These days, it seems the pool of legal talent is not so small after all.

For some time, partners in large law firms have been making serious money. Danny Gilbert, managing partner of Gilbert + Tobin, recently told an audience of young lawyers at an event organised by the NSW Young Lawyers association that during the last 10 to 15 years - since the last recession - partners have grown accustomed to a very distinct lifestyle, one that can arguably be compared to their counterparts in investment banking. But, he says, it's a lifestyle that may need to change. "Partners in law firms are going to have to expect that they will earn less," he said at the event in early March.

For students, it may be a difficult change to accept. Those now finishing their law degrees and preparing to step into the working world are experiencing a markedly different employment climate to when they first commenced their degrees.

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Unemployment hit 5.2 per cent across the general workforce in February - an early indicator of the road ahead as Australia heads into a sustained period of economic uncertainty. Recent redundancies in law firms prove the Australian legal sector will not be immune. If it's not layoffs in law firms, it is restructures, frozen salaries, shortened weeks and/or a push to take time out from work as organisations weather the crisis.

Less money, less motivation?

In corporate circles, the idea that money is a primary motivator for work has become slightly outdated. The pay cheque is nice, of course - even necessary - but isn't it the career that matters?

According to corporate psychologist David Ryan, from Ryan Spargo, more money might not be a motivator, but money can act as a de-motivator if it's taken away. "What we know is the nature of the work and the opportunities the work provides people is the motivator," he says. "In the absence of those things, money takes on a lot greater impact than it otherwise would. Often, it becomes the only sign of value people get off their organisations, or their clients."

This might be especially true of environments in which people might not gain satisfaction from their job, but are willing to stick with it for the sake of their income. In a law firm, if lawyers have not been nurtured to take on responsibilities of work that offer career satisfaction, this could be a real problem.

"For people for whom money has got to the stage that their salary is an indicator of their value - both in their social networks and in their business - those people are going to struggle big time," says Ryan.

But Simon Tobin, director of legal recruitment at Michael Page, says that in his experience, people will enter and leave the law for a variety of reasons and that, ultimately, "short-term salary considerations are not a major factor in career decisions".

A changing mindset

If lawyers for whom income has become a priority are struggling, what's the likely long-term impact of the situation on the profession as a whole?

John Chisholm from Chisholm Consulting says it may simply affect the type of individuals who are joining the profession in the first place.

He points to history as the indicator: "It did in 1990, and 1980, and 1974," he says, noting that lawyers will remember just how a recession affected their prospects in law, but that the memory is not necessarily long-lasting. "We remember for a while and then revert back to old habits."

For the next couple of years, or however long the crisis continues, Chisholm believes the impact on the profession, as in other industries, could be more profound. "The effect on almost everyone, in any industry, in any country, will force many industries and businesses, including the legal profession, to look critically at some old habits - many of which we should have killed off long ago - to come up with different models, service offerings and strategies for the future."

Organisational psychologist Helen Crossing believes that if individual lawyers are pushed too far to produce more with less, the impact on their health, wellbeing and their willingness to stay in the law could reshape the profession. "This is where it will push people over the edge - [those] who are already struggling," she says.

For lawyers out of work, the situation could be even more demoralising. "This will really test their mettle and their resolve to actually continue as practising lawyers," says Crossing.

Ryan adds that now may be a time of assessment for many: "I think a lot of people in the profession will find an opportunity to revisit some of their fundamental drivers."

For those left behind

The question of income again comes into focus when considering the impact of redundancies on those who remain employed. According to a survey by Drake International, downsizing may be ineffective in reducing costs because of the impact on employee morale, motivation and productivity that occurs after retrenchment programs. Drake found that 40 per cent of remaining staff became less motivated after their employers downsized.

The worldwide survey of 6300 employees and managers who have experienced downsizing also found that although processes and staff levels were altered, productivity increased in only 21 per cent of cases.

As positions are made redundant, there will often be a level of work that needs to be transferred to the positions that remain. Individuals may find themselves facing a significant increase in workloads without an increase in pay. "By far the majority (of employers) make no adjustment for salaries for people that remain," says David Edwards, strategic manager of Drake International.

But in the current economic environment, says Edwards, it's a situation that won't necessarily impact on morale. "If an organisation is under such pressure that it has to downsize, some employees would prefer that there is some sort of short-term adjustment to remuneration if it means more job security - as long as there is a commitment from their employer to reverse that once the economic cycle changes."

Across the profession

Combine salary freezes with employees taking on the additional workloads of redundant staff and from the outset, the issue of staff morale appears problematic.

But, says Chisholm, negative outcomes on the business from low staff morale will not necessarily eventuate. Many lawyers still employed will realise they are, in fact, the lucky ones, and be more willing to accept the changing working conditions.

"If that is the worst that will happen to most people they should feel grateful and lucky," he says. "Many others, in other industries, have already and will continue to lose their jobs - many never to return."

Increased competition within the walls of a law firm could also occur, says Crossing, but warns that it may not necessarily be productive.

"As work becomes scarce, you may start to see people behaving more competitively amongst each other - competing for resources and for work. That will result in less constructive behaviour. If it's not managed, that will become a real problem for the organisation."

Ryan wonders if ultimately, this period of economic uncertainty could become a necessary cleansing of the profession. "It's almost as if it could have an effect on the profession of law - the relevance of the law, and the people wanting to practise it," he says.

"It's a chance for those who really value the law to apply their trade and get more out of it ... To some extent it will sharpen the reasons why people want to actually stay in the profession."

Tim Fogarty, a recruiter at Taylor Root, says that lawyers will probably find satisfaction in the fact that, as a profession, they are all in this together. For many, that could be enough to assist them in realising the situation will likely be short-term and that once it's over, staff will again be in demand as employers compete for talent.

"There's an element of support in the sense that it's just happening to so many people and that there's not much you can do about it, other than to be positive and do something in the interim," says Fogarty.

Communication

Leadership, communication and transparency appear to be the keys to ensuring that employee moral remains resilient during difficult times.

Crossing says that any announcement regarding changing remuneration packages should be communicated with a timeline, because any light that can be offered to indicate the end of the tunnel is necessary. "People want to know, 'When are things going back to normal? When will I see that bonus again?'"

How employees react to downsizing measures could indicate how they have been managed in the past - particularly if incomes are affected during the crisis.

Ryan says that now is the time for employers that have not yet learned the lessons of the past to switch onto them for the future - especially to the fact that employees need more than just income as a means to finding value from what they do for work. Ryan says employees need career development, aspirations and the opportunity to fulfil satisfaction needs that may not necessarily be relevant to their clients alone.

"For law firms, it's a good time to reflect on how well we have actually managed our practitioners in the past and what lessons we think we might need for the future about how we can manage more effectively," says Ryan.

Not all law firms can claim victories around staff management - depending on how brutal it becomes, and how long the crisis lasts, the profession could very well find itself licking significant battle wounds.