Law firms raise the bar on the employee workplace experience to win the war for talent.

Demand for legal services and, in turn, legal talent is soaring. In 2021, the UK’s law firms generated £41.58bn in revenues, compared to annual turnovers of £36.78bn in 2020. This was the largest turnover reported to date.

At the same time competition for that talent is growing as the number of players in the legal services sector increases. There are now over 100 high-growth UK LegalTech companies. Elsewhere, the Big Four consulting firms continue their push into legal services.1 PwC, for example, has laid out ambitious plans to double the size of its UK legal business in the next three to four years. Furthermore, a growing number of alternative legal business process providers are entering the market. A study by Thomson Reuters found that the value (by revenue) of the global alternative legal services provider market in 2020 was $14bn, up from $8.4bn in 2015. 

The war for talent is even more pronounced in the traditional components of the sector, with particularly intense competition for newly qualified lawyers between UK law firms and US law firms expanding in the UK. It has resulted in newly qualified lawyers being offered salaries of over £150,000 upon qualification. It is also evident when looking at recent sentiment surveys. For example, a 2021 survey from Smith & Williamson of nearly 200 key decision makers at UK law firms found that talent retention is a key concern for over 80% of respondents, up from just 38% the previous year2.

In addition to bumper salary offers, the pressures to attract and retain talent in this battleground are forcing law firms to raise the bar on the employee workplace experience and rapidly adopting new working practices that have been shaped and refined by the pandemic experience.  This is leading to a flight to high-quality and flexible office space.   

Our analysis of 2021 UK law firm leasing transactions over 5,000 sq. ft found that 94% of deals were for space in Grade A buildings. This compares to 73% five years ago and clearly shows this flight to quality. Furthermore every one of the 2021 law firm leasing transactions were to amenity rich environments, whether that be amenities within the building or on the doorstep.  The most common amenities were health and wellbeing related; active commuting facilities and outdoor terraces being two such examples.  Savvy law firms are involving employees in the design and curation of this new space in order to win over hearts and minds and truly understand what employee’s value most in a workplace.

Some law firms are also recognising the growing connection between social and environmental responsibility and employee attraction and retention. Research by Robert Half, shows that nearly two in five (38%) employees would look for a new role if they thought their organisation was not doing enough on ESG.  This is particularly pronounced amongst the younger, more mobile workforce. Almost half (47%) of 18-34-year-olds surveyed said they would look for a new role if they thought their employer was not committed to the cause. Of course, a large proportion of a law firm’s ESG impact is connected to its office space and the commuting patterns of its employees. Actions law firms are taking to transition to more sustainable office space include:  Sourcing renewable energy, developing sustainable office principles, limiting business travel, enhancing teleconferencing facilities, relocating to buildings with sustainability focused building certifications, occupation of inclusive workplaces and investing in smart technology that monitors and reduces energy use.

Finally more and more law firms are adopting new models of work to entice talent. 83% of respondents to a 2021 Realm Recruit survey of over 100 lawyers said that flexibility would be important to them if they were looking for a new job.  Furthermore the ability to work flexibly exceeded pay in a list of priorities for lawyers entering the jobs market.  Our analysis of the UK’s top 100 law firms found that as at December 2021, 50% had launched formalised hybrid working policies, while over 90% mention agile or flexible working in their list of benefits.

Law firms are grappling with the challenge of how to attract and retain top talent in order to meet booming demand for services. With salaries only able to go so far, there should be no doubt that at the heart of the solution lies real estate.

Three examples of law firm offices designed to win the war for talent

DLA PIPER IN LEEDS

DLA Piper have committed to an 83,000 sq ft pre-let at City Square House in Leeds. The prime office building will include multiple terraces and extensive cycling, electric vehicle and e-bike charging point facilities, as well as Covid-19 influenced design features like contactless washroom taps. It is immediately adjacent to the train station, at the very heart of the city. The building is being constructed to include the following certifications: WiredScore Platinum, BREEAM Excellent rating and EPC rating A.

22 BISHOPSGATE, LONDON

Four law firms, Skadden, Arps, Slate; Meagher & Flom; Cooley; McDermott, Will & Emery; and Covington & Burling acquired space at 22 Bishopsgate in London. Amenities here include a restaurant and terraced bar, dawn-to-dusk food stalls, limited-run supper clubs, pop- up food residencies, an event space with curated events, an active commuter park with 75 showers, over 1,300 secure lockers, up to 1,700 bike spaces and a Brompton Bike rental dock, a gym, a 'sky-wall' climbing window and holistic and wellness services onsite.

SHOOSMITHS IN BIRMINGHAM

Shoosmiths has taken 32,900 sq ft at Birmingham’s 103 Colmore Row. 103 Colmore Row is a BREEAM ‘Excellent’ Grade A office. Amenities include: a two-storey, top floor restaurant, a ground floor café and a rooftop terrace with amazing views of the city.

1. Beauhurst, December 2021

2. Smith & Williamson annual law firm survey