Antitrust Battles to Become Even More Heated in 2023, https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-antitrust-battles-to-become-even-more-heated-in-2023.
What is Diversity, Equity & Inclusion?
Diversity, equity, and inclusion (DE&I) involves cherishing the differences among your employees while shielding them from discrimination. It focuses on representation, fairness, and equal opportunities for all genders, ethnicities, nationalities, sexual orientations, religions, disabilities, and ages.1
Law firms have been making strides in pursuing DE&I. For example, Linklaters has introduced billable credit and recognition for contributions to DE&I under a new global policy2. While Baker McKenzie’s DE&I efforts are championed at the highest level by the firm’s Global Chair and its Global Executive Committee whose members each have KPIs around diversity3.
Striving towards DE&I is important in its own right. However, commentators have highlighted that pursuing DE&I, and an effective DE&I strategy, also improves a business’ bottom line. A 2017 study by McKinsey found the most diverse organisations outperform competitors by 33% and are 21% more likely to experience above average profitability. Decision making by diverse teams also delivers better outcomes than that of individuals 87% of the time4.
However, it is evident, particularly from reports such as the “1% Study”, that further efforts must be implemented5. The report highlighted that just 90 of more than 13,000 partners at major law firms in England and Wales are Black6. The efforts made by firms, such as the aforementioned Linklaters and Baker McKenzie, should be praised and acknowledged for their efforts in pursuing this noble cause. However, it is important to recognise that further work is needed. Thus, despite creating initiatives and policies to address the gap – firms have a long way to go to tackle the ethnic diversity gap, especially at a partner level7.
Further comments have also been made in relation to outreach and creating opportunities for those from underrepresented backgrounds to engage with firms. These have outlined that key to a diverse and representative workforce is ensuring that candidates from underrepresented backgrounds apply to law firms in the first place. Therefore, it is pivotal to create a fostering, inviting, and inclusive atmosphere that attracts all groups, or targeting specific underrepresented groups8.
Doing our share: DE&I at Halkin
At Halkin, we are also focused on promoting DE&I. In doing so, we are aligned to the diversity platform The Amos Bursary to offer a mentoring scheme for Black students. In so doing, we ensure talented people of African and Caribbean descent have the opportunity to excel in education and beyond. We are also in the process of developing an early start mentorship programme aimed at supporting BAME university students. This programme will involve providing advice, guidance, and other opportunities focusing on entering the legal profession.
1 What is Diversity, Equity, and Inclusion (DE&I) in the Workplace?, https://gtmhub.com/resources/articles/diversity-equity-inclusion
2 Linklaters rolls out billable credit and recognition for Diversity, Equity and Inclusion, https://www.linklaters.com/en/about-us/news-and-deals/news/2022/october/linklaters-rolls-out-billable-credit-and-recognition-for-diversity-equity-and-inclusion
3 Our Commitment to Inclusion & Diversity, https://www.bakermckenzie.com/en/aboutus/diversity
4 6 Steps To Build A Successful DE&I Strategy From Scratch, https://www.forbes.com/sites/rebeccaskilbeck/2021/05/11/6-steps-to-build-a-successful-dei-strategy-from-scratch/?sh=32f49d4a44ec
5 The 1% study can be accessed here: https://publuu.com/flip-book/48941/146663/page/18
6 Only 90 of 13,000 partners at England and Wales law firms are Black – report, https://www.theguardian.com/law/2022/oct/19/england-and-wales-law-firms-black-report-1-per-cent-study
7 The magic circle has a race problem – and it isn’t getting better anytime soon, https://www.thelawyer.com/the-magic-circle-has-a-race-problem/
8 Law firms take action to increase diversity in the legal profession, https://www.lawcareers.net/Explore/Features/21092021-Law-firms-take-action-to-increase-diversity-in-the-legal-profession
How did we get here?
Commentators attribute the development of the energy crisis to various factors, with the most commonly cited considerations focusing on the economic stagnation during the COVID-19 pandemic, and the Russian invasion of Ukraine.
As the grip of the pandemic softened, and countries began to recover, demand for gas started to increase again. However, this could not be met due to a shortage in supply, causing gas prices to increase in 2021. This increase in gas prices forced some energy suppliers in Great Britain out of business, with a total of 28 energy companies declaring bankruptcy by the end of December last year, including bigger companies like Bulb, affecting over two million customers1. The 80% jump in the consumer price cap of Q4 in 2022 further demonstrates the impact of the pandemic, with new predictions showing a spike of over 235% from the current levels for 20232.
