Invest in Your Top Performers or Risk Losing Them After Layoffs

As we’ve witnessed over the last six months, laying off lawyers is often part of the right-sizing that law firms do when there is an economic slowdown. In some cases firms are very public about the need to cut back due to decreasing demand for services.

And we have certainly seen some stealth layoffs occurring, where a firm quietly lets go of lawyers or staff, vaguely citing performance issues rather than financial reasons.

Regardless of the root cause, layoffs may be necessary, but they sometimes have unwelcome, unintended consequences. Layoffs can trigger top performers to start looking elsewhere.

Even when they’re not widespread, layoffs may create a sense of uncertainty among employees, and the perception of instability or insecurity can make it harder for a firm to retain—not to mention attract—high-performing lawyers.

There are ways to combat this problem at a firm that decides to reduce headcount. How does a firm that’s in cutting mode retain the top talent it needs? I recommend transparency, higher pay, better infrastructure support, and greater investment in professional development.

Through each of these steps, it’s important to recognize that retaining top talent requires an individualized approach.

More Transparency

No lawyer wants to be the last off a sinking ship. If you have talented colleagues who are not helping your bottom line, or not enough right now, explain that to them, and make the business case as clear as you can.

Make an effort to maintain a strong relationship with professionals who are leaving. Can you give them time to look? Coaching or career resources? It doesn’t have to cost more, but it may be worth asking what the organization, or what individuals can do to help.

As important as clear, positive communication is with people who need to leave, be transparent with the people you want to stay as well. The more your top performers see hard decisions being made for good reasons, and with compassion, the less they will see it as a signal of broader uncertainty. Plus, greater transparency can give lawyers a sense of ownership, loyalty, and accountability for the success of the firm—that they’re on the inside and aligned with firm goals, as opposed to on the outside looking in.

Higher Pay

It’s said that money can’t buy happiness, but when people feel—or know—they are being paid significantly less for the same work, it can lead to dissatisfaction. Playing hardball on monetary compensation for top performers rarely turns out well.

Top performers are hard to find and expensive to replace, so when firms make compensation decisions, think about attorneys you don’t want to get into a bidding war over. Keep in mind that studies show that companies with higher pay have lower turnover rates.

I rarely see basically happy lawyers seek a change over marginal differences in compensation, but if there’s a big enough gap that a top performer entertains another offer, the employer may find themselves in a position where they don’t need to match the market—they will need to beat it.

In my experience, it’s almost always better—and cheaper—to be proactive and pay top performers what they’re worth, than to make a counter-offer once someone has shopped their services around.

Better Infrastructure Support

Top performers tend to be team builders and client originators who require robust support from their firms. One of the reasons it’s so important to specifically identify individual lawyers to target for retention is that it allows a firm to identify such lawyers’ infrastructure support needs.

When a firm is making cutbacks among associates and professional staff, it may lay off personnel a key partner relies on, thereby making the partner’s departure more likely.

Investment in Professional Development

From mentorship to business development to leadership training, firms that invest in these types of initiatives for their top performers are more likely to retain them.

According to data from Deloitte, organizations with strong learning and professional development cultures have 30%-50% higher rates of employee engagement and retention than those that don’t.

As with most relationships, law firms will get back what they put into relationships with lawyers they hope to retain for the long term.

A Strategic Approach

After a period of frantic hiring in 2021, many law firms have shifted to a more strategic balance of hiring and firing. This has caused some uncertainty among a law firm’s ranks, especially when firms are citing slowing demand and financial pressures as reasons for cutting back. It’s important, therefore, to take proactive steps to retain top performers during times like this.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Anna Sanders is a senior director with VOYlegal, a national legal recruiting firm. She was previously a practicing attorney.

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