How Legaltech Can Help Law Firms Navigate the Current Labor Shortage

How Legaltech Can Help Law Firms Navigate the Current Labor Shortage

We’re currently still in the midst of The Great Resignation. Around the world, workers have been quitting their jobs en masse—47 million Americans alone quit their jobs in 2021. Labor shortages are affecting all industries, and the legal sector is no exception. Read on to learn some of the reasons behind this legal talent shortage, and find out how legaltech can ease the burden that law firms are currently facing.

Worldwide Lawyer Shortages

An estimated 58% of UK-based law firms are under pressure due to a lack of qualified workers. Likewise, the Australian legal market is facing its own talent shortage. In a bid to stem high turnover, firms are pulling out all the stops. Average associate compensation in the U.S. has risen 11.3% over the past year, while some firms have even gone so far as to offer massive bonuses (up to $64,000, in some cases). In the UK, legal graduates entering the job market are being offered salaries as high as £150,000—over five times the average national salary.

On the one hand, this might seem like good news for the legal profession. Being paid handsomely for a job well done is only fair, right? Of course.

However, these massive hikes in pay haven’t occurred due to firms’ goodwill. They’ve occurred because lawyers, especially those just starting out, are less accepting of “always-on” cultures where burnout is the norm. These outdated approaches are pushing people out of the profession, leading to the industry’s biggest talent crisis and lawyer shortage in recent history.

What’s Behind the Legal Labor Shortage?

Generally speaking, there are two major factors that seem to be causing the legal industry’s current labor shortage: overwork/burnout and cultural concerns within law firms.

Lawyer Burnout and Overwork

When the pandemic hit and lawyers could suddenly work from home, it might have initially appeared to be a breath of fresh air. If anything, however, lawyers have been working harder than ever before over the past two years.

Junior lawyers at firms in London have been averaging 14-hour workdays since the onset of the pandemic. In fact, estimates suggest that lawyers are working approximately 20 days more per year than they otherwise would if they were in the office full-time. This workload is simply unsustainable.

According to Mark Weber, Harvard Law School’s assistant dean for career services. “.... we’re getting calls from alumni who are saying, ‘everyone around me has left and I’m drowning.’ Firms are paying enormous bonuses to retain associates because that’s still cheaper than leaving business on the table.”

Such intense workloads have a profound impact on lawyers’ health—both mental and physical. A number of stories have emerged from junior lawyers on the verge of hospitalization from stress, anxiety, and burnout. The U.S.’s recent mergers and acquisitions boom might have been good for firms’ bottom lines—but it had a catastrophic impact on their turnover rates. In Australia and New Zealand, statistics show that around 85% of legal professionals either suffer from anxiety themselves or they know of a colleague who does, and 80% have (or know someone in the industry who has) depression.

When confronted with these figures, it’s no surprise that so many lawyers are turning their backs on the profession.

Law Firm Culture Concerns

First things first, we want to reiterate something: many legal firms have fantastic cultures. Unfortunately, however, some don’t—and this has a profound impact on how employees feel and perform.

A UK survey showed that over 50% of people working in the legal profession have left a position due to their workplace having a toxic culture. In fact, 38% of respondents have found themselves less engaged with their roles as a direct result of their workplace’s culture.

And this extends beyond private firms alone. The High Court of Australia was recently rocked by its own scandal after it was revealed that former Justice Dyson Heydon harassed six female associates during his tenure. For Dr Raymond Trau, senior lecturer in the Department of Management at Macquarie University, this is symptomatic of a wider cultural issue within the industry, commenting: “This toxic culture endorses a winner-takes-all mentality and where women and men who are perceived to be weaker are collateral damage”.

Again, not all firms have toxic cultures—but those that do tend to hit the limelight. When analyzing why so many lawyers are leaving their firms, it’s important to acknowledge that culture is a key factor.

What Impact is the Labor Shortage Having on Law Firms?

When there aren’t enough lawyers to go around, firms begin to struggle.

They have reduced capacity, meaning key deadlines are missed and work is rushed. Those that do stay find themselves at risk of burnout—or of deteriorating mental health. When the quality of work suffers, so does the firm’s reputation. They might end up losing key clients and struggling to replace them.

Reputational damage can also profoundly impact their recruitment efforts. When current employees are overworked and disillusioned, is it any wonder why firms struggle to hire new recruits?

How Can Legaltech help Firms Navigate the Labor Shortage?

Right now, efficiency is the aim of the game. Lawyers are in short supply—so firms must identify how they can do more with less. Most importantly, they need to ensure their staff’s time is focused on high-value billable work. This is where legaltech comes in.

Legal practice management software helps lawyers become more efficient and more effective. It automates key administrative tasks, from client/matter management to document generation to billing to time tracking. Lawyers can therefore focus their precious time and energy on what they’re best at and what really matters: helping their clients.

When lawyers are rushed off their feet, the last thing they want to have to do is admin. By implementing legaltech solutions, firms can leverage automation to increase their staff’s productivity, allow them to focus on high-value (and interesting) work, and take low-value tasks off their plates.

Another consideration is the working style and technology expectations of younger lawyers and staff. People in their 20s and 30s have grown up being online and using mobile devices. In general, these younger legal professionals want to work for modern, progressive firms who have up-to-date technology and offer the flexibility of remote access. If your firm does not offer the ease and efficiency of cloud-based legaltech, you are a competitive disadvantage when recruiting and retaining talent.

Safeguard Your Law Firm’s Future

Legaltech solutions can’t solve the current labor shortage on their own. However, legal practice management software can maximize the value that your firm gains from your existing staff—and improve their employee experience. In turn, this will help firms win the war for talent and retain employees over the long run.

Want to find out more about how Actionstep increases firms’ productivity? Talk to our team today to find out how we can help.

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Written by The Actionstep Team