Why you should hire graduates – and some tips to woo them

Law firms can get strong returns from graduate lawyers if they give them the necessary supervision, support and leadership, writes Neil Oakes.

As I write this article, the legal media is abuzz with issues of graduate supply relative to demand. I read an article in today’s paper about unpaid internships, while the radio news reported of “an Adelaide law firm” offering graduates two years’ “experience” for a fee.

Regional firms who struggled to find an applicant seven years ago now receive loads of applications for every junior lawyer job advertised. My clients throughout Australia and New Zealand report that they receive a similar load of applications from law school graduates when they advertise for admin staff. So, is there an oversupply? Probably.

The Australian Financial Review reports that there are now 40 law schools in Australia, more than twice as many as there were 20 years ago and, although the size of the legal market (measured in dollars) has grown during this time frame, our data indicates that the actual volume of activity has grown only marginally. There is little doubt that it is harder to get a start in the profession today than it was 20 years ago, and it is likely to get harder – even before we factor in the effects of digital disintermediation and legal process outsourcing.

Cultural cringe

That said, the challenge for law firms is to think and act strategically. High-performing firms of all shapes and sizes work tirelessly to build great cultures. They are organisations in which people want to work, excel and be a long-term member. It is highly unlikely that any firm will develop such a culture by exploiting graduates. It is not a great first impression, is it? Come here, be glad of the opportunity, work hard … for nothing (or, in the extreme, pay for the privilege).

What would an employed lawyer of three to five years’ experience be like, having endured such treatment? How would such a lawyer treat the next group of junior lawyers? I do not have an answer for those questions, but I will bet that the organisational culture in firms employing these tactics would be less than ideal.

If you are reading this you already understand that professional leverage is an effective profit driver in law firms. I encounter many firms that are actively seeking lawyers with between three and five years’ experience. They are not easy to find.

I would encourage all firms to consider a graduate recruitment program. I know that attrition rates are high among year one and year two solicitors. I know that graduates require supervision, coaching and support. I know that some graduates can be a little bit precious and I know that Gen Y are, well, challenging. But I also know (a fair bit) about profit margins in law firms.

Healthy pay-off

It is not unusual for a graduate solicitor to return $2.50 for every salary dollar paid in their first year. An associate will usually return $2.50 and a non-equity partner about $1.70-ish. In years two to five it is not unusual for returns on salary dollar paid to approximate $4. These numbers, of course, assume appropriate delegation, supervision, support and leadership.

Graduates are relatively easy to get and you can go direct to the factory; you do not have to deal with a broker (and their extortionate placement fee). You would be well advised to build selection skills among those charged with the responsibility for recruitment, but these are learned skills that one can develop internally at relatively low cost. So getting graduates is not hard; keeping them is a bigger challenge. Here are some tips.

1. Look closely at profit margin

The ideal of cradle-to-grave employment where a graduate joins your firm, works hard, stays and one day buys a partnership, stays and eventually retires (gracefully) probably will not happen. Of course, people will leave. Young lawyers want variety in their career; why not? Managing attrition requires a targeted approach. Aim to retain them for four or five years by implementing the strategies below. If they stay beyond that, great (subject to acceptable performance). But if they do not, it is no big deal, so long as others are coming through to take their place. If your firm is average, attrition will be about 20 per cent (that is, 20 per cent of employees will leave annually) but 15 per cent is closer to ideal.

2. Find round pegs for round holes

We all have a hard-wired skill set. Some people thrive in an organised, process-focused environment, some people thrive in a client service-focused environment, some people thrive in a creative environment and others thrive in learning or intellectually challenging environments. Determine what the role involves and recruit someone with the appropriate behavioural skill-set. Test shortlisted candidates to ensure that they fit. Do not put a highly intelligent, creative kid into a job that requires attention to detail, tenacity and repetition. They will hate every minute of it and leave.

3. Paint a clear picture of the first five years

You are significantly more likely to retain graduates if you can create a picture of their first four or five years with your firm. What will they be doing in year one? What will they learn? What will they be doing in year two? Show them your graduate development plan that includes professional and personal skills. At the end of year two send them on a three-month holiday overseas (with appropriate pocket money) and explain what their job will look like on their return, for the next two years. If you build the vision then there is a pretty good chance that they will structure their life around it. If you do none of the above they will build their own vision and, typically, it will be short term and opportunistic. By the way, I have seen this exact model working well in several regional firms (including the long holiday at the end of year two).

4. Pay well

This is pretty obvious, pay people well and money ceases to be an issue, pay them poorly and it will fester into discontent (pay them nothing and you deserve what you get). Aim to pay competitive market salaries and enforce minimum acceptable performance standards. If employed solicitors cannot perform at acceptable levels, given appropriate support and opportunity, replace them with someone who can.

5. Build a relationship with graduate solicitors

Get to know your talent. People will want to work for you if they like you and if you like them. Take an interest in their lives (without interfering), help them save and structure a wealth-creation plan, learn a bit about their out of work interests and encourage them. In short, care about them.

6. Leave the budget out of it

I would not bother a graduate lawyer with a budget or a time sheet. Explain what minimum acceptable contribution looks like and that nobody ever progressed in their career by achieving minimum acceptable contribution. Acknowledge good contribution with pay rises, minimum contribution with no pay rises and below minimum contribution with termination.

Do not expect graduate lawyers to develop their own practice, most will not (for that matter, neither will most employed lawyers). If they show some aptitude and enthusiasm for marketing and business development, encourage them. More often than not you will have to delegate sufficient work to enable them to be productive. Getting work is the responsibility of partners. In my experience, the more work you delegate the more they will do.

Meet with graduates every morning (initially) to compile their daily to-do list; recognise performance and achievement in these discussions. When you are confident that they can cope, lengthen the lead and meet weekly. Maintain weekly meetings and weekly to do lists for the first four years of their career.

7. Do unto others

We have seen significant development in HR strategies in law firms in the past 20 years. Engagement has replaced fear as the primary motivator of young lawyers; flexibility is now a corporate virtue and employer of choice the new mantra. Talent management has become an industry! This is all well and good, but managing and leading employed lawyers is, in a pragmatic sense, no more complicated than ‘do unto others’; treat people the way you like to be treated and you are pretty much there. Note I said treat people the way you like to be treated, NOT treat people the same way that you were treated; there is a subtle but important difference.

Have a look at your employee structure and see if you have room for a couple of graduate solicitors. I suggest putting one or two on annually. Some will stick and some will not, but if you do the above well the majority will stay for the high-profit margin employee years (years two to five). The financial risk is low, so give it a shot.

Neil Oakes is the director of FMRC, which has provided research, training and management advice to law firms throughout Australasia for the past 30 years.

www.fmrc.com.au