Member Article

Law firm partners brace for legal talent war

A survey of over 200 law firm partners has laid bare legal industry concerns about escalating bidding wars for talent, at a time when clients are applying financial pressures on firms during the pandemic. The survey, commissioned by Harbour, found that amongst the 203 lawyers surveyed, almost half(45%) of firms said that retaining their existing staff was the biggest challenge they were facing after the pandemic, ahead of the current macro-economic conditions or retaining profits.

Lawyers also highlighted a backdrop of cost pressures from clients and a drive amongst partnerships to lower overheads. 86% of law firms say they are under pressure from clients to reduce fees or offer alternative billing arrangements.

Despite this, 37% of law firms say they are trying to grow by hiring more lawyers, with 60% of large firms (over £500 million turnover) actively hiring more talent.

The research highlights a conundrum for firms – are there creative ways to retain or attract talent without simply increasing the salary bill? Responses to the survey suggest that firms are exploring ways to remain competitive without those solutions weighing heavily on the balance sheet. 37% of partners said their firm is actively seeking external finance to help support growth while a similar number said they are considering a more traditional route of bank loans, or sourcing capital from private equity. Litigation funders are also increasingly regarded as a source of working capital to support the running of law firms and their plans for growth, with 73% of partners saying they would consider seeking capital from a litigation funder.

It is not merely more expensive talent which partners see as key to the future of their firm; 80% of those surveyed said their firm’s leadership could be more innovative with strategic planning in order to keep ahead of competitors. Half of the partners surveyed said that despite these the ongoing pressures, they have instigated new plans for growth to take advantage of the businessopportunities thrown up by the pandemic.

Ellora MacPherson, Chief Investment Officer at Harbour said: “This survey shows that firms are grappling with the expensive business of how to attract talent and grow in a competitive postpandemic market. But paying larger salaries is not the only solution – partnering with external sources of finance supports a culture of innovation and fosters an environment well-suited to the demands of the next generation of lawyers.

This was posted in Bdaily's Members' News section by Lucie Hayes .