Law Firms Practice Predictive Analytics Says Lawyer Weekly
According to Canada’s Lawyer Weekly, when it comes to hiring new associates, law firms typically follow a very structured process. Often this involves hiring a large pool of summer students, narrowing down that pool when selecting articling students and then further tightening the assessment criteria when identifying new associates. This tiered approach is designed to help firms identify the top performing students most likely to contribute to the firm’s long-term productivity.
The article published this week states that in practice, however, this isn’t always the case. Students who perform well during summer internships and articling, may not contribute as much to the firm’s financial growth as expected. It can be difficult to decide who will be a top performer in your law firm based solely on grades and preliminary interviews. There are many qualities that come into play including, having the ability to attract the right clients and provide a consistent level of customer service. Lawyers need to be able to achieve their billable hour targets as well as adapt to the firm’s culture.
Why it’s so hard to hire right
When you consider how rapidly the workplace is shifting, it’s no surprise that firms can have difficulty hiring the right people up front. On the one hand, today’s young lawyers continue to expect quicker advancement opportunities and greater mobility than ever before. On the other hand, as we know, Canada’s average workforce population age is increasing.
Due to these trends, law firms increasingly need the ability to manage a multi-generational workforce. At the same time, they need strategies for identifying and retaining those lawyers best suited to lead the firm into the future. Unfortunately, some law firms lack formal systems for identifying emerging leaders. Current hiring practices rarely take into account the need to hire specific talent to fill expected turnover, support new service offerings or meet fluctuating demand within each practice group.
In an effort to overcome some of these process gaps, law firms have adopted a range of strategies. Many firms try to improve their associates’ chances for success through formal mentoring, training and development programs. They aim to retain high-performing talent through compensation and rewards, job flexibility and other perks.
Each of these approaches form a critical pillar in a law firm’s talent management arsenal. Alone this is not enough. To manage growth, maintain profitability and mitigate the risks of ongoing volatility, law firms should also adopt more sophisticated approaches for predicting their current and future talent requirements. Here are four methods to consider:
1. Workforce analytics
Workforce analytics use human resources data to help firms make informed decisions around hiring, promotion and pay. Use metrics?—?such as performance reviews, salary levels, billable hours, revenue by practice group and even the average age of practitioners?—?to assess the effectiveness of your firm’s hiring strategies and compensation programs. The data may offer answers to critical questions such as the average level of your turnover over the past few years, the best hiring sources and the highest-performing departments. Armed with this knowledge, you can begin to optimize your hiring strategies to attract specific people who possess the characteristics that traditionally contribute to your firm’s success.
Before workforce analytics can pay dividends, you need to ensure the quality of your firm’s data. Using incomplete, inaccurate or out-of-date data will hamper your abilities to clearly understand the factors that contribute to your workforce strengths and weaknesses.
2. Resource forecasting
Resource forecasting allows you to predict the future levels of demand for—and supply of—talent within each of your practice groups, at a local, national or even global level. By analyzing current workforce and economic trends, as well as organizational factors, you can often determine what skills your firm will need in the future. You can also assess if you have the internal resources to fill those needs, or if you will need to attract new external hires. By gaining a firm understanding of the number of people you will need in various practices, you will be better placed to allocate the right number of lawyers to each practice group.
3. Skill-based forecasting
An even more advanced approach to talent planning is the adoption of skill-based forecasting for key talent segments. With skill-based forecasting your law firm can start to identify those lawyers who possess the required skills to support the firm’s long-term strategy. By identifying people with the right skills, you can further foster their leadership development by assigning them to critical roles or placing them in a variety of cross-functional roles. In addition to plugging talent gaps, this can help maximize the firm’s growth and profitability over time.
4. Predictive modeling
A particularly sophisticated approach to talent planning involves statistically analyzing a firm’s data to determine the likelihood of, and reasons for, future events such as attrition. Using predictive analytics and retention modeling, firms can often identify those lawyers who are most at risk of leaving and which practice groups or geographic areas may be most subject to these talent shortages. By creating a profile of associates and partners most likely to stay or go, your firm can begin to predict potential vacancies and leadership gaps — and take steps to mitigate these risks in advance. Ultimately, understanding the causes of turnover allows you to reduce attrition, along with the financial and productivity costs associated with it.
The power of foresight
Although workforce analytics, forecasting and predictive modeling do not offer a 20/20 view into the future, they can provide law firms with a glimpse of the factors that may affect talent planning over time. This insight can position your firm to do more than determine the optimal composition of its future workforce needs. It can also enhance your decision-making when it comes to your most important asset: your people.
Sara Arnstein is a manager and Richard Lee is a partner in Deloitte’s Human Capital practice, based in Toronto. Deloitte’s Human Capital practice helps organizations develop and implement effective talent management strategies.