The invasion of Ukraine, the sanctions imposed by the international community in condemnation of the conflict, and Russia’s subsequent retaliation to these sanctions, have further exacerbated this international quagmire which has stunted the supply of gas throughout Europe. Thus, commentators have been rallying to provide solutions to this situation. Amongst them is John Zadkovich, a partner at Penningtons Manches Cooper, who suggests that governments should encourage foreign investment in the sector through incentives, while “abandoning disincentives such as windfall taxes and nationalising infrastructure”. The energy market has long lead times, says Zadkovich. For example, “the time between discovering a specific ore and/or fossil fuel to producing it is often just shy of ten years”. Equally, most renewable projects also have long lead times, often “five to ten years before they are commercially viable”3.
It is also worth noting that while the eyes of the world look to the looming effects of the pandemic and the war in Ukraine, many commentators have been vocal and critical about the surging profits of energy suppliers such as BP, where its profits hit $8.45 billion (£6.9bn), more than triple the amount it made in the same period last year4.
Impact on the Legal Sector
The impact of the energy crisis has also been prevalent in the legal market, as law firms are placing particular emphasis on developing and expanding their energy capabilities encompassing renewable energy, project finance, and infrastructure. The expansion in these areas is exemplified by several significant departures from the Magic Circle, which amongst others include Marton Eorsi joining Addleshaw Goddard as Partner from Allen & Overy, and Infrastructure M&A Lawyer Sara Pickersgill, who also departs from Allen & Overy, and joins the ranks of Kirkland & Ellis.
Spearheading the energy expansion efforts on the U.S side are Akin Gump, Latham & Watkins, Orrick, Shearman & Sterling, Simpson Thacher Bartlett, and White & Case. Akin Gump have made particularly significant strides in securing top talent with the likes of Matt Hardwick joining the firm after spending 13 years at Norton Rose Fulbright. Another significant hire is Alex Harrison, the power, renewables and energy transition head at Hogan Lovells, whose tenure at the firm spanned 18 years. Kirkland & Ellis is another notable figure in the energy space with the development of its ESG Impact Team aimed at combating energy related crises.
UK headquartered firms such as Pinsent Masons are also emphasising their energy capabilities and their focus on this sector, with a significant round of promotions setting stage for an exciting future for the firm. What is interesting here, is that of the 23 promotions, 10 of these were in the energy space.
Our Response and Approach
At Halkin, a significant section of our work focuses on staying up to date with the developments in the market. We place significant emphasis on this, in order to provide informed, relevant, and strategic advice to the firms we work with. This is particularly important in times such as these, where the needs of our clients are rapidly changing given the instability of the geopolitical climate. Thus, our market intelligence, competitor analysis, and our entrenched relationships with senior partners in practice, in house, and across multiple jurisdictions, means that we are uniquely positioned to benefit from extensive information, insight, and wisdom. Subsequently, our market analysis is rigorous, accurate, and comprehensive. The sector specialist approach we take also affords our consultants a wealth of expertise which we can relay to our clients, and the present expansion of our team means that we are able to develop our already formidable capabilities.
1 Why are energy bills going up? https://energysavingtrust.org.uk/why-are-energy-bills-going-up/.
2 UK Energy Crisis Response – Key Proposals Emerge as Winter Of Discontent Looms, https://www.herbertsmithfreehills.com/insight/uk-energy-crisis-response-%E2%80%93-key-proposals-emerge-as-winter-of-discontent-looms.
3 Energy: Companies and governments consider legal remedies as crisis set to deepen, Energy: Companies and governments consider legal remedies as crisis set to deepen | International Bar Association (ibanet.org)
4 Underlying profits of the energy giant hit $8.45 billion – the second highest figure in the company’s history, https://www.energylivenews.com/2022/08/02/bps-profits-skyrocket-as-energy-crisis-deepens
As we look back on 2021, we wanted to take the time to reflect on ESG and COP 26, and what this means for the legal sector as a whole. The most recent ESG market review published in November highlighted the surge in popularity for investment as well as how this became a trend throughout the entirety of 2021.
This was largely due to the shift in focus after the height of the 2020 pandemic forced individuals and businesses to look at how they were operating and where they were investing.
Legal Cheek supports this, highlighting in a recent article that “Environmental, social, and governance (ESG) matters are quickly rising to the top of the agenda for City law firms and clients alike.”. The author, Clare Burgess, Partner at Clifford Chance, broke down that the ESG agenda has grown exponentially in the last decade, but particularly in the last five years.
