Resource or career planning in the legal sector for 2024? Take a look back on the trends experienced in the past few years to better understand your potential candidates or what to factor in if you are considering a move.
Hiring trends and salaries in Brisbane’s legal profession have tipped from one end of the scale to the other in recent years. Few could forget the uncertainty brought by COVID-19 and wide-spread lockdowns, with staggering job losses, confusion about how to work from home, financial insecurity for individuals and businesses and concerns about other long-term impacts. In contrast, towards late 2021 we saw firms returning to work with a vengeance, a record demand for legal professionals and salaries sky rocket, even for entry-level graduates. This change in hiring trends was often described as a candidates’ market.
Now at the end of 2023, significant salary jumps and the number of roles on offer have slowed. On the candidate side, there is a lot more hesitancy, potentially due to the financial pressures associated with rising interest rates, the need for job security and concerns about misalignment with the organisational culture they were considering joining.
Soaring salaries now stabilising
A survey reported by news.com.au earlier this year revealed “eye-watering salaries” among Australian law practices as well as other professional service specialties, which can be daunting when planning for new recruits. However, the Australian Financial Review recently reported a significant shift in the legal market, stating the 25 per cent pay rises firms and lawyers had become used to were close to ending. While salaries were still considered generous, firms have been adjusting their compensation strategies in response to the changing market dynamics and the article cited “a more conservative approach to salary increments” now being taken. This same trend can be seen across professional services industries, prompting professionals at all levels to reassess their expectations and needs. This has been reaffirmed by a recent Lawyers Weekly article, referencing the Beacon Legal Salary & Market Report July 2023. In the article, Sydney-based legal recruiter Alex Gotch said “the last two years has been a bit of an anomaly in terms of the levels of salary rises and the levels of salaries generally which lawyers can command in the Aussie market”. He explained that if you took a longer five-year-view, “getting a five to 10, eight on average per cent salary rise is a good result really and in line with what you’d expect over a sustained period of time”. With salary reviews, Gotch recommends ensuring everything is “kept in the context of where the market is at the moment, where it’s heading in the next 12 months and making sure there’s a realisation of salaries in the last 18 months”.
While many are secure in their roles, it seems the financial climate is also prompting organisational restructures and downsizing for some companies. This recent article published in the Australian Financial Review reports on job cuts at “Big Four” firm EY, and the broader economic impacts on professional services. This provides perspective for legal professionals. Employees should assess what is important and what is a necessity in uncertain times. Often a reasonable remuneration package in a stable company with a strong culture rather than a higher salary in a volatile environment can be more appealing.
Previous trends and issues to be aware of, so you can negotiate a middle ground
With skilled professionals in high demand following COVID-19, we saw the following:
- Salaries increasing by 50% – even at one-year post-admission experience (PAE).
- The return of the sign-on bonus.
- Added flexibility and work-from-home options to fit the candidate or employee.
- Company loyalty and employee retention weaken, due to distrust or resentment created when employees were abruptly stood down during lockdowns.
- Employees more willing to make a move when there was a more attractive offer.
However, just throwing more money at a candidate can mean other areas suffer:
- A heavier focus on remuneration, rather than cultural fit and job security.
- A heavier focus on filling a gap rather than the key capabilities needed.
- Stress on retained employees to cover those gaps to meet service demands.
- Feelings of dissatisfaction, lack of engagement and disinterest.
Higher salaries come with wider organisational impacts:
- When peers and colleagues receive offers at a higher rate, expect other employees to ask for a salary review, or look at other opportunities.
- Make sure you communicate that an increase in salary will result in higher performance expectations, challenging KPIs and more significant targets.
- Rather than meeting immediate recruitment needs, think long-term and finding an employee who will be the right fit for the future – and the same goes for employees ensuring they will flourish in the culture they are joining.
In 2024 the challenge is to rebuild trust, encourage longevity with employees and strengthen culture, while presenting fair remuneration offers.
What does this mean for the New Year?
We are starting to see more balance between the prospective/current employee and employer, better communication around expectations and a stronger focus on culture and fit. Salaries still remain an important factor for job seekers, but that’s fair. There needs to be some incentive to leave a secure role in the face of a recession and rising interest rates. If offering salaries outside of what was budgeted, employers should benefit by being able to keep up with client demand, and having someone on their team who is invested and committed to the firm. Interestingly, working from home may become less common for the legal sector in the near future, as outlined in this article. The view is “we have realised as a profession, as have many professional services industries, that the real value of the workplace is culture and teaching”. So, the landscape continues to change.
There will still be uncertainty in 2024. Concern about rising interest rates, job security, the possibility of a recession and the housing crisis is having a significant impact on hiring, retention and those entering the job market. There is a lot to learn from recent years, but it’s positive to see more of a balance of power between employers and employees returning to help create a more cohesive working environment for all involved.
If you would like to discuss any of this, please get in touch. Otherwise, enjoy your Christmas break, and I will see you in the New Year!
Author: Alex Monks
Photo by: fauxels