More than half of law firms are using exceptional bonuses to retain top talent during the pandemic, according to new research from a London-based recruitment specialist.
Of the firms surveyed by Totum Partners, 51% have already made exceptional bonuses over the past 16-18 months, while 21% are planning to do so in the next six months.
The survey secured responses from a range of global law firms asking their decision-makers an extensive range of questions on compensation packages awarded to “chiefs” and “directors” across business services functions.
The response from firms demonstrates how important business services directors and chiefs have become, and why firms are keen to use bonuses to prove that it’s worth staying put.
Firms are also becoming more creative in the ways they are using bonus structures to attract new talent. As a result, more than two-thirds (70%) of respondent firms now offer sign-on bonuses, with a further 4% thinking about them for the future.
The reasons given vary, although the majority offer sign-on bonuses to compensate new joiners’ loss of bonus from their previous employer (83%). This was followed by those that use them to bridge the gap between salary wanted and the offer being made by the firm (75%).
The majority of firms (79%) also protect such investment by including claw-back provisions for sign-on bonuses, should an employee leave within a certain period.
As lockdown restrictions begin to ease, many firms believe that sign-on bonuses will be used more to encourage new talent. Nearly half (49%) of firms surveyed think that sign-on bonuses will be used more as the market improves.
The survey also found that a quarter (25%) of respondent firms now have business services directors or chiefs who are equity partners (with a further 4% thinking about it).
Moreover, as many as 43% of firms in a revenue bracket of under £100m have equity partners (compared to just 8% in the £200m-£500m bracket), with a further 13% of these smaller firms considering making chiefs and directors equity partners in future.
This is likely down to the fact that more of these businesses are set up as alternative business structures (ABSs), giving them the freedom to award equity partnership to business leaders who are not lawyers.
A similar proportion of firms now have fixed share partners (26% overall), with 4% considering it in the future. Here, fixed share partners feature particularly highly in risk and compliance functions – which makes sense given the high numbers of lawyers who often take these roles.
When it comes to the way bonuses are paid, the large majority of firms pay discretionary bonuses (76%), although a minority pay bonuses contractually or via a combination of contractual and discretionary arrangements, with three quarters (75%) of respondents paying bonuses as a percentage of salary. Furthermore, 85% of firms pay their bonuses on an annual basis, typically in July.
Finally, Totum believes there might be interesting shifts in salaries in the future. For example, in facilities management there are some new roles emerging with very senior responsibilities, covering, for instance, global real estate strategy.
While such roles are not yet common, Totum is receiving an increasing number of enquiries about jobs that address important resourcing/office decision-making in the wake of the pandemic.