Talent Management | Spring 2016
Just what is it that you want to do?
We wanna be free.
We wanna be free to do what we wanna do.
Loaded, Primal Scream
It was a very different legal market in 2007 when Simon Harper and a group of colleagues at Berwin Leighton Paisner geared up for the launch of Lawyers On Demand (LOD). Amid boom time for legal services, few knew what to make of a flexi-lawyering business. Working on initial marketing, the idea was hit upon to draw on the famous freedom refrain from Primal Scream’s 1990 song Loaded (actually a sample from the cult film The Wild Angels). The intent was to reach a new generation of lawyers: a generation that in law and in other industries would increasingly be known as Millennials. The impact was immediate, recalls Harper. ‘What made LOD fly was the changing attitudes to work. Some of the CVs we got were amazing.’
While LOD’s initial growth was driven by an influx of such lawyers, in recent years, all people-driven industries have been focused on the challenges of engaging with Millennials. The breed is attributed with qualities making it difficult for hierarchy-driven businesses to manage. The legend is well rehearsed over an avalanche of research, articles and books in academia and popular culture. Millennials are tech-savvy, demanding, collaborative, attuned to work/life balance, focused on personal development and flexible in their attitudes to working practices, career track and physical location.
For law firms, built on a lengthy, expensive and highly-structured career path to partnership, such qualities represent frontal challenges to their business model. Among partners it has become a common complaint that the current generation of self-possessed associates have little drive or interest in knuckling down for a decade-long slog to partnership.
At a recent Legal Business debate, a panel of elite lawyers agreed with the sentiments voiced by Reed Smith structured finance head Tamara Box: ‘We talk about Millennials all the time. They are a huge opportunity. They are forcing us to think differently. They are impact and skill seekers. They are a threat in that we are not reacting fast enough to what they require of us. If they are not looking for the carrot of partnership, what are we going to do with that skillset?’
Travers Smith managing partner David Patient says: ‘Millennials don’t want a straight-line career. Work/life balance is crucial to them. As partners we need to be the right role models. There are structural challenges, but we have to work to deliver alternative career tracks.’
But how much reality is there to claims of a generation with attitudes starkly differing from those preceding them? Delve into serious research and talk to professionals working with Millennials, and it becomes clear the reality is more complex than the accepted notion.
Terms of engagement
Given how broadly applied the Millennials term has become, it is useful to set out some definitions. The term is often attributed to authors William Strauss and Neil Howe, who coined the expression in 1987. Though Howe and Strauss later put the range for Millennials as being born between 1982 and 2004, over the years it has been popularised to refer to those born as early as 1980 – even occasionally as early as 1975 – though not generally later than 2004.
Millennials are differentiated from two other major generational groups, Generation X, born between the early 1960s and early 1980s, and the Baby Boomers, born in the wake of World War II. Conventional wisdom says the three groups have distinct attitudes and traits. Following Gen X, Millennials were at first more commonly dubbed Generation Y – the Gen Y phrase was popularised initially in 1993 by the magazine Ad Age – though Millennials became increasingly common over the last 15 years, squeezing out other proposed names, such as Generation We or the Net Generation.
The range of who is covered by Millennials limits its focus, spanning people not yet teenagers to workers in their mid-30s.
Millennials form an increasingly dominant part of the workforce. According to US Census Bureau statistics, there are over 80 million Millennials in the States. On most projections, the group will constitute over half the workforce in ten years in major economies.
There are differing traits given to the group, though some common ground is accepted among almost all academics, at least with Millennials in Western economies. Most obviously, the group is liberally-minded, taking a tolerant attitude towards issues like gender equality and sexual politics. Engagement with conventional politics, conversely, has fallen with this generation. Sizeable ongoing research by the University of Michigan and the University of California, Los Angeles found the group was less focused on political events than Baby Boomers and Gen X.
Many firms are trying to roll out initiatives aimed at Millennials, but they are often undermined by the partners’ behaviours.
Heidi Gardner – Harvard Law School
Having grown up in the age of the internet, smart phones and social media, the group is unsurprisingly identified as technologically adept. The generation is also agreed to be individualistic, despite putting a focus on their own social groups, a dynamic the US Pew Research Center articulated in a 2014 report as ‘detached from institutions, networked with friends’.
