Associates are under threat. Is it time for partners to share the pain?

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It’s been another difficult month for law firm associates. New waves of redundancies have been announced, with more expected to follow.

For many firms, such redundancies will be seen as just another symptom of the on-going economic climate. Lay-offs are unlikely to hit the levels of 2008-2009, and there are even some positive signs of associate and trainee pay rises in some quarters.

This doesn’t mean, however, that the problem is short-term.

Following years of cut-backs, these latest redundancies are a reminder that things are far from returning to normal, if indeed they ever will.

The legal career ladder is one such area that, if anything, appears increasingly shaky. Firms now need to give serious thought to their future resourcing needs, if it’s not to fall down altogether.

Digging a hole

Clients, for instance, have been the major driver for staff cutbacks in recent years, and for obvious reasons. They themselves haven’t had the cash to splash on ‘unnecessary’ resource.

This can, however, leave mid to senior-level associates out in the cold, if firms and clients decide that matters can be managed by a partner and more junior (and even outsourced) staff alone. This is only made worse by ever-tightening partnerships that also block associates’ way up.

No wonder perhaps that it can seem like this group is the chief target when the redundancy stick comes out.

But by ditching associate resource, firms are also at risk of abandoning their career development structure. A void in the mid to senior-tier ranks will ultimately result in firms becoming ever more reliant on lateral hires due to insufficient internal resource.

Lateral stinking?

Not that lateral hire policies are necessarily a bad thing. They have been popular across all firms and for good reason. They have enabled many a firm to grow and adapt at rates that would be impossible from internal development alone.

But lateral hires (particularly at partner level) can bring with them problems: lack of loyalty, cultural disruption and frequently underwhelming performance when clients/revenue don’t follow.

They can be hugely expensive too. Securing a big-hitter partner may come with income guarantees; fine in boom times, potentially disastrous in a flat-lining economy (think Dewey).

Which all leaves law firms with a tricky problem. As associates have borne the weight of cut-backs, so have firms risked being left with a hole in the middle of their businesses and a major question hanging over future resourcing needs.

Firms will need to carefully consider how they are going to develop the talent of the future, if clients won’t pick up the cost of associate resource. Or they’ll have to find the budget for sustained and expensive lateral hiring – until there are no decent lateral hires left.

The final frontier

There is a potential answer to this: address the skeleton in the cupboard and once and for all deal with the massive underperformance that still prevails among law firm partners.

By cutting costs among unprofitable partnership ranks, law firms could free up the supply chain, leveraging more work down to upcoming talent at associate levels, while opening up space to promote the best to the top.

There are signs this might be happening already. Anecdotal reports suggest that many firms are quietly managing out or de-equitising weaker partners.

That’ll please the online community who frequently rail at the greed of partnerships at the expense of more junior members of staff.

It may not be enough to fully address the challenges of the future, wrought by years of financial stagnation.

But in these world-weary times it could play an important role in breathing life and positivity into beleaguered associate ranks and providing fresh impetus for the legal career ladder of the future. CP

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