Unlike in years past, many law firms now seem to feel that their benefits programs need to be on a par with other firms rather than having to outdo those offered by their competition. There also seems to be an awareness that there is value in investing in professionals and staff already working in the firm at least until the economy has hit full recovery and job growth continues to sustain itself over the next few years. The biggest challenge some law firms are encountering is effectively communicating the benefits they provide to their professionals and staff in a way that compares favorably with other firms.

In a policies and practices survey conducted by Mercer in 2003, data was gathered from approximately 600 large and mid-sized organizations throughout the country. Of the top 10 concerns listed by human resource professionals, many have remained the same over time; however, the prioritization of those concerns has shifted fairly significantly over the past five years. In working with law firms, it is clear that many of these concerns are transferable to the legal community and may help to frame the evolution of new benefits policies and programs for law firms looking to attract and retain top-notch lawyers and staff.

Top HR Concerns
(Mercer Policies and Practices Survey, 2003 Results and comments)

1. Managing Benefit Costs. With all the changes in the economy and the increase in healthcare costs, it is no great surprise that this is a top concern. In previous surveys over the past five years, this was a secondary or tertiary concern among professionals. Although there has been an apparent plateau in insurance rate increases over the past 12 months, a national trend of 12-13 percent increases is very significant, especially in larger law firms.

2. Employee Morale. Employers struggled with ways to keep employees happy in the late-’90s when there was a tight labor market, and then with the economy weakening, morale became more of an issue with layoffs and the subsequent recession. Recently, law firms have had to confront a cap to the pay structure for new associates in the wake of years of dramatic pay increases. Pulling in the reins on salary increases and keeping people motivated has become quite a challenge.

3. Retention of Professional Employees.

4. Accuracy of Market-pricing Data. This is an interesting dynamic that was barely on the list of concerns five years ago. With the advent of access to the Internet in the workforce, employees have the ability to obtain survey sources with market pricing standards for compensation. As a result, many employers find themselves needing to justify their pay levels to employees. It is very easy for all staff and attorneys to know what fair market value is for their respective job positions and many employees are making this information part of their review process to obtain salary or benefits increases.

5. Relationship between Pay and Performance. While this concept is still of great interest to employers, many have found it difficult to measure performance and document it in connection with compensation.

6. Competitiveness of Total Compensation Package. Employers seem to be taking a more holistic approach to their “reward” programs. Career opportunities, benefits and pay are being looked at more broadly than in years past. “Quality of life” is becoming as important to employees and associates as salary was in the past. Many firms are concerned with providing adequate paid time off and other similar benefits to engender loyalty and satisfaction among employees in their workforce.

7. Productivity of the Workforce. With the economy remaining fairly stagnant over the past few years and some firm’s revenues following suit, it has been difficult for many organizations to grow. Many employers are trying to increase or keep revenues steady with fewer employees and by maximizing their internal efficiencies. One of the reasons some companies and firms are able to do so is that they invested very heavily in technology during the ’90s, which allows them to maximize the efforts of existing employees.

8. Competitiveness of the Benefits Package. While this may not be the primary issue in attracting and retaining quality people, it can be the tiebreaker between one law firm and another. Most employees do not expect the benefits to be much better than the marketplace, but it is very important that they are in line with other law firms in their geographic area and size range.

9. Internal Pay Equity.

10. Recruiting and Retaining Skilled Technical Workers. The survey also included a “compensation/benefits checklist,” which asks employers to reveal how they have reacted to more than 100 compensation and benefit programs. A few of the top benefits reportedly added recently include annual computerized benefit statements and long-term care insurance programs. Some of the benefits most frequently dropped included indemnity health insurance plans and pension plans.