‘We call them the sticker brigade,’ comments Maggie Stilwell, managing partner for talent at Big Four accountancy firm EY. ‘They have grown up in an environment where they have been praised and given a sticker for doing well, and this is an expectation. They see fewer limitations in what they can achieve. They are happy to move around to get what they want.’
If this ground is largely agreed, the terrain becomes rockier with attitudes to life and careers, and there is considerable disagreement between those who take a positive or negative view. While Millennials are often cited as having the confidence and self-possession lacking in Gen X workers, plenty of researchers cite narcissism and a pronounced sense of entitlement, hence references to the selfie generation.
Counting beans faster – How the Big Four tackle Millennials
If the legal profession is still struggling to get its head around Millennials, the Big Four accountancy firms have been more proactive on the issue, bringing in a range of policies to change how they recruit, train and retain. The Big Four have also been more explicit in trying to recruit from a broader band of society to avoid the entitlement culture associated with privileged and highly educated Millennials.
KPMG, which attracts 1,000 graduates, 200 school leavers and 110 apprentices annually, will reward those that remain at the firm after three years by promoting them to manager level and contributing £5,000 per person towards their student loan. In 2015, KPMG spent £3m on the 350 employees that made the promotion. ‘KPMG would not have done this ten years ago. There is something about incentivising graduates to stay,’ says KPMG head of human resources Martin Blackburn. The firm also set up an in-house career advisory service last year to help employees make career choices.
Concluding Millennials have different expectations on decision-making and feedback, EY moved to speed up its recruitment process. The firm now uses online assessment, telephone interviews and a series of brain teasing games before recruits get through the door. EY is also currently piloting a new performance-rating scheme globally, which will be adopted in the UK later this year. The scheme will measure success by looking at the future aspirations rather than past performances. EY has over the last two years implemented agile working, invested in new technology onsite, like installing microphones in the ceilings of meeting and conference rooms, and setting up numerous coffee areas.
‘We are growing at a phenomenal rate and simply cannot afford to keep taking on more offices, so it’s a business imperative that people use office space more thoughtfully and in a very proactive way,’ says Maggie Stilwell, managing partner for talent at EY.
PwC has been assessing Millennials since 2006. Since then, the accountancy firm has run two large surveys canvassing 4,000 Millennials globally to understand their values. The third survey is due this year. One notable finding was the importance placed on CSR by young workers dropped markedly post-banking crisis, from the most important factor in choosing an employer to the seventh most important.
Having pored over the data, Jon Andrews of PwC argues the supposed traits of Millennials are largely the result of their economic circumstance or traditional generational differences, with one very notable exception: ‘Our findings show the younger generations are either “toggleists” or “compartmentalists”. The older generation has components and compartments to life – school, college, university, job, family, retirement – and they work up to this and save accordingly. The younger generation toggle between things – they are used to everything happening at the same time. This plays out to where their future career goes.’
Conversely, others cite Millennials as caring and community-oriented, noting greater involvement in social issues – a tendency that many in corporate life view as translating into more focus in corporate social responsibility (CSR). The contradiction may be explained in that Millennials’ altruistic energies are more likely to be channelled through single issue campaigns rather than organised political parties.
Conventional wisdom has it that Millennials are less focused on long-term career decisions and committing to employers, instead focusing on short-term development and immediate feedback.
The legal industry often throws cash around to engage young lawyers, putting in place dramatic pay rises during 2000 and 2001 in the US and UK for their (Gen X) associates.
Nevertheless, the group wants material success. In Western economies, the group that grew up in the time of relative plenty identifies wealth as more important than earlier generations, particularly the Baby Boomers, in much research.
This picture is echoed in research focused on the legal sphere. In the 2015 article ‘Leading millennials’ by INSEAD’s Henrik Bresman, and Heidi Gardner and Samantha Sheehan of Harvard Law School, the trio cite research based on 16,637 Millennials in 43 countries. The research, published in the book Leadership for Lawyers, notes the group are focused on empowerment, personal development, flexible working and work/life balance, arguing law firms needs to overhaul their processes to engage this new generation.
Legal Week Intelligence’s annual Employee Satisfaction Report partially echoes the point. The 2015 report, based on responses from over 2,000 associates, ranked feeling valued; treatment by partners; recognition; and work/life balance as among the top priorities for associates.
