🤿 Sunday Deep Dive: The Great Resignation
In May 2021, Anthony Klotz, an associate professor of management at Texas A&M University, told Bloomberg Businessweek, “The great resignation is coming.” The term clearly resonated with a lot of people. It’s been bouncing around news headlines, LinkedIn blogs and Twitter feeds ever since.
Data suggests Klotz’s prophecy is coming true. A record number of Americans said adios to their employers this April. That record was broken in July and again in August. In September, it was broken a fourth time when 4.4 million people - or roughly 3% of the workforce - resigned, leaving behind an unprecedented number of vacancies.
The trend doesn’t seem to be over yet. The subreddit ‘antiwork’ is fast becoming one of the top-ranking Reddit communities. According to data from Gallup, almost half of Americans say they are actively seeking new roles while 73% of respondents to a survey by job search site Joblist said they are considering quitting in 2022.
So why is this happening? And how will The Great Resignation impact the legal industry?
Hasta la vista, baby
Most of us have worked jobs that made us fantasize about marching out in dramatic style (a bit like this brave/foolish Walmart worker who quit over the store intercom). Here are some of the reasons why more people than usual are chucking it in.
The Great Reconsideration
The pandemic took away lots of things that we care about and gave us plenty of time to think. It also gave many of us the chance to experience working from home. All this has shifted our priorities and changed our attitude to work. Employees are demanding flexible, hybrid work models and improved work-life balance and they’re willing to move jobs or exit full time employment to get it. In the UK, for example, 1 in 4 employees (and 1 in 3 millennials employees) plan to quit if their boss makes them return to the office full time. Around 2 million Americans became freelancers in the year to September 2020 and freelancers now make up 36% of the workforce.
A survey of 1000 US employees found that 89% are burned out. Professionals who switched to working-from-home during the pandemic saw working hours creep further and further into personal time. 70% report that they now work on weekends and 45% say their working day is longer than it used to be. It became tricky to distinguish work from homelife when we were forced to spend all our time in the same space. Plus, it’s easy to squeeze in more work when there are no chats at the watercooler or walks between meeting venues. With employees furloughed and resigning, those who kept working found themselves working ‘superjobs’, covering multiple roles while employers couldn’t (or wouldn’t) fill the vacancies.
In France and Portugal, the government acknowledged the extent of the problem by making laws that prevent employers from contacting employees outside of working hours. Some companies shut down entirely for a week to give their staff a break. For those who weren’t so lucky, 2021 seemed like a good time to drop the mic.
Catching Up & Calling It a Day
It’s likely that people who would have jumped ship in 2020 delayed because stability is attractive in unpredictable times. Now those pent-up retirements and resignations are all happening at once. There have been 2.4 million ‘excess retirements’ since the start of 2020. In addition to those who delayed, some baby boomers are calling it quits early to avoid exposure to the virus or the headaches of adapting to hybrid working. Employers looking to keep things lean likely encouraged them.
So what’s happening in legal?
The legal industry has not been spared. According to the Bureau of Labor Statistics, over 700k lawyers and other business professionals quit their jobs in just 2 months of this year. That’s the most since 2001. Some of that number are Big Law associates moving between firms. In fact, Big Law collectively has retained 17.71% more of its attorneys in 2021 compared to 2019. Major firms lured talent by upping starting associate salaries from $190k to $205k and giving senior associates bonuses of $100k. But reports suggest that, despite these incentives, some lawyers are leaving firm life altogether.
Recruiters have seen talent move from traditional law firms towards boutique firms and non-traditional employers. Smaller firms are better placed to offer work models customized to the needs of individual employees. Like the droves of lawyers going freelance, employees heading to boutique firms are seeking job satisfaction and a better work-life balance.
The hemorrhage hasn’t been helped by a massive increase in demand for legal services. Big Law revenues rocketed by 11% in 2020 and around 19% in 2021 and top firms have seen partner profits exceed $6m. One firm claims demand for their services grew by 20% this year. One of the practice areas seeing the most activity is transactions after the pandemic forced companies to re-evaluate their priorities. Firms were ill-prepared for this boom. Why? Well, between 2019 and 2020, associate hiring almost halved as the initial shock of the pandemic caused fear that work would dry up.
As a result of talent shortages, Big Law firms are casting a wider net, seeking out associates not only from fellow Am Law 50 or 100 firms but from local and regional outfits. They’re even recruiting from Canada and Australia, and considering graduates from less prestigious universities. They might be glad they did so. Research suggests that workplace diversity is linked to financial success.
What about in-house teams?
In-house legal teams are also suffering the impact of the resignation phenomenon but they may ultimately benefit. There is a surge in vacancies for in-house roles. Resignations are particularly high in tech which saw an increase of 4.5%. Demand for tech exploded during the pandemic, leaving tech employees particularly burned out. According to one report, 72% of US tech employees are considering resigning in the next year. But tech companies are more compatible with flexible and hybrid working models than law firms. Many have been working this way since before the pandemic. In-house teams could capitalize on lawyers fleeing Big Law by offering environments that prioritize talent’s well-being - although it may stretch their budgets to compete with Big Law salaries.
What’s coming next?
The arrival of Omicron is a reminder that the pandemic is still with us. 493,000 more women than men have gone missing from the workforce since the start of the pandemic, partly due to additional child care duties. They’re unlikely to return while school closures are still on the cards. Some industries - like air travel - are yet to fully reopen which means that even more vacancies could flood the market. On the other hand, pent-up resignations from 2020 have likely taken place by now and rising vaccination rates may give more people the confidence to return to work. Some even say the Great Resignation is not evident in the data and it’s all just hyped up clickbait material.
Klotz (the ‘prophet’ of the Great Resignation) predicted another phenomenon: boomeranging. Some firms report boomerang employees, who quit to seek a better lifestyle and were lured back by juicy hiring bonuses. But it’s likely the shift in our attitude to work is less like a boomerang and more like a one way flight. In 2020, 100 people left the NY metro area for every 84 that moved in. The pandemic pushed people out of cities towards suburbs and small towns that offer more space and a more relaxed lifestyle. Moving house is a strong indication that you want your life to change in a permanent way. Lawyers, like the rest of the workforce, are saying a big ‘no thank you’ to the traditional workplace.
Freedom, flexi and freelance, here we come.