Within the Legal sector there has been a focus on a number of social issues aside from ESG, with #MeToo and Black Lives Matter being the most prevalent over the past few years. It’s clear that the priorities of law firms are shifting from what we could consider “traditional” and instead making important changes to ensure that they can service their clients in a modern, up to date way.
So, does the legal sector now need to be a force for good?
In October 2021, The Guardian released an article evidencing that multiple law firms were complicit in working with fossil fuel clients in over $1tn worth of legal cases (368 in total). This raised a number of valuable points around the part that law firms play in our growing climate crisis, and how they can become more sustainable whilst still supporting clients on difficult cases. It can often be a predicament as there will always be cases within this realm available, however, putting more onus onto law firms to operate sustainably may be the answer.
The same piece by The Guardian highlighted “Law Students for Climate Accountability is calling on law firms to pledge to stop taking on new fossil fuel industry work, phase out their current work by 2025 and ramp up their work for the renewable energy industry and supporting litigation to tackle the climate crisis.”. Although this is a step in the right direction, the proof will be evident only if firms are held accountable year-on-year.
At the start of November, Cop 26 was hosted and brought solicitors into the limelight, as “Climate change is no longer just a problem for governments to deal with.
What’s being discussed at COP26 will impact all solicitors, not just those that deal with environmental and climate change issues” (LawSociety.org). There will be a stringent management process put in place to keep the legal sector accountable from an ESG perspective, specifically the regulatory landscape.
We are seeing an increase in the demand for ESG focused lawyers. The issue, however, lies in which teams these lawyers may be in. We’ve seen interesting backgrounds such as corporate, tax, environmental and regulatory. Due to the relatively new focus on ESG, it has become apparent that most firms do not have a dedicated team but rather individuals who have a focus on ESG. We, however, foresee that this will change in the coming months, such as Kirkland and Ellis who have launched an ESG & Impact team in London.
With remote working being one of the most significant changes implemented by firms globally due to the Covid-19 pandemic, return to work strategies are a hot topic due to the conflict of opinions from Partner through to Associate levels across the UK and US.
Although most firms globally were forced to adopt a 100% remote working model, it seems that despite impressive productivity levels and performance, this has not been enough to implement permanent flexible working policies, although a minority have. Firms are making more money globally as well as billable hours increasing due to less commuting time eating into individuals’ working days.
From our own experience in the market, it looks as though UK firms are embracing said flexibility with less resistance, whereas the consensus in the US is that the majority would like employees back in the office, although there are still a small portion of firms offering flexibility.
Will there ever be a true work-life balance for junior employees?
An article published by Business Insider highlighted the dangers of a 100% remote model, stating “Junior lawyers at the London office of a major US firm worked more than 14 hours a day on average during lockdown in early 2021” which demonstrates the dangers around extreme flexible working policies that do not allow for employees to find a happy medium in their work life.
Naturally, firms can support junior employees by creating hybrid models as well as educating employees on how to structure their days more effectively. However, even the most robust return to work schemes can be difficult to implement, especially due to the surge in work as the UK and US legal market returns to a “new normal”.
Training and development must also be considered when looking at return to work policies. Firms have to ensure that regardless of what flexible working agreements they have in place, junior employees are receiving adequate training and development to progress their careers.
What is happening in the UK?
Generally, UK firms are approaching remote working with an open mind, and have used Covid-19 as an opportunity to see what ratio of remote and in-office work. A great example published by Legal Cheek is law firm HFW, which revised its salary and bonus structure for employees as well as introducing a new agile working policy. It gives employees up to 40% of their week to work from home, with variations of this being implemented in their other locations.
The model, which was only introduced in the summer of 2021 was devised to ensure that client needs are still prioritised, whilst also taking into account what employees, particularly juniors, are looking for in the workplace.
What is happening in the US?
The US has taken a similar approach to remote working, with a minority asking for everybody in full-time, but a majority are still in a transitionary period. This should not, however, be viewed negatively, particularly as each firm has to find a way of working that doesn’t just serve employees, but also the firm’s goals. However, some US firms are looking at flexible working, a great example being Shearman & Sterling.
Legal Cheek reported that the firm allows for Monday’s and Friday’s to work remotely across the whole group, and instead implementing set days in the office to focus on deep work and also ensure that productivity doesn’t fall by the wayside.
How does this affect Talent Acquisition?
