Human resources strategy is no longer just about managing redundancies; it now requires a creative engagement with a new legal world. That was the message from The Lawyer’s annual HR Strategy conference last week.
The world of change was nowhere more starkly depicted than in Tony Williams’ sketch of the possibilities raised by the Legal Services Act next year. If private equity got involved in law firms, he said, they would demand radical shifts in profitability and working practices – both changes that HR professionals would have to implement. And he had a warning for HR teams: “If you’re just examining sickness records, then 30 per cent of you will be outsourced.”
Performance metrics may also need some interrogation. “Firms are already struggling with how to measure the performance of lawyers in heavy management roles,” noted Williams.
But good HR culture still plays an enormous part in effective management, he argued. “Before you put your values on your website, think of your great biller, who is also an utter sh*t. Are you prepared as a firm to bring that person’s remuneration down or exit them? If not, please don’t waste that space on your website.”
Outmoded metrics came under attack in the presentation made by Field Fisher Waterhouse HR director Charlie Keeling. “The days of PQE [post qualification experience] increases each year – adding cost increases to the bottom line every year – are over,” he declared. “It means we need to be more focused on performance management.
“PQE is a misused and misunderstood metric that drives behaviours which aren’t helpful for driving growth.”
Keeling also addressed the issue of culture. He confided that he spends considerable time telling his partners that they operate in not one but two marketplaces – the client marketplace and the talent marketplace.
“They usually focus most of their effort, time, love and care on the client side,” Keeling said, “but they’ll have to focus more effort on the talent side without giving up on the client side. If there’s no talent, the clients will disappear.”
Keeling agreed with other delegates that the approach of senior lawyers would have to change. “Partners are going to have to get used to concepts such as sales targets, production costs and project management,” he said. “I predict a third of partners today will really embrace this new world and leadership skills, and will become successful leaders.”
How law firms move away from outmoded PQE structures was the subject of the presentation by Angus MacGregor, who joined Eversheds as HR director in November 2009. MacGregor discussed how remuneration structures and appraisal schemes should be revamped, and acknowledged that one of the trickiest parts of the HR equation was fusing values statements.
But the biggest workplace issue at the moment is undoubtedly outsourcing. A trend that began with back-office functions has now picked up pace to embrace low-level legal work.
Freshfields Bruckhaus Deringer global HR director Kevin Hogarth stressed the need for a good grasp of the outsourcing market: “As HR people, we need to understand it all so that when we talk to partners, associates or third-party suppliers we can speak the right language.
“Don’t assume that once you outsource work you don’t need to worry,” he said. “Clients will still hold us to account for the quality of work. Although the firm is making a saving on costs, don’t think you’re going to get a saving in terms of management time.”
Outsourcing will require HR professionals to learn completely new implementation skills, Hogarth argued. “Implementing a good outsourcing operation needs a particular set of skills that are not in great supply at law firms – project management skills, financial management skills, change management skills and supplier relationship skills.” In this context, recruiting experienced HR professionals with financial services backgrounds might become an attractive option. “It’s a real opportunity for HR professionals to show that our jobs are not just about paying rations, but about demonstrating our work to the business. It is the most significant change-management challenge facing law firms – the unbundling of our model, maybe to a core of business with a series of strategic partners. It’s something that financial institutions have been doing for some time.”
As Clarke Willmott HR director Joanna Parker and conference chair said at the beginning of the day: “One thing is clear, simply watching the world change and doing nothing about it is not an option.”