Regulatory uncertainty and geopolitical volatility will have their effects on law firms, partners, and associates, according to the recently released 2018 Legal Industry Outlook report by global legal search firm Major, Lindsay & Africa (MLA).
Just how deep into the legal industry framework the reverberations will go is a story yet to unfold. But the impacts will penetrate C-suite leadership and leave the associate market on uneven footing, the report suggests, raising questions and eyebrows as firms seek to understand the evolving world order.
In-house and law firm associates face a more challenging path to partnership than ever before, the report states, and a lack of regulatory clarity in the U.S. has yielded a sense of financial insecurity among corporate associates. And professional advancement among private firm associates has been slowed by their firms’ “focus on propping up lateral hires” — a practice that MLA suggests may come at the expense of strong succession planning within firms’ stable of rising associates. Whether this line of thinking comes to fruition remains to be seen, but “questions linger about how well law firms are setting themselves up for future success,” the report notes. For now, the current law firm environment has yielded a cohort of associates ready to stand pat in their current roles — stand pat, but by no means stand idle.
The path to partnership may be longer and more ambiguous, but associates (many of whom are among the millennial cohort) don’t find it any less appealing. In light of their limited options, many are more likely to stick it out at their current firms and wisely bide their time while laying the foundation for a future partnership.
In support of their 2018 Industry Outlook report, Major, Lindsay & Africa conducted an extensive associates survey in conjunction with BigLaw. Based on 1,200 respondents across 132 U.S. law firms, MLA reports that millennials are taking full advantage of their time in professional purgatory.
Today’s millennial associates are “leveraging the personal and professional development opportunities their current firms are offering,” according to Ru Bhatt, managing director in MLA’s Associate Practice Group. “They’re demanding it. This cohort of millennial associates is different than prior classes in this way, looking more broadly at their careers, including the importance of law firm management experience and developing a sound work-life balance.
“In this environment, law firms have acknowledged these demands and are placing a higher emphasis on associate training and retention,” Bhatt added.
Law firm leadership instituted many of these incentives as part of broader measures, allowing the firms the time needed to fill vacancies created by a dearth of hiring in the wake of the 2008 economic downturn. Firms have also acknowledged the very real risk of eventually losing high-potential hires to other firms and have focused recent energies on not only an industry-wide wage increase, but also a higher emphasis on associate training and retention.
This investment in associate learning not only demonstrates the firms’ desire to retain top prospects, but also prepares the firm for seamless succession planning, as associates are weaned from the partner trough and begin to generate clients through their own demonstrated business development expertise. The MLA report confirms the point, stating, “The exceptional associate not only has to have a sound legal mind but must also be adept at attracting and retaining clients” — skills which have been wisely included in the associates’ professional development programs.
By all accounts, law firm efforts have been rewarded. Findings in MLA’s lawyer survey indicate that associates have acknowledged their firms’ investment in them, “which in turn creates a sense of loyalty.” While the impact of law firms’ investment in professional development cannot be overstated, it is important to keep in mind that several factors were at play in boosting associate fidelity. Among them was an industry-wide pay raise during 2016 and the waning perception among law firm associates that in-house positions offered better work-life balance.
The MLA report also confirms this assessment, stating that “millennial attorneys, particularly those in BigLaw, take professional growth seriously and diverge from the stereotypes of their career-hopping peers in the general workforce.” In fact, among those surveyed, “an overwhelming 70% of respondents describe themselves as ‘loyal’ to their firms, and more than a third (33.9%) of millennial lawyers in BigLaw aspire to partnership,” in spite of the difficult path toward that goal.
And this path may remain a long and winding road. “[B]ut amid the ambiguity,” the report concludes, “one constant remains: law firm leadership and management will find themselves under renewed pressure to charge less for doing more, examining staffing levels and leveraging new technologies to drive profitability.”
In other words, what initially appeared to be a significant challenge to the future success of law firms has been turned into an opportunity that may well secure law firms’ legacy for generations to come.