In this article we discuss how the current candidate tight market and high demand for legal services is creating a perfect storm in the legal industry recruitment market in Australia. This article is based on our partner, Sharon Henderson’s presentation to ALPMA in May 2022 as part of their HR Workshop - Refocus, Re-engage, and Retain.
At the time of publishing this article, we are finding that Australian legal firms continue to be terribly busy. The number of roles we are recruiting for at Legal People and candidates we are placing are up approximately 30% on what we would call a “normally good market”. Whilst recruitment during the height of the Melbourne lockdowns ebbed and flowed, particularly in 2020, firms learned quickly that it was going to take time to find any new staff that they were looking for. At the same time, candidates slowed their applications for new roles, not wanting to start a new job in uncertain circumstances or during a lockdown.
In the Australian legal market, we are not yet seeing the Great Resignation that has been discussed so much in the media. Instead, we are seeing the “Great Hesitation.” Candidates are hesitant to move to a new role unless they get exactly what they are looking for, including a salary increase, a sign on bonus and even a promotion!
At Legal People, we feel that this hesitation relates to burnout during the pandemic. When we spoke to potential candidates in late 2021, they were all exhausted and just wanted to make it through to the end of the year. They talked about possibly looking for new roles in early 2022. Further uncertainty was added with the war in Ukraine, new strains of Covid such as Omicron becoming prevalent, and subsequently infecting more people, and the uncertainty of a federal election. All of these factors, have meant that candidates have continued to be reluctant to move. As salary review season sets in, we expect this to continue for the next couple of months. We predict that there will most likely be more employee turnover in the legal industry from August onwards.
Why is there a candidate shortage?
During the pandemic, many people took a moment to reassess their working lives and their careers. They were faced with tough questions about how they spent and prioritised their time. In some cases, this did lead to some lawyers exiting the industry, or making a tree or sea change. When the federal and state governments eased their recruitment freeze late last year, this also led to some lawyers leaving private practice to explore government roles.
Having said that, demand for legal services is up far more than anticipated. Firms are telling our consultants that they are starting to have to turn away work because they are unable to keep up with demand.
Now that state borders have reopened and freedom to travel has resumed, we are just starting to see an increase in candidates applying for roles based in Melbourne from interstate. This is after 2 years of avoiding our beautiful city at all costs!
We are aware that there is a huge backlog of processing permanent residency visas which is also perhaps reducing our intake of lawyers from overseas.
Head Hunting is Prevalent
Traditional advertising is no longer as effective as it once was. Now, for roles at all levels, candidates are being tapped on the shoulder and persuaded to consider a role. Firms are also approaching candidates directly. At Legal People, our data base of 50,000 legal services industry people gets utilised daily to find people we spoke to two to three years ago to see if they are considering a new role. Recruiters are also approaching potential candidates directly via LinkedIn.
The Key Areas in Demand
At Legal People, the key areas we are seeing much demand for, at all levels, are as follows:
• Family law
• Insurance
• Personal injury
• Commercial law
• Property law
• Conveyancing law clerks
• Legal secretaries specialising in family law, property law, workplace relations and personal injury
In such a candidate tight market, we are also finding that good candidates are receiving and comparing the details of up to three offers of employment.
How can Small Firms Compete?
Small firms can be much more agile than their larger competition and can get an offer out quickly. When they are interviewing a candidate, we are advising our clients to not wait to see someone to compare them to. They need to decide on candidate suitability very quickly. In one instance, in recent weeks, a talented associate level property lawyer came on the market. We were able to work with our client to move from interview to offer all in the space of a week.
We have also learned valuable lessons through our many years of industry experience and have been advising clients to keep the lines of communication open as potential candidates move through the recruitment process. This even includes keeping a lawyer that has signed an offer engaged right up until the start date. Their current employer will be doing everything they can to keep them! We recently heard of one new starter recently who continued to be head hunted up to five times, right through his probationary period, so it was very important that induction went well and that he was engaged throughout the first few months.
If a smaller firm is struggling to compete on salary expectations, then a sign on bonus can make a difference. We are currently seeing sign-on bonuses in the range of $5,000 to $20,000. These are either paid on commencement or at the end of a probationary period.
As recruiters, we are very much having to sell a firm and its associated values and benefits to a potential employee, and candidates are asking more questions than ever before. Having a compelling one-page document that really outlines your company values and all the associated benefits of working for you can be beneficial. An employer’s Employee Value Proposition (EVP) needs to be very strong to compete for talent at the moment. Hiring managers need to sell their firm more than ever before.
What are Candidates Looking for to Move?
Candidates are looking for a real values alignment between an employer and themselves. They want to understand clearly what is great about working for your firm. They have expectations of continued flexibility and an individual budget for professional development.
Consider carefully what is attractive about working for your firm. Can you send staff on conferences overseas or offer promotional opportunities in other major cities? Most candidates who are taking action on landing a new role are receiving a salary increase of 10%-15% to do so.
In some benefit statements we are seeing the percentage of profits that are reinvested back into staff development and training stated to give potential employees an indication of the investment they can expect in their career.
Candidates are also particularly interested in billable hour expectations and generosity of parental leave arrangements. They also want to know about the role of your firm in the community, how you give back and the causes you support.
How Do You Retain Existing Staff?
Many firms have increased salaries as a retention strategy to keep their high performers and are offering employee bonuses for bringing in work, or exceeding KPI’s. One of the reasons we are often given by job seekers for leaving their current role is that they do not feel appreciated or that their efforts or achievements are not recognised sufficiently. In many instances, these bonus payments are then being considered as part of their package and are expected by employees as part of the salary offered for their next role.
Before Covid-19, salaries in the legal industry were relatively flat and we are very much now playing catch up. Many HR leaders are nervous going into salary review and promotional review time in relation to managing the fall out of this. There is upwards market pressure on salaries, and this is a challenge to those firms wanting to keep their costs down.
Firms should expect to continue to offer flexibility including working from home and hybrid working opportunities. They should also play close attention to their communication and messaging – making sure staff feel like they are getting regular feedback and feel that they fit into the future of the firm. Employees who feel valued, feel invested in, and are connected to an organisation, want to show up for work and invest their time into mutually beneficial company goals.
For candidates who are fielding multiple offers, this situation can feel quite overwhelming. At Legal People we are asking candidates qualifying questions to understand clearly what they want out of a career move. This helps us suggest 2-3 firms that are going to suit them – which can help them to decide between competing offers.
In our many years as recruitment consultants for the legal profession, we have never seen such demand for talent or such a candidate short market. Candidates know they have the market power, and we are not expecting this to change in the coming 6 months.
In all cases, now is not the time for detailed psychometric testing, or grilling the candidate to the nth degree. It is not the time for them to take away an exercise to complete or a presentation to deliver. Your recruitment processes need to be tailored to meet the market. Your EVP needs to be compelling. Now is the time to expedite your recruitment process, work with a respected industry specialist recruiter and seize talent when you spot them!
Now is an exciting time to be looking for and landing a new role, especially if you are a high performer with good industry experience. Should you be looking for a new legal industry role contact our team of legal industry specialist consultants for a confidential discussion. We have a number of exclusively listed opportunities with legal industry employers of choice. We can help talented lawyers and legal support staff find a role at the firm on the top of their wish list. Contact us on [email protected] to get started!
This article originally appeared on LinkedIn authored by Sharon Henderson.