But even accepting this ground, the problem with dealing with younger workers is identifying what – if any – are traits of Millennials rather than wider shifts in society or generational differences. What is a manager of lawyers to do?
Something must be done!
For all the rhetoric, identifying concrete action in how to engage Millennials is a challenge. Law firms are often unclear as to what issue they are addressing amid a bewildering array of measures covering remuneration, diversity, training, graduate recruitment, flexible working, career progression and technology.
Linklaters, for example, works with businesses like Goldman Sachs and PwC through the 30% Club to study Millennials to improve engagement. Global diversity manager Daniel Danso says it has changed Linklaters’ approach to learning and training by using technology and has also increased sponsorship and mentoring.
Meanwhile, Allen & Overy (A&O), which attracts 90 trainees annually in the UK, also tries to engage with undergraduates earlier, mainly through its work experience programme for first-year law undergraduates called A&O First. The firm will also this spring launch an online campaign using Twitter.
Our generation want different things. Even the outstanding people who went in-house ten years ago looked at work/
life balance differently.
Maria Leistner – Credit Suisse
Other progressive measures have seen A&O six years ago introduce policies for part-time partners, so far, it is conceded, with limited results. The firm also introduced iFlex in 2015, which enables employees to work flexibly on an ad hoc basis. It may be stretching the point, but A&O also last year hiked associates’ pay by £20,000 after overhauling its pay and bonus system.
Money is significant according to a vast body of research that shows Millennials care a lot about wealth. The legal industry often throws a lot of cash around to engage young lawyers, putting in place dramatic pay rises during 2000 and 2001 in the US and UK for their (Gen X) associates, and again in 2006 and 2007. Significant upward pressure has been building on remuneration in the City legal market through the last 18 months, underpinned by higher pay by US-based law firms competing for talent.
Herbert Smith Freehills (HSF), meanwhile, ran a pilot in March last year, where associates and partners were allowed to work from home in certain practice areas, such as the competition or employment practice in London. The scheme was then rolled out to cover all practice areas five months later. Competition partner Veronica Roberts says that giving lawyers one day’s work at home per week ‘significantly boosts staff morale and in return the firm gets more loyalty’.
The last five years has seen a number of law firms tighten polices to deal with social diversity and the retention of women. Most notable has been the 2011 launch of the industry-wide PRIME framework for work experience for non-privileged school children, while many leading firms have overhauled their recruitment processes in recent years to tackle unconscious bias.
If such measures cover a range of areas only tangentially crossing over with junior lawyers’ agenda, the trend over the last decade to introduce partner alternative roles, such as counsel, is a clearer attempt to offer flexibility for associates not focused on partnership.
Also significant is the creation of contract lawyer arms in the wake of LOD’s success at A&O, Pinsent Masons and Eversheds, as such operations are designed to work with the firm’s alumni.
There have been several high-profile examples of law firms making more audacious commitments to flexible working, with US disputes leader Quinn Emanuel Urquhart & Sullivan in 2014 handing associates $2,000 to work from anywhere they wish for a week. London’s Mishcon de Reya introduced a policy in 2014 to allow staff to take off as much time as they want, providing client work was covered.
Both firms put such policies in the context of their firms’ entrepreneurial culture. Quinn Emanuel London co-head Richard East cites another scheme to give associates a budget of up to £5,000 to run events to help encourage client and associate engagement. A first attempt is set to lead to The Crystal Maze-themed day for clients this spring.
Despite a range of initiatives, ultimately it is telling that many major firms remain evasive on their policies on flexible working, which many cynics see as evidence of wanting to discourage their lawyers from requesting agile working. While A&O, HSF, Hogan Lovells, Dentons and CMS Cameron McKenna, for example, all have partners and associates working-part time, Clifford Chance, Linklaters and Freshfields Bruckhaus Deringer refuse to provide any details on part-time work policies.
The selfish partner
As so often in law, it comes back to partnership. While it is widely accepted that associates are, in general, less focused on making equity, the basic point is often lost that law firms themselves weakened the motivational power of partnership thanks to a number of industry shifts over the last 25 years.
Most starkly, firms dramatically reduced the numbers of partners they make up over the last decade, a trend starkly in evidence at leading London firms that are attempting to push their profitability higher to compete with US rivals.
