Biggest HR Issues in Law Firms

Biggest HR Issues in Law Firms

Running a law firm takes more than legal acumen – employees must be compensated and managed fairly to ensure a smooth working environment and a successful firm. Whether you’re running a solo practice or managing over a dozen people, every law firm must contend with HR functions.

If you’re new to the organizational aspect of running a legal practice, here are the four biggest HR issues in law firms that you should be aware of.

• Hiring and Retaining Talent

Over half of young lawyers are considering leaving their current jobs within the next five years, reported the International Bar Association in 2022. This means that law firms will likely face a shortage of qualified partners for their businesses in the next few years.

Without qualified, hardworking, detail-oriented partners, paralegals, and legal assistants, a practice will surely burn out its remaining lawyers and shut down. That’s why legal practices in today’s times should place greater emphasis on hiring qualified employees, as well as retaining the ones they have.

To do so, a law firm should consider offering a robust and attractive compensation package – rather than simply posting a higher wage, hiring managers should be aware that workers might prefer non-monetary benefits such as more flexible hours, health benefits, and retirement plans. On top of a livable wage, promising a higher quality of life will ensure a firm can retain its best personnel.

• Mental Health

Everyone in a legal practice, from the attorneys to the bookkeepers, will often feel stress from the unending barrage of high-profile, time-sensitive, and top-dollar cases. Too much stress can lead to burnout, causing a loss in employee productivity or even the loss of an employee themself as they quit for their own health.

To protect employees’ mental health, a law firm should allocate tasks and cases according to each worker’s capacity, check in frequently to ensure that no one is being overworked, and offer support for attorneys who lose cases.

Additionally, check in with employees to remind them to take breaks and check for signs of burnout. If an employee experiences burnout, they’ll need a long break from work to get back on their feet. If you suspect an employee is close to burning out, have them take a break and sit down with them to reallocate their workload to a manageable level.

Another trick to reduce overall workplace stress is to stagger employees’ schedules to prevent everyone from clocking in and out simultaneously. If the firm has longer working hours, employees won’t have to rush to finish everything by the end of their shift and can leave each day assured that someone else will finish the work soon. As a bonus, this could also reduce overtime expenses.

• Payroll

Like all other businesses, law firms must ensure employees are paid fairly in accordance with federal and state law. Legal experts your staff may be, no lawyer wants to go to tax court against the beast that is the IRS!

As an employer, you have a legal responsibility to ensure that your employees are regularly at a fair rate, that all employment taxes are properly withheld, and that their W-4s are prepared on time.

Though this may seem complex to do by yourself, there’s no need to hire a CPA: this Human Resource blog can help you find a payroll software perfect for your law firm to automate the process and ensure flawless payroll runs.

If your firm is organized as a sole proprietorship or partnership, it will be taxed as a pass-through entity, meaning that the business’s income is taxed to the partners and not the firm. As such, it’s each partner’s responsibility to ensure that their taxes are paid on time and in full by the deadline.

To prevent any financial trouble, law firms should pay attention to federal and local tax laws to ensure their taxes are reported accurately and on time and that all employee wages are paid duly according to state regulations.

• Workplace Conflict

When two attorneys or partners at a law firm have a disagreement, the whole office may walk on eggshells and worry about the entire practice fracturing at the seams. Alternatively, an associate berated and belittled by a higher-ranking attorney may not feel comfortable reporting the situation to anyone else, sure that other employees will take the side of the big boss.

The unique power structure and hierarchy of a law firm make it doubly important for managers and HR professionals to implement policies regarding workplace conflict or even abuse of authority.

To prevent interpersonal disputes, a legal practice should establish procedures ahead of time to manage disputes between partners or employees. For example, two partners may designate different situations in which one partner has more authority than the other, or they may designate a mediator for disputes. Or, for an employee taking a stand against an owner, HR should have a process for reporting these cases and holding the owner accountable.

Hopefully, your firm has an operating or partnership agreement outlining these cases. If not, your law firm should take steps to implement these procedures now, so it can quickly intervene should a situation ever arise.

Conclusion

Running a legal practice requires more than a thorough understanding of the law: it requires a robust and continuous effort to manage its employees, without which the firm would cease to exist. To maintain a healthy and harmonious working environment, the top four issues law firms should pay attention to are employee recruitment and retention, mental health, payroll, and workplace conflict.