Charlie Sandel is vice president, senior client advisor at Axiom. He’s a former GC of American Eagle Outfitters and Regional GC of Levi Strauss. Views are the author’s own.
With unionization on the rise for the first time in years, it’s become clear that we’re seeing an uptick in labor and employment (L&E) related issues.
Meanwhile, many legal departments are struggling with attrition, and the timing is tough: due to the volatile economy, many departments are also under or anticipating hiring freezes and are already overburdened by ever-growing backlogs of L&E work and investigations.
New workplace regulations continue to be enacted, including wage transparency laws in several states. And regulatory oversight is increasing, with a rise in discrimination complaints filed with the Equal Employment Opportunity Commission (EEOC), as well as state regulatory agencies and private actions.
While this increase could be attributed to many issues employees are facing and could also be due to employees feeling more comfortable filing complaints, it isn’t likely to slow down. And it’s placing a greater burden on many already under-staffed legal departments.
The U.S. Securities and Exchange Commission (SEC) is also facing pressure to take a more proactive approach to requiring public companies to enhance their human capital reporting. It is currently accepting comments on a rulemaking petition that would require issuers to disclose information about their human resource management policies, practices, and performance (such as requiring disclosures about workforce diversity, turnover, skills and development training, compensation, and benefits). This will likely lead to increased reporting requirements.
As new regulations are enacted and regulatory oversight increases, many GCs and legal hirers have found themselves scrambling to find a solution that will help their departments both tackle their backlog of labor and employment issues and keep up with novel requirements.
Attrition-related issues are making the task much more challenging. Nearly 90% of recently surveyed in-house counsel report their department is suffering from attrition-related issues, and over 40% report not having the appropriate amount of staffing bandwidth.
This, coupled with the fact that almost 60% of in-house counsel are reporting they’re open to a new position, spells trouble for GCs, especially as 53% of those who are not searching for a new position feel it’s somewhat likely they’ll begin their search within the next year.
Even if employers wanted to attempt to hire fixed headcount to tackle additional L&E work, many legal departments are under or may soon be facing hiring freezes due to concerns that the economy is heading towards recession.
So how can legal teams prepare to navigate the new challenges of increasing labor-related legal matters while also addressing attrition in a less than ideal labor market?
When faced with hiring freezes and a backlog of work, the inclination of many GCs is to turn to a law firm to handle the overflow. While a law firm would ideally be able to handle the overflow, law firm rates are increasing, and many legal departments are under pressure to cut or drastically reduce legal expenses.
There is also the issue of experience; many law firm lawyers lack the critical, unique in-house experiences that are so very helpful in bringing a practical, in-house perspective to bear in managing L&E related issues effectively and efficiently.
Building and using a structured team to handle L&E issues eliminates the steep costs of a law firm while giving legal leaders access to lawyers who can bring subject matter expertise matched with an in-house perspective and focus. And what makes structured teams especially effective is the combination of relevant experience and flexibility.
Structured teams are comprised of flexible legal talent who are available to tackle L&E work when needed, as needed. This eliminates concerns around hiring fixed headcount, whose expertise may not be needed as the workload of L&E investigations, policy development work, and audits naturally ebbs and flows.
Importantly, structured teams can be managed by one or more flexible team leads who also have a breadth of experience handling tasks that are like the ones the legal department is currently dealing with.
For legal departments experiencing or trying to head off attrition, implementing a structured team approach is invaluable – it will demonstrate and deliver tangible support for the in-house team by reducing their workloads.
Additionally, having a team lead will help alleviate the management burden typically placed on permanent headcount when working with outside resources, while also enabling the in-house team to have the bandwidth to focus strategically on identifying key risks and opportunities and designing programs and processes to proactively protect and strengthen their organizations.
A striking 90% of surveyed in-house counsel who reported their legal departments are suffering from attrition plan to look for new jobs within the next one to two years.
This flare, coupled with the increase of challenging L&E regulatory and compliance issues, means the time for GCs and other legal hirers to act and implement an effective solution for their teams is now.