A five-year analysis of partnership rounds by Legal Business in 2013 among 25 UK law firms confirmed the anecdotal view: promotion rounds at many firms were running below the rate needed to sustain partnerships and were well below the levels seen in 2008 for the following five years. Domestic promotions were hardest hit, falling from 210 UK promotions across the top 25 in 2008 to just 128 in 2013.
The propensity for law firms to hire partners laterally or promote partners hired as mid-level associates means the number of associates moving from trainee to partner has also plummeted. In 2013, just 40% of new partners at the top 25 trained at the firm or joined at equivalent intake level, illustrating how bumpy the partnership track has become.
The related expansion of partner recruitment, which weakens the bond between partners and firms, and pressures law firms to push up profitability, has also shaped the modern profession into one of mobile stars and put pressure on the traditional partnership track. Throw into the mix proactive performance management, in which partners are increasingly likely to be fired, and rising expectations on partners, and the attractions of the job have diminished for some.
Also significant are high female intakes, with major law firms notoriously poor at retaining female lawyers at partnership level. The latest Office for National Statistics (ONS) numbers underline how female-dominated Millennial lawyer ranks have become: 64% of solicitors aged 25 to 34 are female. Yet Legal Business’ research in 2014 found the Magic Circle had fewer than 20% of their partnership composed of women (associate surveys have consistently shown that male lawyers are more focused on partnership than female equivalents).
In this context the emergence of senior, partnership alternative roles was an inevitable consequence of law firms straining their own business model and female intakes running well ahead of comparable industries, like banking and accountancy.
Jon Andrews, global leader of people and organisation network at PwC, says law firms need fresh thinking. ‘Law firms need to think about whether they want to be the disrupter or be disrupted. They need to look at how Millennials will fit into the future of work rather than how they fit in today’s work.’
In many regards, with all these forces bearing down, what is striking is not that partnership has lost its drawing power, more that its potency has proved so enduring.
Heidi Gardner, Distinguished Fellow at Harvard Law School’s Centre on the Legal Profession, tells The In-House Lawyer: ‘Ultimately, if a firm is losing talent, then the firm will pay attention. But if the firm is an elite one and people are lining up at the door, even if the work/life balance is abysmal, then there is not a whole lot of incentive for partners to change their behaviour towards associates.
‘I have observed that many firms are trying to roll out initiatives aimed at Millennials, but they are often undermined by the partners’ behaviours. These policies will never be effective if an associate tries to work from home one evening and gets screamed at by their client lead partner. The associate will never do that again, but they become more likely to leave the firm and perhaps the legal profession.’
A&O graduate recruitment partner Claire Wright says partnership is still relevant for many: ‘Students and young lawyers on entry are interested in the best training and the best opportunities to travel. After this, they make their career choices, and this could be to stay, and continue to work at the firm and achieve partnership, or to move on to other opportunities.’
The statistics back up such sentiments. Major law firms still get huge numbers of applications for trainee positions. Legal Week’s Employee Satisfaction Report also shows that partnership as a long-term career goal still drives many. The 2010 report found 38% of respondents listing their primary career goal as partnership at their current firm. Five years later, this figure had risen marginally to 42%. Partnership, with its promise of huge financial rewards, ownership and considerable autonomy, still holds considerable allure for many Millennials.
Smoke and Millennials
Much of the confusion in dealing with young lawyers is because many of the supposed qualities of Millennials fail to stand up to scrutiny. For example, one of the largest polls of employee attitudes by consulting firm CEB, which surveys 90,000 US employees every quarter, flatly contradicts the popular image.
Its research puts Millennials as more competitive and career-minded than older generations. A CEB survey in 2015 found 33% putting ‘future career opportunities’ as their major priorities in joining a company, ‘against 21% for other generations’, while only 35% cited CSR policies, against 41% for Baby Boomer respondents.
Likewise, research cited in the ‘Managing millennials’ article states over 60% of Millennials view becoming a manager or leader during their career as ‘important’ or ‘very important’ and notes the group put high emphasis on securing promotions and salary increases.
For those pointing to a shift in attitudes among the current generation of associates, it should be remembered that, during the late-1990s boom, major law firms often faced 15%-plus annual attrition among their (non-Millennial) associate bases. Associate burnout and gripes over the hard realities of commercial law are nothing new.
