A Survival Guide for Legal Practice Managers

A Survival Guide for Legal Practice Managers

Developing an effective remuneration strategy for your law firm - a mixed bag of lollies!

Tuesday, March 14, 2017

By Emily Mortimer, ALPMA Board Member


Rewind back to when local shops sold mixed bag of lollies – remember the excitement of not knowing what you were going to get for your hard earned dollar? Will you get what you want – or will your friend get all the good ones? Well fast forward to the 2017 remuneration landscape and this is shaping up to be that exact same feeling.

Let’s look at why this is occurring. There has been limited movement in the market when it comes to legal remuneration recently. According to the results of the 2016 ALPMA salary survey, wage growth for the previous 12 months was 2.8%, down from 4.6% the previous year. This sluggish wage growth is consistent with the Australian economic climate and the changing legal landscape in which we work, so a sound and sensible approach to remuneration was appropriate. But are we ready to move on?

The Global Financial Crisis (GFC) of 2008 still looms as a hangover, we have lost a booming resources industry to a scaled back model, ‘new law’ is challenging the traditional law firm model and overheads and the costs of doing business are being very tightly managed by law firms. These are all realities to consider when preparing the remuneration strategy for your firm. However, whilst it is important to know what is happening in the market we all operate in, the real driving force in change in the 2017 remuneration strategy must be securing the talent your firm needs to operate effectively and profitably.

Again, take a trip back to 2011 (ish) – the year the industry battened down the hatches – some reduced graduate intakes, some scrapped clerk programs and there were a large number of firms who froze salaries altogether. Now return back to 2017 and the job boards are filled with lucrative offers for certain classifications of lawyers at 4-6yrs post-qualification experience some with some fairly hefty lures of high remuneration not seen since well before the GFC. 

How do you deal with sections of your firm which are underperforming due to tough market conditions but where you need to retain key talent? Think your standard 2%-4% pay increase is still going to cut it? The legal landscape continues to change but we need to respect this is the norm and standard remuneration models cannot continue as they always have and data driven decisions have become key when preparing for remuneration forecasting. 

The salary surveys, and particularly this year’s ALPMA Legal Industry Salary & HR Issues Survey, provide a solid foundation to building your remuneration strategy - but what can you do between now and when the results are released?

1. Budget Forecasting


As the person who will drive the remuneration process, have early discussions with those in your firm who are responsible for the budget forecasting. Where is your firm revenue forecast for 2017/2018? What overheads need to be managed? What are charge-out rates going to be set at?

2. Do your homework


What are your firm’s current salary ranges? Are your salary bandings sitting in the low, mid or high percentile based on last year’s survey results? How does this align with your firm’s market positioning? Where can your firm afford to sit with its 2017/2018 remuneration strategy? Spend some time on job boards and talk to specialist legal recruitment agencies to see what talent is sought after in the market.

3. Risk Manage


Remuneration strategy has a strong element of risk management. You want to ensure your best talent is rewarded for their contribution - you don’t want your best talent looking on those filling job boards - but do you know your risk ratio by mismanaging your remuneration strategy? What about those who have the potential to be top talent…those in the middle? How do you stop them from going elsewhere for being overlooked for not being there quite yet?

4. Get the low down


Employees will tell you what they expect. Some will have done their homework (or some will have had recruiters tell them what they are worth!) and present solid business cases for their remuneration expectations to be met. Others will pick the top of the band and hope for the best. Whilst others may just sit back and hope for the best. So you need to ensure that your development discussions hold the opportunity to find out what employees expectations are. Some firms have a hush-hush policy on remuneration being discussed in a development review – don’t make life hard for yourself. Arm yourself with as much anecdotal and empirical data as you can, and you will find yourself having less discussions post distribution of remuneration outcomes.

5. Be realistic


Start discussions with partners and employees as early as possible. Firms can only afford to pay so much before they start to have to look at reducing overheads, which can lead to unwanted redundancies. If your remuneration process is going to struggle to keep up with what the market is showing through job boards and anecdotal conversation, then explore and communicate your firm’s strategy early so there is no surprises. Are there signs of improvement - just not enough confidence to know the good results are staying? 

One approach to all this could be to consider a partial remuneration review for July and another in January 2018. What are the benefits that your firm offers that those with high salaries can’t emulate? Money isn’t everything and sometimes we need to remind employees of the non-monetary advantages that we have in our individual firm environments.

So will your firms be handing out fantales or will it be the disappointment of a bag of black cats you give away this year….only time will tell?

Editor's Note

2017 Salary Survey imageThe 2017 ALPMA Legal Industry Salary & HR Issues Survey is now open for participation by all Australian law firms. The survey provides a comprehensive, independent review of salaries paid for legal, management and support roles at Australian and New Zealand law firms, broken down by location and firm size so you can compare compensation strategies with like firms.  The survey also reveals the hottest HR issues and challenges for the legal industry in Australia.

This year's New Zealand Survey is proudly supported by McLeod Duminy. The Australian survey is proudly supported by In2View Recruitment, IPA, Kaleidoscope Legal Recruitment and KBE Human Capital.  

It is free to participate, and all firms that complete the survey will receive a complimentary copy of the research report, valued at $550 for non-participating ALPMA members or $2,200 for non-members. The survey is open until 5pm, Friday 31 March.




About our Guest Blogger


Emily Mortimer
Emily Mortimer is an ALPMA Board Director and member of the board’s Salary Survey Sub-Committee, along with Emma Elliott (ALPMA WA) and Mark Beale (ALPMA NZ). In this role, Emily has provided significant input into the questions covered in the survey, drawing on her extensive legal industry and HR experience. Emily also currently serves as the Chair of ALPMA’s SA Branch, and has been a long-standing member of the ALPMA SA Branch Committee.


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