Is a seven-digit salary sufficient evidence of good leadership in law firms?

How American law firms deal with crises
Judge for yourself: what happened to associates in American law firms during and after the pandemic can be summarised in simplified terms as follows: at the onset of the pandemic, the recruitment of new employees was postponed; existing employees were sent on compulsory leave; this was followed by a reduction of employees’ pay; and finally employees were made redundant. After the economy had increasingly recovered, there was suddenly a lack of legal staff, which is why after a year, people were re-employed and newly employed, however, now with even higher salaries and additional bonus payments. And what can be observed now that the economy is slowing down again? You might have guessed: recruitment is being deferred again, and people are being made redundant.

With such general conditions in place, what can realistically be expected of the employees concerned? Loyalty would be unlikely. Rather, such employees have been conditioned to adopt a mercenary mentality. This means that they will align their performance with the expected remuneration (and with no more than that any longer), select their employers accordingly and change them if necessary. This also means that employees of this type are appealed to and recruited.

Leadership vs. operations
What has been described above is short-term cost management. And what is primarily addressed here are the high personnel costs and how they can be controlled. Thus this is about operations. At the same time, however, this concerns a law firm’s most important resource: human resources. This is what makes the difference in contacts with customers – and will become even more essential with AI on the rise. But how do you lead employees, how do you fill them with enthusiasm and inspire them to ensure that they will deliver the desired maximum performance for the company? Leadership must therefore be more than mere optimisation in the field of operations for the purpose of profit maximisation.

Current leadership issues in the legal market
The question arises as to which current challenges should occupy leaders in the legal industry. It is undisputed that law firms and legal departments have to be run in accordance with business administrative approaches in order to guarantee profitability and cost efficiency. That the legal services and the legal information on offer must be correct and delivered according to the state of the art goes without saying.

1. New Work: It simply sounds too perfect (#Workation): spending the day answering e-mails while lounging in a hammock and looking at the vastness of the ocean, and relaxing from work in the evening by having a pleasant swim (#Work-Life-Balance) – and this not merely off and on during a well-deserved holiday, but permanently at the newly chosen workplace. What has happened? The old demand for part-time work is now being extended on several fronts at once: people are looking for a new workplace where they can work from home, at least to a certain extent (#WorkFromHome), where the framework conditions suit their own life model better (#WorkFromAnywhere). The original wish for flexibility in terms of time is now being joined by a geographical angle. What is easy for employees to demand, however, confronts employers with great challenges. If employees are available only virtually by e-mail or Teams and only deliver work results transactionally, changing jobs is made easy: get a new laptop and set up a new e-mail account (#Mercenary). If you try to explain to employees why employers need to comply with their duties of care and that New Work presents many legal challenges (such as relate to work permit, establishment of a new business domicile or a place of jurisdiction, tax liability, insurance cover, safety at work), that remote work may be detrimental to their careers (#ProximityBias) and that all this will change teamwork and work culture (#OfficeGossip), this will not be understood by everyone – particularly if employees enjoy a direct view of a ski run, the sea or a biking trail. This will require genuine leadership!
2. Staff shortage: The legal market, or leastwise part of it, regularly complains about a shortage of talents, specialists and employees in general (#WarForTalent). Particularly in the legal market, this is less about a lack of talents (#Women), but about unfavourable general conditions that are not to the liking of talents. Here, leaders are called upon to develop a different work culture, promote #diversity with all the necessary means at all levels and to extend the #retention relevant to turnover.
3. Permanent crisis mode: For two decades, international disruptions and crises have occurred in quick succession (#Polycrisis). In addition, companies are having to manage purely local and industry-specific challenges. It is not sufficient for leaders to explain that we are living in a #VUCA world and that changes are par for the course. Nor does it help to know that everything has become more complicated and complex, which is why every employee is responsible for working on their own resilience and fitness for the labour market (#LifeLongLearning). Rather, the question is what leaders can do to relieve their teams of this permanent background noise of negative news, or at least to reduce it. This is primarily about the question as to how employers can create security and trustworthiness (#Trust). In positive terms, this is also about ensuring that lawyers, who are conditioned to perceive risks and dangers, do not instinctively see the downsides only but, as responsible entrepreneurs, also recognise and exploit the concomitant new opportunities (#Entrepreneurship, #Risk-basedApproach).
4. Artificial intelligence: Apropos uncertainty: in view of the new developments, the issue of digitalisation must already be regarded as “old hat” again. Since 30 November 2022 (#OpenAI, #ChatGPT), knowledge workers such as lawyers in particular have realised that their raison d’être may soon be changed. In this respect, leaders are especially called upon to reflect on their future and that of their employees. This concerns questions about strategic positioning in the market (#ALSP), the business model (#HourlyRates) and the perennial issue of data security (#CyberSecurity). The fact that these issues also serve to exploit new consultancy avenues need not be expressly added here.
5. Change (#ChangeManagement) requires very special leaders. It is they who initiate change, persuade their employees to join them in the process and to pursue adaptation until the goal has been attained (#Perseverance) without losing their employees on the way.
6. Role model function: Finally, leaders must be role models and persuasive (#Credibility, #Values, #Trust). Without passionate involvement in their own cause, people are unlikely to become good leaders (#Passion). If they can share their own enthusiasm, the whole team can be oriented and committed to the shared journey (#Purpose, #Sustainability, #OneFirm).

Work on the above-mentioned points can be time-consuming and emotionally demanding. It may not even result in any directly demonstrable interconnections. Yet it is immensely important and relevant to the successful leadership of a company and its employees. I wish you good luck!