In addition, tax cuts come FY24–25 could mean lower salary increases in review season and somewhat of a “pivot back” towards more reasonable raises compared to those of FY21–22 and FY22–23.

Despite raises during the period expected to be lower than in previous years, employee retention remains a “critical” strategic move for firms, with some turning to alternative benefits, including flexibility and value alignment, despite the majority of lawyers preferring pay rises to perks.

As such, managing and retaining talent following remuneration reviews requires new and innovative ways of thinking about employee management, according to Macpherson Kelley chief people officer Olivia Holmes.

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“We know recognition remains one of the strongest drivers of engagement. With remuneration and budgets reset, firms must continue to innovate in how they reward and recognise employee performance. In addition to this, firms are needing to reimagine the employee experience by listening to what matters to their people,” she said.

“Our recent work defining the Macpherson Kelley employee value proposition underscored the immense value people place on connections with colleagues, a clearly communicated firm purpose, as well as transparent career pathways.”

Despite the potential reset of remuneration and budgets, fostering engagement through innovative recognition and rewarding employee performance remains crucial, particularly as the candidate market remains competitive in 2024, with the best lawyers still “sought after and hard to find”.

To attract talent, u&u Recruitment Partners associate Steph McKenzie and partner Matt Brown said that more and more firms have implemented “flexible working policies, encompassing compressed work weeks, remote work options, part-time schedules, and adjustable start and end times, aiming to accommodate various personal and professional requirements”.

“Nonetheless, ambiguity persists concerning graduate programs and those with restricted practising certificates. While many supervising partners still favour traditional in-office settings and fixed schedules, emphasising face-to-face interactions, most firms are adapting flexibility on a case-by-case basis or setting core in-office days at a practice group level,” the pair said.

“We’ve also seen more firms refining their communication strategies surrounding flexibility to alleviate any associated stigma. Furthermore, office spaces have been redesigned to include hot-desking/collaboration zones, and there has been a broader acceptance of online professional development tools offering both live and recorded learning resources.

“Emerging lawyers are prioritising work/life balance, driving technological advancements and innovative solutions, which is presenting to shift the traditional working methods. To address these dynamics, law firms might consider implementing reverse mentoring programs, which provide immediate feedback in a more informal manner, contrasting with the traditional periodic mentoring approaches. Additionally, establishing a norm for team-level and wider firm bonding activities can foster an environment supportive of open dialogue and collaboration.”

As the profession (and the world) gets increasingly digital, effectively retaining staff requires integrating traditional leadership principles with advanced digital tools.

Clear communication and “human-centric” leadership, Holmes said, are also key for a digitised future and technologically literate profession.

“Undoubtedly, AI and other digital technologies are enhancing human capability and sharpening our decision-making skills. As the legal industry becomes increasingly digital, we need to double down on human-centric leadership, focusing on behaviours that shape our culture and intentionally connect people to our vision, mission, and purpose,” she said.

“To manage and retain talent in this ever-shifting landscape, it’s crucial to reconcile traditional and tech-assisted collaboration. There will continue to be steep learning curves as leaders seek effective ways to engage, mentor and develop early-career professionals in digital and hybrid workplaces.”

Being able to strike this balance is vital moving forward, both for talent management and for enhancing the client experience, added Holmes.

“With so many digital tools available, striking the right balance between leveraging tech and maintaining a personal, human-centric leadership approach is needed to foster a supportive and engaging work environment.

“The key is to be deliberate about what tasks we delegate to technology and where personal leadership and engagement is essential. Digital tools will never replace the ‘human touch’, but they can assist modern law firms to enhance the client and employee experience. By empowering employees to work more productively – be it from home or with tools that automate parts of their processes and provide quick access to information, we can create a more responsive workplace,” she said.

“Talent management today continues to be about creating inclusive, connected and high-performing environments when recognition is valued, and purpose is known. Ultimately, it’s the responsibility of law firm leaders to blend technology with human-centric leadership to drive innovation and inspire success.”

Lawyers Weekly will host its inaugural Partner Summit on Thursday, 20 June 2024, at The Star, Sydney, at which speakers will address the range of opportunities and challenges for partners and partner equivalents, provide tips on how they can better approach their practice and team management, and propel their businesses towards success. Click here to book your tickets – don’t miss out! For more information, including agenda and speakers, click here.