Is This the Unexpected Fall-Out From the Salary Explosion?

“Where will it all end?” questions have sounded either rhetorical or ruthlessly pragmatic, as people consider the inexorable rise in lawyers’ salaries.

Though some firms have chosen not to compete on these terms (and/or have realised they really can’t) others daren’t throw in the towel in this financial slugfest. Usually, this kind of increase in firms’ costs has only one outlet: through their client charges. And that is where most of the pragmatists have seen “it all ending” – without actually giving much detail.

But over the past month or so, two other dimensions have come into view in conversations I’ve enjoyed with a number of partners in different firms. One surprised me, the other reinforced a growing suspicion. But both raise serious issues around the leadership and culture of firms, that will need to be addressed properly.

The surprise is heading towards ‘imposter syndrome’ but also highlights perhaps unanticipated risks for both firms and clients. Big price tags carry big expectations. One Partner described this as the “Jimmy Greaves scenario”: not wanting to be known as the first £100,000 footballer, Greaves allegedly asked for his transfer fee to be set at £99,999.

We shouldn’t assume that junior (or any) lawyers are any less aware of similar pressures. Firms are now far more open in discussing mental health, and I wonder if they are factoring in this Greaves effect.

As they earn salaries that are not only out of proportion to their real experience, but are also highlighted as such, these junior professionals often feel extra stress in living up to them. On this kind of money, shouldn’t they know, or do, more themselves, rather than ask for help? And if they do try to prove themselves in this way, what does that mean for the overall quality of client work and the position that the firm might be put into?

The balance between worth, expectations and reality needs sensitivity and careful management. As will the dynamics within, and across, teams: will collaboration and collegiality be so easy to achieve in an environment where individuals feel under intensifying pressure to justify their worth? There are suspicions that some of the tensions and inconsistencies exposed through the Covid pandemic will increase, and might threaten internal relationships.

Which takes us into the second dimension I mentioned: firms’ culture. It has never been an easy fit, to use the word ‘brand’ in the legal world, but some firms have made serious efforts to define theirs – with particular emphasis on the ‘employer brand’ aspect. As the battle for talent intensifies, that has to make sense: especially for those firms who cannot compete on the purely financial level.

What else can they offer, to counter the obvious attractions of the giant pay-packet? The question applies equally to those firms who can: why should someone choose to earn £150,000 in one, rather than £150,000 in another?

Without an authentic and compelling reason, firms might just have to understand that they are encouraging a transactional relationship with this cohort of professionals. The quid pro quo (no pun intended) follows: yes, you’ll pay me a lot of money, and yes, you’ll work me very hard for it, but ultimately I’ll take it for what it gives me, and if I feel after 3-4 years that I’ve earned or done enough, I’ll go somewhere else.

The ties that bind can never be taken for granted, and firms have woken up to some of these challenges, as evidenced through various efforts to embrace ‘purpose’ and greater attention being given to people’s well-being. These initiatives are important and well-intentioned, and it is easy to be cynical (especially in this sector, which still seems to put quantitative and financial measures above all others).

As this salary explosion seems to be the current headline version of that, it’s interesting to note that some people are already beginning to think about how to deal with the inevitable fall-out.

Keith Wells is co-founder of The Charisma Index.

https://www.law.com/international-edition/2022/08/23/is-this-the-unexpected-fall-out-from-the-salary-explosion/