Attractive salaries are driving Australian lawyers overseas. What can firms do to attract and retain legal teams?
Following a turbulent two years of lockdowns, border closures and social distancing, the global workforce is now facing significant talent shortages in several industries. With two thirds of executives reporting that the talent shortage is top of mind, the legal sector faces additional concerns as Australia has become a premium market for international firms to source talent. Whilst legal firms adapted their hiring methods and workforce expectations where possible throughout 2022, a number of firms reported that talent in the domestic market is still difficult to find.
Despite junior lawyers receiving significant salary increases between 10-20% throughout the past year, the appeal of relocating to work for international firms has led to professionals accepting new opportunities elsewhere. For firms unable to compete on rapidly increasing salaries the answer may lie in offering career development or implementation of workplace benefits, such as talent and physical mobility.
The current state of Australia’s buoyant legal employment market poses the question, should firms buy or build?
For many organisations desperately seeking new talent to fulfil skills gaps, the biggest source of untapped potential are employees who are already within the business. Historically the employee journey has been specifically crafted for employees to move into new positions in a vertical manner. However, as organisations evolve to reach new and existing markets globally, the reliance on employees to have specific skillsets to meet changing demands may result in hiring managers opting to hire (buy) new talent. Given that employers have a pool of people who understand the business and values, do the benefits of offering employees the opportunity to move laterally within the organisation outweigh the risks?
Whilst salary was the leading factor in employees opting to take on new opportunities last year, the Global Benefits Report for 2022 indicated that 40% of working individuals consider career growth potential a driving factor when deciding to take on a new position. Considering the hard-line benefits of internal employee mobility, such as reduced costs, training time and resources; providing internal opportunities may also contribute to increased retention rates. Leaders in the legal industry, like Hazelbrook’s Managing Partner, Hugh Griffin, have seen the value in providing junior team members with the opportunity to develop their skillsets across a broad range of matters and to enhance their career development experience.
Despite internal mobility offering many benefits to both employees and organisations alike, managers and HR leaders often do not feel equipped to manage mobility effectively. In a survey of HR leaders, 49% of respondents reported that career planning and development was not personalised to each employee, and the majority of managers felt that did not have the skills to effectively guide their employees in their career path (as referenced by the Managing Director for LHH, James Mcilvena).
With the global workforce predicted to expand within the next 5 years, organisations could turn to the hidden workforce to fulfil labour requirements
An additional challenge facing the Australian legal industry is the strict regulations that allow foreign lawyers to practise in Australia, requiring further studies to be undertaken within a specified timeframe. As domestic firms work with government bodies to implement positive changes to assessment standards and agreements for foreign legal professionals, the legal sector may need to utilise areas of the labour market that require physical mobility and flexibility. This was exemplified in 2022 when one of London’s top law firms, Stephenson Harwood, offered their staff the opportunity to work from home permanently (on the provision they would receive a 20% pay decrease).
Physical mobility saw major companies like Airbnb and Atlassian adopting new flexibility policies such as permanent working from home arrangements to remain an attractive employer for current and prospective employees. As the technology industry often leads the charge when it comes to adopting modern practices, with other industries later following suit, it is surprising that some of the bigger players in the technology sector have not been as accommodating. Companies like Google, Netflix, Twitter, and Amazon have all expressed a desire for their employees to return to the office, indicating a less favourable perspective of workforce flexibility. For Atlassian Co-Founder and Co-Chief Executive Officer Scott Farquhar, encouraging flexibility for his employees allows the organisation to tap into a global talent base.
Whilst the Australian legal sector adapted significantly over the past year to provide more flexibility, the deficit in talent resources meant that firms were turning away additional work throughout 2022. With 54% of organisational decision makers expecting that their global workforce will grow within the next five years, changes may be on the horizon sooner rather than later for the legal industry, meaning firms could tap into global and hidden talent markets earlier than anticipated.
Mobility is key to attracting, retaining, and developing staff in a tight labour market
As rapid changes to our everyday working lives were accelerated in the post pandemic era, this presents an opportunity for employers to implement new policies and structures to encourage mobility at all levels within their organisations. Organisations should focus on promoting and individualising career development plans for their workforce, whilst implementing training programs to equip their management team with the resources to effectively lead these conversations. With the unemployment rate having reached a historic low within Australia, applying a flexible approach to working conditions will attract a wider talent market and contribute to creating a positive employee experience. If we learned anything from the ‘Great Resignation,’ it’s that the employee value proposition is not something to be shelved until the next board meeting.
