Under a third of law firms are considering offering more flexible working despite talent shortages

Just under a third of law firms are considering offering more homeworking despite talent shortages driving up labour costs, according to research commissioned by Millnet, a leading British document and data processing business to the legal sector.

According to the research, which sampled nearly 200 UK law firms ranging from the Magic Circle to smaller High Street practices, law firms are less keen on expanding homeworking than other professional services businesses, such as accountancy firms. 40 percent of professional services businesses are considering offering enhanced homeworking compared to just 32 percent of law firms.

This is despite 71 percent of law firms saying that homeworking is important to improving staff wellbeing and, therefore, retention – significantly higher than the professional services sector overall (45 percent). Tellingly, nearly three quarters of law firms (74 percent) value homeworking as it allows them to recruit from a wider geographical pool in the UK, compared to 19 percent of the professional services sector as a whole.

According to Millnet, there is clearly a tension between the growing need to offer flexible working to attract and retain staff and concerns about the impact of homeworking on working culture and productivity.

Steve Chadd, Managing Director of Millnet, comments:

“Law firms have been reviewing pay, particularly at the newly qualified level, in a bid to attract and retain talent. Increasing pay while billable hours are falling and overheads are rising is not sustainable in the long-term, which has pushed firms to explore alternative benefits, including homeworking.”

“There is a growing tension between offering flexible working in lieu of pay and maintaining profit margins. More law firms are reaching a consensus that homeworking has led to a decline in chargeable hours, which is prompting them to update remote working policies and shift the emphasis back towards in-person collaboration and networking.”

He adds:

“One of the key advantages of homeworking for the Magic Circle and mid-tier firms is that it allows them to recruitment from a wider geographical talent pool. This can help offset the rising cost of labour, which nearly two thirds of law firms say has increased over the last three months.”

According to Millnet, law firms are much more concerned about the cost of labour than other professional services businesses. 59 per cent of law firms said that their staffing costs have increased over the last three months compared to just 22 per cent for the professional services sector overall. 23 per cent of law firms said that the cost of labour is negatively impacting their business, compared to just nine per cent in the wider professional services sector.

The research also revealed that among those law firms not intending to increase their use of homeworking, the single most popular reason was negative impact on working culture (51 percent), followed by reduced communication (39 percent) and difficulties managing staff remotely (37 percent). For the professional services sector overall, the three most popular reasons for not embracing homeworking were: not suitable for our business (60 percent), difficulties managing staff remotely (22 percent) and reduced communication (21 percent).

Steve Chadd says:

“Although law firms have in many respects embraced hybrid working more wholeheartedly than their professional services peers, increasing numbers of firms are changing the minimum number of days in the office from two to three. While there has been a rise in the number of fully virtual law firms, the general trend is towards a slight retrenchment towards office presenteeism rather than a full-throated embracing of remote working.”