Despite this, firms are still struggling for talent in 2024, with the best lawyers still “sought after and hard to find”.

This has historically led to financial incentives such as a “loyalty tax” for firms to retain staff and significant salary hikes for entry-level law graduate roles, as well as an increase in people and culture-led initiatives, such as flexibility and value alignment, despite the majority of lawyers preferring pay rises to perks.

As previously reported by Lawyers Weekly’s sister brand, HR Leader, “companies need to be laser-focused on their people” in 2024.

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Majority of employers and employees concerned about retention

New research from Robert Half recently revealed that 67 per cent of Australian employees doubted their organisation’s ability to retain staff, with only 12 per cent confident in their employer’s retention strategies.

Further, 88 per cent of employers surveyed also questioned their own ability to retain valued employees.

According to the research, the top reasons employees leave organisations are increased workloads (28 per cent), burnout (24 per cent), poor work/life balance (23 per cent) and being headhunted (23 per cent).

Many of these issues have seen skilled lawyers leave firms – especially as burnout continues to be rife in the profession.

Robert Half director Nicole Gorton told HR Leader that organisations, therefore, need to be increasingly people-centric, as there is still a massive skills shortage in many sectors, including legal.

“Losing talent will cost money and can be as much as three times their salary due to recruitment expenses, time spent on hiring and training a replacement and the impact on team morale, potentially leading to higher turnover in the future. Overall, replacing a valued member of the team typically outweighs the extra efforts needed to retain them,” she explained.

“Business leaders generally understand why their employees leave the organisation, though awareness isn’t enough. Employers have many tools up their sleeve that they can use to improve job satisfaction, ranging from financial and non-financial benefits to building a culture where employees can grow and develop, and providing support to help employees alleviate heavy workloads.

“Establishing open lines of communication, actively listening to staff and being able to address their concerns – even if not everything can be resolved – are key to make employees see that the grass is not always greener in another pasture.”

In conversation with Lawyers Weekly, Beacon Legal director Alex Gotch said this research certainly rang true for the legal profession.

“The demand for the top legal talent in Australia peaked in 2021, and although it has cooled in the last 12–18 months, there remains a significant gap between supply and demand, with large law firms continuing to post high volumes of new vacancies each month, with not enough suitable and available lawyers to fill them,” he said.

“Retaining legal staff in Australia is a challenge, especially as so many lawyers have the option to move overseas. It is of paramount importance for law firms to have developed, and put into practice, a strategy to retain their lawyers.”

How are firms retaining staff – and is it something candidates look for?

Despite partners now being optimistic about the development of next-gen leaders, Gen Z workers are reportedly still pushing away from office culture and looking for shorter-term roles compared to previous generations, as work/life balance and flexibility remain important.

As a result – and following the pandemic, which forced the profession into remote work – more BigLaw firms than ever are adopting people-centric strategies, prioritising culture, professional development, flexible working arrangements, and increased parental leave entitlements.

Having these strategies and additional benefits can help drive retention – particularly as the profession “continues to be a competitive and complex talent market”, Macpherson Kelley chief people officer Olivia Holmes said.

“Law firms need to get serious about understanding what matters to their people and deliver a genuine and holistic employee value proposition – not just a work experience. Employee experience matters for all employees, and over the next few years, I expect the legal industry will see law firms try to differentiate themselves from each other with a tailored employee value offering that understands their needs and empowers them as people, not just as workers,” she explained.

“As people seek greater autonomy and flexibility in the way they work, firms must endeavour to balance performance outcomes as part of this employer/employee deal. We take proactive steps to listen to our people and reinforce the reasons they share with us as to why they stay at our firm. Our approach appears to be successful, with one example of this being the low turnover rate of 6 per cent at our Dandenong practice.

“Our most recent engagement survey confirmed genuine flexibility, shared purpose and values, and impactful diversity, equity and inclusion policies are all contributors to why our people recommend Macpherson Kelley as a great place to work. This confirms what we have known for a while – that competitive remuneration and benefits are non-negotiable and employees expect value in more intrinsic areas.”

