The legal industry is experiencing one of its most competitive recruitment markets. ½Û×ÓÊÓƵ recently spoke to law firms and lawyers about the pros and cons of the billable hour model. They reported that existing and would-be lawyers are rethinking the long hours and billing pressures that come with a law career. 24% of lawyers said they are leaving their jobs for work-life balance, whilst 35% said they are leaving for better salaries.
Law firm leaders are concerned that the talent shortage will negatively impact law firms' meeting their targets. Consequently, law firms are hiking salaries to attract and keep talent like never before.
Salaries for newly qualified lawyers (NQ) are reaching record highs, with junior lawyers earning £125,000. US firms are paying UK juniors even more - Davis Polk & Wardwell are paying NQs £160,000.
Given that only 35% said they are leaving for better salaries, it remains to be seen if the higher salaries will succeed in attracting and retaining lawyers.
With higher salaries come higher expectations. In the billable hours model, it means even more billable hours.
Firms are dealing with a younger generation of lawyers. "One of the issues that really defines this new generation of lawyers is that they are really focused on their own mental health and wellness," said Brad Wine, global co-chair of litigation at top 50 US firm Morrison & Foerster. "That means we need to make sure that we're not burning people out and we need to make sure that we're providing associates with the tools that they need to manage the stress that comes with this job."
According to Law Care's report, more than two-thirds of UK lawyers have recently suffered from some form of mental ill health. "The billable hour is horrible from a mental well-being perspective because you always have this general level of anxiety and stress," said a senior lawyer in the UK who has worked in both private practice and in-house. "No matter how much amazing work you're doing, if you're not putting in those long hours, you're not seen as being committed, and you're not going to progress in the law firm, and I think that's why many people end up leaving private practice to go in-house."
For firms with strict hourly targets, the pressure to meet those targets can be detrimental to mental health and well-being. However, not everybody thinks the billable hour alone is responsible for lawyer stress.
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"While it's certainly true that months and years on end billing tonnes and tonnes of hours is typically a recipe for burnout and other well-being challenges, it's not accurate to put all of the blame on the billable hour," said Krista Larson, director of well-being at top 150 US firm Stinson. "It's often more of a quality than a quantity issue and not being able to have more autonomy and flexibility over one's time."
What came out of the ½Û×ÓÊÓƵ report is an increasing awareness that the billable hour can be detrimental to mental health. To retain staff, law firms will have to address the challenges posed by the billable hours model.
Some law firm leaders believe that shifting the focus from billable hours can also support greater diversity and gender parity in the profession. Lawyers from underrepresented backgrounds are often asked to contribute to the firm's diversity initiatives. These initiatives are non-billable activities, meaning the pressure is even greater on these lawyers to meet billable targets. Often, the impact of non-billable work disproportionately falls on underrepresented lawyers.
, CEO of Obelisk Support and creator of the First 100 Years (a national campaign supported by the Law Society, Bar Council and CILEX, charting the journey of women in law since 1919), the billable hours' target, amongst other factors, stack up against women in the profession. This comment came as they discussed why only 35% of law firm partners in 2021 were women, whilst women accounted for 61% of solicitors and 52% of lawyers in law firms.
Suzanna Eames, chair of the Junior Lawyers Division, added that firms should properly consider non-chargeable time when calculating hours and encourage all staff to participate equally. According to Eames, women often undertake the 'soft', 'non-chargeable' work such as pro bono or organising events. "This then reflects in lower billing hours which are used when considering promotions".
Hiking salaries might not be enough to retain your lawyers. Law firm leaders must focus on workplace culture and lawyer well-being with a more holistic approach to their billing structure. 24% of lawyers leaving their jobs gave work-life balance as the reason, and 12% said it was to reduce stress.
Given that billable hours lead to stress and mental health problems, impact underrepresented lawyers disproportionately and can work against women regarding promotions, it seems a fair conclusion that billable hours are, at least, contributing to lawyers leaving the profession.
Law firms should also consider the cost of replacing staff when thinking of meeting targets. Nicole Nehama Auerbach, vice president and founding partner of ElevateNext, a law firm that predominately offers alternative fee arrangements, said: "Staff who mentor and train young lawyers and build team morale can save the firm a lot of money if they prevent lawyers from leaving, something that isn't usually quantified".
It is time for law firms to look at other ways to measure law firm performance beyond simply counting hours. "Sometimes the things that matter a lot are intangibles—not necessarily bringing in the business, but running the business in such a way that the client is happy and satisfied and wants to bring in more business," said Auerbach. "Even if they're not billing the most hours, that's super important."
If you are still sticking to billable hours, it might be time to re-assess goals and consider an alternative approach. Brad Wine, global co-chair of litigation at top 50 US firm Morrison & Foerster, says, "My goal as a law firm leader is if one of my high-achieving associates gets a phone call from a recruiter, they say they are happy where they are."
Please read the full ½Û×ÓÊÓƵ report for more insights on why UK lawyers are leaving their jobs, statistics on mental ill-health, and retention rates at magic circle firms.
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