October 2, 2006
2007 Salary Increases
Our informal survey of law firms tells us that, overall, law firms seem to be budgeting a little less than four percent for support staff and no increase for the associate scale. There is some deviation by location with Houston and Washington being the major legal markets reporting budgeted increases of five percent.
For associate salaries, the exceptions are those firms who increased starting salaries during 2006 and are, therefore, planning to increase their associate scale for the first three or four years to maintain a differential. There seems to be little change above the sixth year. Additionally, several firms with significant European offices are projecting slightly higher associate raises to correspond with “catch-up” raises being paid to English and German associates.
Another change for 2007 seems to be the elimination of salary caps by many firms. A couple of years ago there was a trend to follow other professional service industry firms and create salary ranges for all staff positions. When an employee hit the top of their range they were not eligible for any increase beyond a modest cost of living amount that all ranges were increased by. Unfortunately, the marketplace is sufficiently attractive in the legal sector that such “red circled” employees (who tend to be the firm’s best people) can walk across the street to another firm, get a raise and have unlimited compensation aspirations. Health Care Coaching
Traditionally, law firms complain that they pay among the highest health care rates of any industry. Reasons given range from having an educated workforce that is experienced in understanding complex documents and are, therefore, more knowledgeable about available benefits, to having pregnancies among older-than-average women, resulting in a higher likelihood of problem births. This, of course, is added to projections that health insurance rates overall will increase by 50 percent over the next three years.
One option being offered by some employers is health care coaching. The Centers for Disease Control and Prevention estimate that the medical care costs of people with chronic “lifestyle” diseases such as diabetes and cardiovascular disease account for more than 75 percent of the nation’s $1.4 trillion medical care costs. Online coaching programs are believed to promote behavioral changes that lead to healthier lifestyles, limiting the onset of chronic diseases. This, proponents argue, reduces the likelihood that employees will need costly medical treatment in the future and will enjoy increased productivity and morale.
One such coaching service is Hummingbird Coaching (www.myhealthcoach.com). An independent study found that their clients saw an average 23 percent decrease in health care usage cost after six months of using the coaching service. This is an equivalent to a return of investment of $5.50 for every dollar spent on coaching.
Coaching programs seem to be largely geared around personalized goal-oriented action plans to quit smoking, lose weight, increase exercise, lower stress, improve personal relationships and other positive influences on health. We know of four firms that have introduced similar programs but it is too early to report on results. “No-match” Rules for Social Security Numbers
The U.S. Department of Homeland Security has teamed up with the Social Security Administration to provide one more thing to keep law firm HR Directors awake at night. Currently, if an employer submits a withholding report for an employee with a social security number that does not match Social Security Administration numbers, the employer receives a notification but not specific directions on actions to be taken. Basically the new regulations (which have yet to be approved) require the employer to resolve the discrepancy with the employee and then provide a detailed follow-up report to the Department of Homeland Security.
How big a problem are no-match numbers? Each year about 10 percent of 250 million wage earning reports do not match social security numbers. It is suspected that most are typos or transposition errors by the worker but there are no reliable statistics.
There is, however, good news in the proposal for law firms. Under the regulations, I-9 forms (proof of citizenship) could be kept electronically. Experts project that the rules will be issued but probably not for another year or more. Employee Branding
Law firm Marketing Directors spend huge amounts of effort and cash in trying to brand and re-brand their law firms in the eyes of clients. Yet, many businesses consider their employees as primary branding tools. In fact, Interbrand, a branding consultant to the Fortune 500, says that there appears to be a direct correlation between the visibility and acceptance of a brand in the marketplace and employee awareness of the brand and what it means. That’s not idle chat…Starbucks, one of the Business Week 100 Most Valuable Brands, uses no advertising to perpetuate the brand. Instead, it relies on its employees as evangelists.
The experts tell us that, especially in professional service firms where there is little expenditure on advertising, employees need to be excited about the brand, able to communicate and connect with it, and then radiate that message to clients. Without employee buy-in, the brand’s external promise falls flat in the real world of daily client interactions. Legal Resource Group LLC specializes in serving the executive and administrative recruiting needs of law firms. We maintain the largest data base of law firm executive and Administrative staff in the world. This allows us to immediately identify the very best candidates. We find the best people, complete searches faster and have extremely reasonable fees. For further information, visit our website at www.LRGLLC.com , contact us by e-mail at inquiries@LRGLLC.com or by phone at 1-800-688-4147.
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