How UK firms can challenge huge overseas demand for our legal specialists
by Heat Recruitment
By Dan Hazzard
When US law firm Kirkland & Ellis poached private equity heavyweight David Higgins from Freshfields Bruckhaus Deringer for a $10m-a-year package right before Christmas, no one could have seen it coming. Freshfields had recently overhauled its partnership to reward top performers, and Higgins was one of their star players. The London legal community was startled, and the deal soon became the talk of The City. Overseas firms poaching legal talent, at least on this scale, was unprecedented.
“That sort of number is not generally something you would see in the London legal market,” said Justin Stock, London managing partner of US legal firm Cooley.
As well as a significant change for the lawyer and his former employer, the sudden move represented a shift in attitude for the top earners of UK law firms. Until recently, the few who managed to make it to magic circle firms would never dream of leaving: the prestige, the pay, the luxurious offices and the reputation that London holds as the world’s legal capital are hard things to give up. But times have changed, this deal is just one of many hires US law firms made from the UK legal market.
Top partners in UK law firms may be paid well, but due to fluctuations in value of GBP since the EU referendum, they could easily double their salaries by switching to a firm across the pond. Even a newly qualified lawyer working in a US firm can earn up to $180,000.
It’s no surprise that, when surveyed on their biggest concerns post-Brexit, nearly nine out of 10 (88%) of partners in UK law firms said they were worried about losing talent to international firms – and it’s easy to see why. As well as the United States, the last few years has seen a rise in UK lawyers taking advantage of the growth in markets like Asia and Australia for lifestyle, tax and salary reasons. So, as the demand for UK legal specialists from overseas firms continues to grow and lawyers increasingly look abroad for opportunities, how can domestic law firms keep hold of their best talent?
Freshfields had the right idea – they were just too late. By implementing a new “single ladder lockstep” system, the firm will enable top performers to earn six times more than those at the bottom. When this system comes into effect in May, it will see all partners joining the “lockstep” at 12 points, with a new top lockstep of 60 points. However, the core ladder will only run from 12 to 40 points, with the top 20 reserved for star performers.
So, while all partners’ salaries will see a steady rise – regardless of achievement, experience or ability, only those who truly excel will be able to rise past this limit.
As well as rewarding hard work, systems such as these place emphasis on group achievement – encouraging commitment rather than competition amongst lawyers at the same firm. But law firms comprise of more than just partners, and leaders must work to increase loyalty amongst associates of the firm as well as trainees. Without the motivation to ‘make partner’ at your practice, a talented lawyer would happily take their skills elsewhere.
According to Michael Bennett, chairman of the HR in Law association, the key to retaining staff lies in creating a culture where trainee lawyers and qualified associates can freely discuss their career aspirations and regularly receive feedback on their performance. “Sometimes the messages are not what you want to hear, but it enables you to be flexible and to meet the needs of both parties,” he says.
It’s the investment in the development of your staff that demonstrates your commitment in their learning journey and career progression, driving engagement and boosting productivity. To challenge overseas demand and retain your best staff, it’s also one of the most effective strategies to remain competitive in your marketplace.
If you’re looking for your next legal role, or are an employer seeking the most effective talent possible, get in touch with our dedicated team at Heat Recruitment today.