Hall & Wilcox, which was recently ranked fourth in the Lawyers Weekly Top 25 Attraction Firms ranking, also has a “sharp focus” on people engagement and retention, according to managing partner Tony Macvean.

“People engagement and retention is one of our highest strategic priorities, and something that we think we do well. Our people tell us that they are engaged and invested in the firm – including in regular engagement surveys,” he said.

“We are always looking for ways to improve the experience our people have with the firm. One priority is designing work and providing support to enable people to be mentally and physically healthy while prospering in their career.”

From a recruitment perspective, staff retention is also key to drawing in candidates – or driving them away.

“Many law firms have developed retention strategies with the aim of retaining their lawyers, which is especially relevant as the top lawyers are often receiving numerous approaches from other firms trying to poach them,” Gotch added.

“[Our] clients have reported initiatives such as increased salaries and bonuses for top performers, reduction in the years of experience required for promotions, closer monitoring of employee billable hours to avoid burnout and additional incentives such as enhanced annual leave and the ability to buy extra annual leave.

“It is common for candidates to ask Beacon Legal whether the firm they wish to apply to has a high turnover of staff. There are some firms, or teams within firms, which have an unwanted reputation of staff turnover, which is rarely regarded as a positive by prospective employees. A firm which has a high retention rate and good team morale will often use this as a differentiator and an attractive talking point during the interview to help attract the top lawyers.”

The vital importance of retention moving forward

The attraction and retention of talent has been one of the highest-rated challenges for a number of years within the Australian legal industry, with the war for talent only continuing in 2023 and mid-level lawyers and senior associates in particularly high demand.

However, following the release of the 2022 National Profile of Solicitors report last May, former Law Society of NSW chief executive Sonja Stewart told Lawyers Weekly that female lawyers, in particular, are now more likely to stay in the law for longer as more firms place higher priority on retaining staff.

“Firms – and people who make key decisions – are now understanding the importance of a diverse and inclusive workforce in attracting the right talent, retaining the right talent, productivity, engagement and competitive advantage,” she said at the time.

“I think that over a number of years, firms, particularly in private practice, are seeing the importance of that.”

In 2024, this hasn’t changed – and Gotch emphasised that the retention of lawyers is still of “paramount importance” for firms and should remain high on the priority list moving forward.

“It remains challenging for firms to hire talent, in an ultra-competitive recruitment market. One only needs to look at job vacancy volumes to see that the large law firms have many open positions, which can often take months to fill due to lack of available talent, particularly in the sweet spot of demand at three to six years PQE. If law firms can implement a retention strategy that works, they may be able to avoid the significant financial and non-financial costs that occur when a valued employee leaves the firm,” he added.

“Devising and implementing a lawyer retention strategy should be high on the agendas of law firm managing partners. Understanding what lawyers want and then devising incentives and benefits to cater for their needs, in line with the overall firm’s business interests, is extremely important and critical to allow a firm to grow headcount and retain their valued employees.”

Further, good staff retention is “critical for business continuity and growth”, and to get the best out of their employees, firms need to place greater importance on employee experience, according to Holmes.

“Retention of talent is critical for business continuity and growth. I would argue that successfully integrating talent management, the practice of acquiring and retaining people, is the most integral component to achieve firm stability and growth.

“Mid-level lawyers remain in high demand, so it is as important as ever that law firms deliver a compelling and genuine employee value proposition that meets the needs of this group. Clear career pathways, sustainability, flexibility, competent leadership, progressive technology and an inclusive and positive workplace culture are all key priorities for this group,” she concluded.

“Any business must demonstrate care, value, purpose and connection in return for high performance. It is a deal between the employer and the employee. Law firms must understand what the expectations are of the people they are most interested in attracting and retaining. Therefore, employee experience is a strategic offering for firms. This means more listening, more transparency and best practice policy that supports a workforce who, for the most part, works to live.”