From our experience in the market, candidates are becoming increasingly more interested in what law firms have to offer in terms of their flexible working policies. Due to Covid-19, a lot of junior candidates have suffered from remote working, so although it is now becoming a requirement, there also needs to be reassurance from firms that junior associates will be supported and trained.
There is also a lot more movement within the market as the UK and US market returns to normal. We are working with our clients to provide them with valuable competitor insight so they can attract and retain the best talent in the market, whilst also staying up to date with the latest remote working trends.
The search for the brightest thinkers has caused many London firms to reevaluate their salaries for entry-level and mid-level legal talent. This change has seen some US firms offering newly qualified salaries starting at £153,300, with some also including bonuses and better flexibility when working.
This shift has come from influence in the US, who naturally pay Associates higher salaries when they first join a firm. With US firms having roots in the UK, this salary banding exercise has been replicated, which has created even more competition amongst firms in London to attract and retain the best talent.
In an article by Sky News, it was highlighted that there are two main areas for competition, “one if for lawyers in their mid-40s with a couple of decades of experience under their belt. But, the most fiercely-fought competition right now appears to be in newly-qualified lawyers, where, during the last decade, salaries have exploded”.
This sudden demand was partly influenced after multiple hiring freezes during Covid-19; however, many firms now have the budget and the bandwidth to hire entry-level talent as the London market returns to normal.
This was also discussed in an article published in Global Legal Post, stating that “US law firms are waging an associate salary war as they look to match one another in order to attract and retain talent amid surging volumes of work.
Davis Polk & Wardwell set fresh terms for the pay race last Friday, when it upped associate salaries to between $202,500 and $365,000 per year depending on seniority level.
The hike came just a day after Milbank had fired the starting gun by raising first-year associate salaries by $10,000 to $200,000, with its most senior associates receiving $355,000.”
The salary pressures imposed by US-based firms, although positive in many ways for newly qualified lawyers, may also lead junior talent to make decisions purely based on salary, instead of culture, career progression, and other factors that are personal to them. There is a notable generational shift amongst the new wave of legal talent.
Many value the idea of work-life balance, whether this is through flexible working or having the opportunity to socialise more with friends over longer hours in the office. Although some junior candidates are still heavily motivated by the financial gain that many US-based firms can offer, there is a vast majority who would value a lower salary in exchange for a better balance.
This was supported in a piece published by Legal Cheek, which stated that “The reasons given as to why one should not give into such salary temptation and jump ship to a top-tier US law firm are varied and, for many associates, have long held sway.”
However, although there are clear opinions for and against the salary increases, there has been a notable shift in the recruitment of women, supported in an article published by Sky News;
“Another consequence of the war for talent is that, for the first time, women are being elevated to the top tier of what were seen traditionally as clubby, male-dominated environments. For example, Freshfields elected Sydney-born Georgia Dawson to be its senior partner in September last year, the first time a woman had been elected to the role.”
So, what should UK law firms do?
Attracting top talent will always be a priority for firms; however, it can be challenging to strategise the best approach to ensure that the right people are being onboarded. Company culture, mission, and values are equally as important when attracting talent, so although increasing salaries will allow you to attract financially motivated candidates, you must also highlight the other benefits to joining your firm so you attract the right type of individual.
Additionally, Associates wanting a more balanced lifestyle, are less likely to be motivated by purely financial gain. So, in summary, it is completely dependent on the type of firm you run and the type of talent that you want to retain.
The discourse on women in law has continued to evolve over the last few years, and although progress is being made, there are evidently gaps in diversity initiatives across the majority of firms who are looking to attract, retain, and promote women.
In a piece published by Chambers Student in February 2021, 7 years of recruitment data showcased the number of women hired, retained, and promoted in law firms, as well as the current state of the gender pay gap.
Although the figures regarding trainees and associates showed a clear increase in female vs male hiring, the issue lies within retention, rather than attraction and hiring.
There is a clear appetite from women to enter the legal sector, with c.63% of graduates being female. Furthermore, law firms are taking the right steps to ensure that women are being given opportunities to either join their firms or progress within them.
In the same article, Chambers Student highlighted key areas which have contributed to the lack of gender diversity within law firms. The most notable was outdated working practices which aren’t gender inclusive, with role modelling and implicit bias also being highlighted. Some examples include lack of remote working flexibility which would aid women with children, as well as a lack of opportunities designed for women returning to the workforce.
Although role modelling is key for retention, particularly for female associates who aspire to progress to partner level, we believe that outdated working practices are a larger contributing factor to the lack of gender diversity. Women are less likely to receive promotions or get opportunities within a firm whose infrastructure works against women, rather than favouring them.
