With junior lawyers no longer buying into the partnership dream and the fallout from the tough tactics adopted during the recession beginning to bite, this year's Employee Satisfaction Report poses plenty of questions for law firms to tackle. Alex Novarese analyses the results

"It's like me saying, 'I've abandoned my strategy of sleeping with Claudia Schiffer'. I've abandoned my strategy because it will never happen."

That comment, made to me years ago by a grizzled managing partner, sprang to mind while reviewing the findings of this year's Employee Satisfaction Report (ESR) from Legal Week Intelligence. The managing partner was dismissing the claim of a rival firm that its strategy was to focus on domestic expansion over international growth – his reasoning being that this firm had roughly zero chance of convincingly going global.

The question for law firm leaders is to what extent the impossibility of aspiration is now shaping the views of junior lawyers towards partnership, which is still supposed to lie at the heart of the law firm model, providing the key tool for retention, motivation and development of lawyers.

Yes, it has become a cliche to say that the current generation of junior lawyers no longer want to make the sacrifices needed to make partner. But how much is that being shaped by the unwillingness of law firms to allow many into the club? This year's report, the result of polling more than 3,800 UK-based lawyers below partner level, strongly suggests that the squeeze on partner promotions that law firms have put in place over the last two years is making many junior lawyers, for good or ill, adapt their career plan.

Barely more than a third of respondents (38%) now list their primary career aim as partnership with their current firm, a figure which falls to just 29% for female respondents. Only two years ago 50% of respondents considered partnership their main objective. Even for male lawyers, traditionally much more focused on partnership, the current figure is only 48%, falling below the halfway mark for the first time in the report's seven-year history.

As you would expect, the popularity of senior non-partner roles has continued to rise. Eighteen percent of respondents now put these as their primary career aim, up from 15% in 2009 and 10% in 2007. Once again the gender divide is clear: 22% of women see such roles as their primary goal.

This means that women, who make up a clear majority of the lawyers coming into the profession, are almost as likely to focus on a senior non-partner role as they are the traditional holy grail of climbing the equity track.

The huge implications of this for law firms in the future hardly need spelling out. Yet in many ways, providing the profession is willing to constructively adapt to such shifts, there are probably more opportunities than threats. Certainly, it suggests that law firms will be able to access a large pool of motivated, well-trained labour willing to work flexibly outside the constrictions of the partnership track.

This would require firms to move further towards a more flexible, multi-tiered structure – which will be a cultural challenge for many. However, there appears to be less scepticism among senior lawyers regarding partner-alternative roles, so it looks like that's the way the wind is blowing.

Not a great year for morale

If law firms are to take advantage of opportunities presented by a workforce looking for a more varied career structure, they will have to overcome the perennial thorns of morale and motivation. That won't be easy, as this study makes it clear that it hasn't been a great 12 months for keeping the troops happy.

During 2009, in the middle of a deep recession, many assistants appeared relatively happy just to be in employment, even though firms switched abruptly from war-for-talent mode to making a series of job cuts, alongside pay freezes and restructurings.

This year, with the economy and labour market improving considerably, such attitudes are changing dramatically. In 2009 only 13% of respondents said they were actively looking for a new job. A year later this figure has risen substantially to 24%. The claims that many assistants who had lost faith in their firms thanks to ruthless job cuts would bide their time before moving appear to be borne out, even if the current labour market is still providing only limited means of escape.

This suggests it won't require much more of a recovery in the labour market for some firms to be contending with a bout of hard-to-manage attrition. And the differences between how staff feel about firms' responses to the recession are huge. At one practice, 96% of staff thought the firm's reputation had been enhanced by its conduct during recession; at the other end of the spectrum, 100% of associates at another firm felt its standing was damaged by how it had behaved.

Neither are assistants that happy about pay – despite most firms restarting assistant lockstep progression this year and in some cases making modest increases to the underlying pay bands. There is now a huge gap on satisfaction with regard to salary. Many assistants also distrust their employers' claims of poverty – understandable, perhaps, given that many firms this year managed sharp rises in partner profits on falling revenues.

Bonus policies continue to be more trouble than they are worth at many firms, and a continuing source of irritation. Bonuses get the lowest satisfaction score out of the 36 criteria assessed in the report – given an average of just 5.2 out of 10.

A neutral observer would question when firms will work out that their bonus policies just aren't doing the job. They appear, in general, to be an awkward compromise between different models, which are supposed to achieve fundamentally different ends. In many cases, law firms' bonuses neither function as partner-style equity participation nor as a tool for rewarding performance. Instead they become something in the middle which satisfies few.

On a broader level, remuneration is a fault-line which once again illustrates the inherent tension between partners and assistants. Assistants see greed because partners earn much more than them – despite the fact that lawyers at the junior end earn more than previous generations did and that many partners saw their earnings not just frozen last year but substantially reduced (partner profits on average fell by 17.3% across the top 50 in 2008-09).

Partners, meanwhile, see profits per equity partner as their firm's 'share price', and fear, with some justification, that if they don't maintain it they are vulnerable to losing top staff. Worse, their capital base is tied up with partnership. In many ways their desire to protect partner profits is logical – and their rewards are far more closely aligned with those of associates and the profitability of their firms than is the case at most large companies – but that message isn't getting across. Perhaps it never can, because assistants don't want to hear it.

Winners and losers

There is little obvious pattern this year in terms of which firms have performed most strongly in terms of staff engagement. On balance it was a better year for mid-tier and smaller practices, with firms like Mishcon de Reya, TLT, Farrer & Co and McGrigors securing some of the highest scores.

But the once-reliable pattern of large firms scoring highly for factors like 'prestige', 'quality of clients' and 'salary' but tanking on the 'soft' quality of life criteria, is no longer a given. Many large firms like Allen & Overy, Berwin Leighton Paisner, Norton Rose, White & Case, Bird & Bird and Weil Gotshal & Manges secured high satisfaction scores. There are a number of firms that this year managed to turn around poor rankings in 2009, in particular DLA Piper, Eversheds and Hammonds.

Conversely, some firms that would have traditionally been seen in their respective peer groups as having a strong lifestyle appeal like Simmons & Simmons, Nabarro and Wragge & Co come in below average. It is also interesting that none of the five lowest ranked of the 58 firms in the survey are from the City's 15 largest law firms – the camp that is supposed to suffer most from poor morale.

Taking a three to five-year view, there is a reasonably strong correlation between strong performers financially and the firms that combine strong aspirational scores on, for example, 'prestige' and 'quality of clients', with solid results on the lifestyle metrics like 'treatment by partners'.

In the majority of cases, firms scoring badly against peers on staff satisfaction are scoring badly against peers on profits – something to think about as the market crawls into recovery.

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Associates on satisfaction

- The criteria in which associates are most satisfied are 'quality of work' and 'quality of clients', both receiving an average satisfaction score of 7.9 out of 10.

- Only 38% of associates want to be partners at their own firm, a figure that falls to 29% for female respondents.

- Nearly one in four associates are currently looking for a new job.

- The most dissatisfied group of employees are the most experienced.

- The least important criteria for junior lawyers are 'pro bono', 'international opportunities', respectively scored at 5.2 and 5.6 out of 10.

For further information on the 2010 report, please contact Paul Birk on 020 7316 9864 or email [email protected]

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