A wider problem is the conflation between wider shifts in society as workers of all ages adjust to changing economic circumstances, new technology and evolving cultural values. While there is no doubt Millennials are more individualist, socially liberal and tech-addicted, this reflects wider changes in Western society, as illustrated in a series of major research projects, including ONS data. LOD’s Harper comments: ‘We often talk about Millennials when we mean change in society as a whole. It can be confusing.’
Many associates choose a well-paid in-house career with more control over their lives than an incredibly well-paid one with little control and the uncertain promise of partnership.
Likewise, Millennials may have been digital natives, but older colleagues are rapidly catching up. Numerous research has identified rocketing levels of internet and social media use among Baby Boomers. Middle-aged lawyers were famously among the first ‘Crackberry’ addicts of smartphones, leading to work and leisure time blurring.
Human experience has been hugely shaped by technology for the last 200 years, much of it like the motor car, electricity, and telephone and air travel having an impact on life more transformative than any smartphone. Prominent venture capitalist Peter Thiel famously dismissed the lack of historical context of digital economy utopians, noting how far expectations have been lowered: ‘We wanted flying cars, instead we got 140 characters.’
And, as has been noted by a number of academics, supposed defining traits of Millennials are often the result of the term being used as a proxy for a relatively small group of privileged highly-educated workers in the West. The sense of entitlement and expectation is in part probably linked to widening social inequality in Western economies and well-established policies of major law firms in recruiting from a narrow band of graduates at elite universities.
KPMG head of human resources Martin Blackburn comments: ‘We will never attract the level of diversity we want if we just depend on the Millennials. That’s why we have apprentices and other routes to access. We want to reach out to a diverse range so we target certain schools nationally and recruit in specific areas. We have to go outside of the Millennials for this.’ PwC’s Andrews takes a different angle on the same point: ‘This is a very Western view. In emerging markets or Bric countries, Millennials have a different perspective on what they want.’
Much discussion of Millennials neglects even the reality that this generation has developed in a specific economic context – one of continued globalisation, disruptive technologies and companies that are increasingly short term with their employees. It is hardly a stretch to conclude that Millennials – recognising fewer industries are offering anything resembling a job for life – are less inclined to themselves offer long-term commitment.
This shift is obvious in the legal industry, which doesn’t even offer partnerships for life, let alone roles for fee-earners. As one associate at a City firm remarks: ‘I have no loyalty to my firm because they have shown me no loyalty when it comes to fulfilling my needs.’
The group has also grown up in a period in which the cheap housing, education and pensions enjoyed by previous generations are gone; some academics argue that the defining characteristic of Millennials is that they will be the first generation in recent history to be poorer than their parents.
Extending life expectancy also means the group will be forced to view their career path as a longer and winding road. In place of the concentrated 30-year run to retirement in the mid-50s, which was a dominant goal for Baby Boomer and older Gen X workers, Millennials face a marathon with a few detours and breaks along the way. Demographics aside, changing gender roles, including greater expectations of parents sharing child-rearing, further underpin the changing demands of the workforce for flexibility.
Andrews says employers should focus less on Millennials in isolation and more on shifting demographic and economic realities. ‘The biggest challenge is that we will end up with five generations working together with many different working styles. Thinking through how you create an environment tailored to those, to help them be as productive as possible, is as critical as merely addressing the Millennials piece.’
LOD’s Harper strikes a similar note: ‘The desire for autonomy isn’t unique to Millennials. It actually now permeates through the workforce and wider society. Millennials may have kick-started the move, but the attitudes have bled up.’
There is no question law firms have and will in future be forced to respond to changing attitudes among junior lawyers, given the profession’s intense focus on recruiting and retaining talented associates.
However, it is not apparent that treating young lawyers as a distinct tribe under the badge Millennials is the best way to tackle the issue. In many regards, the term results in misdirection and confusion.
The tensions in the profession attributed to Millennials are real, though in many cases have been aggravated by law firms themselves changing the deal in how they recruit and manage staff, and showing less loyalty.
