The Struggle for Talent is Real as Law Firms Eye Growth (NZ)

Good lawyers are increasingly hard to find with demand set to grow, however, recent research uncovers that many firms may be under-utilizing key tools & strategies available to attract top talent. Salaries have remained flat despite obvious, and continuing, high demand for quality personnel. There are many external forces impacting a firm’s ability to roll out widespread salary increases but are firms waving the white flag on an industry issue they can solve in isolation?

These are among the top findings of the 2019 ALPMA/McLeod Duminy NZ Legal Industry Salary & HR Issues Survey, which drew a range of views from 100 New Zealand law firms across the country. These firms employ 2714 people in more than 40 different and roles participated in the research conducted in February 2019 by the Australasian Legal Practice Management Association (ALPMA) and McLeod Duminy Careers. 

Kirsty Spears, Director at McLeod Duminy, says the fact that three quarters of firms (77 percent) intend to recruit and grow fee earner numbers is an indication of a buoyant industry. “Yet, at the same time, finding and retaining good staff is recorded as the number one challenge for 94 percent of respondents. This inability to find people will either limit growth or place additional pressure on existing staff. This is the real issue the legal industry should be working hard to crack. Should be, but seemingly isn’t”, she adds.

Despite high demand for talent, which is expected to increase further into next year based on the hiring intentions of the salary survey respondents, Spears points out that salaries are ‘quite flat’, with at, or near, inflation increases of 1.6 percent across the industry.

“Competition for talent is expected to persist, so it’s not surprising to see 94 percent of firms indicating they struggle with talent recruitment and acquisition, while 91 percent continue to rate employee retention and talent management a top HR challenge,” says Sheryll Carey, ALPMA NZ Chair and General Manager at Lowndes Jordan.

“Given demand for employees and a static period for wages over the last handful of years, we were expecting an adjustment upwards this year, which hasn’t happened. This creates an obvious opportunity for those who are serious about attracting the best: with supply limited you need to attract people from other roles and attractive salaries are one way to do that. Most firms we talk to will say that they pay ‘market rate’ or ‘top of market’. Perhaps the ‘market’ has shifted and is demanding more,” adds Spears.

Remuneration, however, is only part of the story; a top package is only attractive if the right individual is made aware of it. Spears says it is another opportunity missed that that the percentage of law firms which lack any recruitment strategy has stayed constant at 45 percent. “Without a strategy, you’re probably missing out on the best people,” she notes.

Furthermore, the survey shows that just 15 percent of firms have a pro-active sourcing strategy, plus a decrease in the number of firms using recruitment referral bonuses. “And the benefits that might make a firm more attractive or help retain staff remain uninspiring, with few firms doing much out of the ordinary, particularly when compared with other professions and law firms overseas,” she adds.

For example, Spears says just 14 percent of firms offer benefits over government requirements; for half of those that do, this is limited to extended unpaid parental leave. “We know our candidates value additional leave, so being creative with how employees might be eligible for, or earn, additional leave could be a real point of difference,” adds Spears.

Previously attractive perks like flexible working, a mobile phone and connectivity are no longer seen as benefits and are instead viewed as normal expectations by candidates who, in some cases, see access at home as more a curse than a blessing.

“Three quarters of New Zealand’s law staff are permanent full-time employees despite the talk around flexible working. And the feedback we receive is that it is still hard for fee-earners, as opposed to support staff, to find part-time positions,” says Spears.

Continuing the trend of the previous three years, employment amongst participating firms increased in 2018 with 51 percent indicating staff levels at their firm grew over the previous 12 months.  This rises to 59 percent of mid-tier firms and 57 percent of large firms and is up from 44 percent in 2017.

Staff turnover is consistent at 16 percent, “That’s high for professionals,” Spears says, “and explains why firms are hiring. But it is where they are hiring which is also notable, and the fact that is fee-earners, inferring the ratio to support personnel is increasing. Does that perhaps provide an indication that fears of tech taking jobs in the legal industry are playing out?”

Expectations for employment growth will continue to be strong in 2019.  Overall employment in New Zealand is forecast to grow by 2.3 percent and 53 percent of the legal firms who responded to the survey expect to increase the number of staff they employ in 2019, likely to be driven by mid-tier firms.

Amongst other things occupying the time of HR with be managing the mental health of their employees. Nearly 9 out of 10 firms (87 percent) believe this will be an area of concern for the coming year. It is hard to say whether this has been driven by concerns within firms, or by a focus on mental health issues in the wider community and by the legal profession.

“Offering flexible working conditions is one of the ways firms can support employees to manage their mental health. Unfortunately, from this year’s respondents, we have seen the number of firms offering flexible working conditions decrease to 74 percent in 2019,” notes Carey.

In a positive sign for gender equality, 50 percent of salaried partner roles were filled by women for the first time in 2019. And, in a big step forward, the proportion of female equity partners has also increased from 16 to 24 percent. “Perhaps even more important because this is where genuine influence and leadership sits,” says Spears.

While women hold nearly three quarters (73 percent) of executive and senior management positions in legal firms in New Zealand. Consistent with 2018, nearly two-thirds (64 percent) of solicitors / lawyers are female.

Finally, Spears is pleased with the range of responses received in this year’s survey. “It’s great that 40 percent of our respondents come from outside the three main cities, with 57 percent employing less than 25 employees and 36 percent less than 75. This is where most lawyers actually work and, in this survey, we’ve got a picture beyond the larger, Auckland-centric firms,” she concludes.

About the 2019 Legal Industry Salary & HR Issues Survey report

 The 2019 ALPMA/McLeod Duminy New Zealand Legal Industry Salary & HR Issues Survey report is the most comprehensive, independent report on salaries for all roles at New Zealand law firms. This is the fifth year the research has been conducted in New Zealand.

100 firms from across New Zealand provided comprehensive information about salaries, benefits and bonuses they pay for lawyers, management and administrative staff, and insight into the critical HR issues and challenges facing their firms.

The report shows the highest and lowest salary paid and the ‘typical’ salary paid for more than 40 roles at law firms.  Salaries for each role are also broken down by size of firm and by location, allowing companies to benchmark their remuneration strategy for each role with similar firms.

Other information provided in the report includes anticipated salary movements, recruitment plans, employment benefits, bonuses and staff employment arrangements.  This year, the survey was extended to include questions about gender for roles and gender pay gap perceptions.

The ALPMA/McLeod Duminy New Zealand Legal Industry Salary & HR Issues Survey report is provided free of charge to all participating firms.  Non-participating firms can purchase a copy online for NZ$550 (ALPMA members) or NZ$2,200 (non-members).  

The research was conducted for ALPMA by Survey Matters, an independent research consultancy, to the highest standards with the data collected in February 2019.

About McLeod Duminy

McLeod Duminy are specialist, legal recruiters based in Auckland and will be celebrating their sixth birthday this month. We enjoy travelling and work with all sized firms across New Zealand.  We know that these days our clients can source candidates from many of the same avenues as us, and so we must delve a little deeper into the market through a combination of technology and good old -fashioned networking.  For more information, please visit http://mcleodduminy.co.nz/

2019 ALPMA/McLeod Duminy New Zealand HR Issues & Salary Survey research report is available now.