This was echoed by JD Supra, who highlighted that “female lawyers feel forced to make significant trade-offs between career advancement and their personal lives”. The reason why these trade-offs happen is that firms are being governed in a way that is not conducive to gender equality, instead, it’s the complete opposite.
To achieve true gender diversity and gender inclusion, women in law should never feel as though they have to choose one or the other, being penalised either in their personal life or professional career.
Whether this is providing additional support for women who wish to have families, or even creating an environment that is welcoming for both men and women, there are key steps that law firms can take to ensure that they are fostering a gender-neutral culture.
It’s important to note that these changes will not be effective overnight, and instead should be part of an ongoing, wider strategy if firms wish to achieve true gender diversity, and retain women who are aspiring to carve out a successful career within law.
At Halkin, Diversity and Inclusion is something we’re vocal about, so helping clients understand how they can develop inclusive working practices is something we do on a day-to-day basis. Some of the things we advise are the following:
There are still a number of firms that haven’t embraced flexible working, when in reality, it’s one of the most critical changes a firm can make to help attract and retain more women.
Whether this is flexible working for current or expecting mothers, or flexible opportunities available for mothers returning to the workforce, creating roles that still allow for professional growth without sacrificing personal duties is integral for retention.
Although there is statutory and mandatory maternity and paternity leave that has to be offered, that’s often where it ends for a lot of firms. Something that we actively advocate and talk about is how our clients can support women coming back into the workforce, not only from a job security perspective, but also being able to phase back into working without being penalised for the time they inevitably had to take off to have a family.
This can be role modelled through other women at Partner level, but ultimately should be tackled from Associate level and above to instil trust for junior women coming into the firm that they will be supported.
With the legal profession still being largely dominated by men, we advise clients on the importance of male Partners advocating for gender equality and being open to change. Ultimately, these changes will incite positive change both for men and women.
For example, equal maternity and paternity leave will take the pressure off new mothers, whilst allowing new fathers to spend valuable time bonding with their newborn. If you are a male Partner, the change will only happen once you start advocating for it.
Whether this is educating yourself through attending workshops and events, or simply speaking to women within your firm asking how you can support them, being an ally for gender equality will enable you to attract and retain more women in the long-term.
Having a role model in the interview process, such as a successful female partner, can be a great way to put women at ease in an interview, especially if the firm is male-dominated. If you don’t have females at partner level, you can still include associates or other members of the team, as long as there is some relevance in terms of experience level.
In summary, the journey to achieving gender equality in the legal sector is far from over, however, we are confident that if the right steps are put in place, and partnerships rooted in improving D&I are made, then the needle will start to move, and firms can create a gender-neutral, and equal environment.
Over the past year, we have seen a number of challenges unfold due to lockdown restrictions and an economic slow-down, but we are positive that these hurdles have forced businesses to think critically about the future of work. As a boutique firm, we have focussed not only on ensuring that the quality of our service continues to improve, but also that we are thinking practically about how we approach remote working.
We have had a lot of insightful conversations in recent weeks, and there are two schools of thought within the legal sector. Some believe that the future of work is remote, and that we should embrace the tangible benefits that come with the flexibility of working from home. However, there are many firms and partners who crave the normality that comes from working in an office, particularly in a sector that has always been rooted in face-to-face contact.
A recent article published in Law.com supported this, stating that some partners are changing their minds on flexible working policies, as some previously “rushed in to” making said decisions. Firms such as Mischcon de Reya have offered unlimited flexibility which naturally, is a benefit for those who need it. However, there have been other firms who have made the executive decision to be completely remote for the foreseeable future, retracting previous flexible working policies they had implemented.
We cannot ignore the benefits of remote working
A silver lining which should be taken from the past year is that there are undoubtedly a plethora of benefits to remote working, regardless of the industry. Increased productivity, better work-life balance and saving money on travel expenses are some of the most common.
It has also forced a lot of businesses to assess how they operate, and has led to 43 out of 50 of the UK’s biggest employers to embody a hybrid working model. Working remotely even showed us, as business owners, that great work can be achieved without having to come into an office. However, these are all benefits that can often just apply to a small group of individuals.
The line between personal and work has been blurred
One of the key motivators for law firms and their partners choosing hybrid models over 100% remote is due to burnout from lack of work-life boundaries. The inability to decompress over a daily commute, or have a quiet space to focus on work has caused many to be less in favour of remote working, and we understand the conflict that some partners may be faced with as we enter this transitionary period.
