The first line in this report is “What a difference a year makes”. And, indeed, any of us working in the legal sector can’t have escaped the dramatic shift in focus from a frenetic scramble for talent and resource by any means to having to review staff costs as a way of dealing with falling demand, likely over-capacity and under-pressure margins.
Attrition and how firms will maintain or improve performance in the wake of it is the focus of report two. Firms surveyed reported Associate attrition of 49% in the last year. But reported support staff attrition was even higher – 53% amongst UK firms but up to 60% in North America.
Forced exits are “becoming commonplace” per the report, describing these decisions as “surprising”. I wonder whether we should be surprised; are support cuts just a reflex response for too many law firms, relying on the same management thinking and behaviour we’ve seen in all previous periods of economic pressure. Maybe not ‘surprising’ then; but I agree it may be ‘short-sighted’.
Whether firms will find themselves in trouble as a result of support staff cuts will depend on the firm and on your view on just how much inefficiency was still baked into law firm operations as we entered 2023. In my experience, there was still a lot of scope for improved efficiency around the sector, even before more advanced technologies like generative AI are deployed. Most firms could absorb and manage some support streamlining, if they take the time to rethink processes, workflow, established ways of working and organisation design. But how many are actually doing this now? As the report puts it “are firms confident that they are identifying the skills and expertise required to optimize service delivery” as we move into the next phase of the market?
Whilst there is a focus on forced exits, we must not lose sight of the fact that firms have only recently been through a period marked by spiraling levels of voluntary exits, as partners, lawyers and support staff jumped for more money, better prospects or greater flexibility.
And some firms are still grappling with the unwinding implications of the pandemic, especially where it drove greater technology adoption, remote work and digitization. Through the last few years of intense competition for talent and a steady drain of skilled people who wanted full-time, office-based employment, many firms have conceded defeat in the battle to replace roles. This may not be deliberate cutting or attrition; more a case of just giving up and taking unfilled roles, that somehow firms have found they can cope without, off the vacancy list. This line is supported by the finding that only 37% of respondents now expect to find a like-for-like replacement when they lose staff.
In many previous BigHand reports the looming demographic crisis as the legal industry’s skilled, experienced but steadily ageing secretarial population retires has been highlighted. This report makes clear that this specific instance of the much-talked-about ‘great resignation’ is still in progress. Firms have not typically developed their own replacements and the pool of experienced legal secretaries out in the market has been in sharp decline. Once again, the attrition numbers being quoted may be as much a result of firms being forced to adapt their support services to a lack of available resources beyond their control, as to conscious short-term headcount cuts.
Attrition could be the result of questionable knee-jerk decisions by firms who have not really assessed the consequences, particularly in a climate where, as BigHand report, firms need to demonstrate to clients (as well as owners and staff) that tasks are routinely handled by the right people at the right cost and meeting client expectations; 74% report clients are pushing for this.
But support staff attrition is not necessarily a bad thing in 2023. Indeed, in an era where firms have to demonstrate those efficiency improvements it may be addressing the longstanding lag in support service performance. Despite the impact of the pandemic period and technological advances, support inefficiency is still widespread – paper, manual tasks and admin burden on busy and expensive lawyers and poor support utilisation due to 20th century structures, with support highly decentralized, organized and managed by office location or by partner and with little smart data or resourcing applied. The best-managed firms, leveraging their massive legacy technology investment and measuring how support efficiency and improvement can actively increase the ability of lawyers to focus on their ‘highest and best use’ and client work, are deploying a range of support design levers; centralizing, specializing, multi-disciplinary teams, relocation to lower cost centres, outsourcing, flexing resourcing to match workload, automation, digitization and paper-lite, streamlining controls and re-handling, data-driven insights and integrated resource management tools to name a few.
Those tactics make up a part of what the BigHand report refers to when it states that “modernizing support staff services is a priority.’ I agree that it should be. But many firms have not treated it as such and real performance efficiency and performance lags in so many firms. Will those firms now just reach for the conventional tactic of slashing headcount once again without really gauging the impact on lawyers, clients and firm performance?
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