The frustrations of the current generation are also relevant because those within the group have more options as lawyers, both to work freelance or in-house, a branch of the profession that has expanded dramatically in the last 20 years. The Law Society figures show there were less than 3,000 lawyers working in commerce and industry in the early 1990s in England and Wales, against around 15,000 currently. The consensus in the profession is the flexibility and autonomy of working for a company delivers higher career satisfaction for many lawyers than private practice (IHL’s 2015 In-House Lawyer Survey found 76% of respondents citing themselves as ‘satisfied’ with their career and 74% seeing themselves having a long-term career in-house, based on more than 450 respondents). These levels of satisfaction are well ahead of comparable results across a range of surveys of law firm associates in both the UK and US over the last 15 years.
Maria Leistner, EMEA general counsel at Credit Suisse, who is set to join UBS, argues that in-house teams can struggle to accommodate the demands of junior lawyers for training and development but have done better in offering flexibility to more experienced lawyers with a solid grounding from private practice.
‘We have done a lot to tackle the wants of Millennials but even men my age are also a different generation to our parents where the father never saw his children. When you go through that pre-Millennial generation… my husband wants to balance spending time with his children with having an interesting job. Our generation want different things too. Even if you look at the outstanding people that went in-house ten years ago, [they] were looking at work/life balance differently.’
Many associates choose a well-paid in-house or freelance career with more control over their lives than an incredibly well-paid one with very little control and the uncertain promise of partnership. (Claims that there is more demand for lawyers in other industries in non-legal roles are far harder to find supporting evidence for and are probably just wishful thinking by stressed associates.)
Claire Chapman, group counsel and company secretary of Daily Mail and General Trust, warns that established lawyers have yet to grapple with the challenge of changing roles in the face of technology. ‘I feel very strongly about those already established in the profession now getting a bit long in the tooth – they have a role to play in mentoring and coaching, looking after people coming through.
We often talk about Millennials when we mean change in society as a whole. The desire for autonomy isn’t unique to Millennials.
Simon Harper – Lawyers On Demand
‘The roles traditionally done are being automated – what are their jobs going to look like in the future? What are the skillsets they will need? In the future firms need to consider that and further consider that people today will consider a myriad of factors to be happy – it’s not just one firm for life anymore or even one career. People find that unnerving – I wonder how the partnership model will adapt to that. It’s a really tough time. I see young people coming into law and there are insufficient roles for everybody.’
There is considerable evidence that a wider approach to recruitment focused less overwhelmingly on recruiting a narrow band of privileged graduates would have some mitigating impact by ensuring the legal industry has a proportion of young lawyers with a drive to succeed rather than a confirmed sense of their own importance. One of the reasons the generation of partners in their late-40s and 50s arguably had drive to commit was that the profession then recruited from a broader range of backgrounds.
In-house legal teams – which have already been prime beneficiaries of the departing flood of talented mid-level female associates opting out of the law firm career track – look well placed to profit from the continued lack of diversity in law firms by picking up a sizeable band of lawyers who feel they don’t fit into the strictures of private practice. In short, the consensus is that in-house teams have done a materially better job of meeting the aspirations and values of Millennial lawyers than law firms.
The same debate in which Box was quoted at the start of this article also saw this observation from veteran recruiter Nick Shilton, chief executive of Shilton Sharpe Quarry, on changing career aspirations: ‘We have in-house consultants who are acting day-to-day for junior, mid-level and senior associates who are very interested in moving in-house to join major corporates or banks. These associates will say: “Do not try to sell me any other law firm. I don’t care how different you tell me US firm x is to Magic Circle y to West End firm z. There is no way on God’s earth I will consider another law firm.” We see an increasing exodus from private practice.’
While some focus on agile working, many interviewed for this article stressed such policies are only a small part of the answer. As one graduate recruitment head notes: ‘Agile or not, you still have to do the work. It does create a mindset of asking if we need to be in the office, but I don’t think that is specific to Generation Y.’ Even Harper notes: ‘Agile working is just a little piece of the jigsaw. If it’s still frowned upon in a law firm, it may be that it’s not really the answer. The whole thing feels a lot more complex than that.’
Ultimately it should be remembered that, at heart, many methods for engaging, retaining, motivating and building trust with junior lawyers are enduring and flexible in a fast-changing age – hiring bright lawyers, giving them interesting work at a level they can handle and ongoing mentoring in a challenging but supportive environment. Many partners concede that old-fashioned mentoring that was more common in smaller law firms in the 1980s and early 1990s was an effective system. It was the law firms that changed more than the aspiring lawyers since then… and not always for the better. Trust and decent treatment goes a long way now as it always has done.