In client facing roles within the legal sector there is nothing more valuable than human contact, and we have experienced this first hand with our clients and talent network. The opportunity to business develop in person is crucial for relationship building, and there are some conversations that simply do not translate well over a Zoom or Teams meeting.
Particularly for trainees and junior associates, learning through osmosis and being a part of the social aspect of a team is what makes work enjoyable, and if that is lacking, it could inevitably affect retention and employee satisfaction.
The crux of this conversation is that there cannot be two extremes. Although we are firm believers that being in the office is crucial to growth both from a financial and cultural perspective, there has to be an element of compromise when we have spent the most part of fourteen months in complete isolation. The past year has taught us how there is not a one size fits all approach to remote working and each firm should create a hybrid model that works for them.
Whether this is allowing flexibility for those who need it occasionally, or adapting to a 50/50 model which works to keep culture and human connection intact, it is crucial to develop a way of working that will serve you well, especially as we are entering a pivotal transition period from June 21st.
The global economy has inevitably struggled due to the Covid-19 pandemic, however a worldwide vaccine rollout has provided light at the end of the tunnel. It has been incredibly encouraging to see the economy growing after many months of regression across a number of sectors.
In an article published by the BBC, The Bank of England said that the UK economy is set to grow at the fastest rate in more than 70 years, as additional government funding has helped to flatten the curve and limit job losses. The furlough scheme has been the most notable, which has been extended until September 2021, so businesses have time to recover, whilst still retaining their employees.
The forecasted economic growth has resulted in employers looking at recruitment drives, particularly in Q3 when we will be entering the final phase of lockdown rules being lifted in the UK.
Although this is positive, many news outlets are reminding us that this should be viewed as a bounce back of the economy, rather than a drastic increase. The same article from the BBC discussed that other elements such as pay rises will take longer to recover and interest rates will plateau instead of improving overnight. The growth we are experiencing is absolutely positive, however should be viewed through a practical lens as the economy is technically still in “recovery mode”.
From our perspective, we have seen a number of interesting shifts, particularly in partnership promotions, which have increased significantly in comparison to last year. This is naturally a positive outcome for all, and evidences that although we have all struggled through adversity, excellent work is still being done. Promotions signify growth, so learning that this is happening across a number of firms is encouraging.
The recruitment market since the end of 2020 has become candidate-driven, thus shifting the onus on law firms to engage in detailed attraction strategies to ensure they are hiring the best talent in the market.
This change has given our Talent Network the opportunity to become selective with opportunities, which is a substantial change from last year. However, it is important to note that this shift is perhaps related to a shortage of talent, and an increase in the demand for legal services. Regardless, it is a positive which should be celebrated, especially for those who are just starting their legal careers.
This has been supported by other search firms across multiple sectors, with Financial Management reporting that “overall, over half (56%) of UK employers who participated in the CIPD/Adecco survey indicated they are planning to recruit in the first quarter of 2021, up from 53% in the previous quarter and 49% six months ago. We are confident that these numbers will only continue to grow towards the end of Q3 and the beginning of Q4.
From a client perspective, it has been encouraging to hear that there has been an increased demand for legal services relating to technology, healthcare, and life sciences. 2020 saw these industries working closely together, from frontline workers for the NHS, through to new technology platforms and products to support remote workers.
This was supported by Deloitte, who highlighted in their “2021 global life sciences outlook” that accelerated digital transformation during the pandemic demonstrated that process changes are required for increased speed to market. This will ultimately affect other industries, such as the legal sector, as streamlining and efficiency will continue to be a priority for all industries moving forwards.
In conclusion, it is clear that the economy is improving, and although there is still an element of uncertainty of what a “post-pandemic world” will accurately look like, we believe that the influx of promotions within firms and increased desire to hire should be celebrated.
2020 was a challenging year for all, and the legal sector was no exception. Although a lot of firms continued to work at a steady, or even accelerated rate, promotions and job changes plateaued. This change was to be expected due to global lockdowns, redundancies, and the introduction of the furlough scheme in the UK.
Now that we are mid-way through Q2, we wanted to share some insights we gathered from 2020, specifically on London Partner hires.
In 2020, we identified 275 partner hires by the leading UK Intl/Global, US and UK independent firms; this compares to 361 in 2019, 345 in 2018 and 357 in 2017. The drop in hires represents a 22% decrease compared to the number of hires in 2019 and a 23% decrease to the previous three-year rolling average.
If you would like a copy of the full report please click here.