Giles Bentley, Managing Director and Head of Professions at Aon – a leading global professional services firm providing a broad range of risk, retirement and health solutions – gives some insights on some of the biggest financial and employee risk questions facing law firms in today’s market.
What insurance trends are you seeing?
Insurers are becoming more vigilant when it comes to cyber risks; looking to exclude any cyber cover that might be included in professional indemnity or other general insurance policies – what the industry calls ‘silent cyber’. It is a reminder of the importance for law firms to consider buying bespoke cyber cover rather than relying on existing insurances to protect against the risk.
Are there growing insurance implications from operating overseas?
In terms of global insurance programmes, it is important to ensure that firms understand the different country approaches to claims handling, as they can vary considerably.
The changing sanctions landscape can also impact whether a firm’s insurance will respond in certain areas and must be a focus for any firm operating in countries subject to international trade sanctions. Political risk is not just confined to overseas territories either and, at the time of writing, Brexit uncertainty will continue to be a concern.
What other risks do you see for law firms?
Employee risks will continue to grow, particularly in areas like managing employee stress; an area where the employer can play an important role. In our HR in Law & Aon Employee Benefits Survey 2019, 89% of the law firms questioned agreed that the employer is responsible for influencing employee health and changing behaviours with 60% having a wellbeing strategy in place.
While a certain amount of stress can help employees be productive and engaged with their work, too much becomes harmful to mental, physical and emotional health and can have a big impact on employees and their business.
What can employers do to minimise stress in the workforce?
There are practical steps every employer can take such as conducting a stress audit to understand the contributory factors; training line managers to recognise signs of stress in their teams; and teaching employees techniques to help look after their mental health.
What about employee engagement?
Measuring engagement levels of partners and employees and capturing feedback is increasingly becoming a focus given the move among law firms to modernise their cultures, diversify their talent pools and embrace new technology in order to deliver efficiencies.
Organisations with higher levels of employee engagement are more likely to outperform on key performance indicators such as stress, talent retention, operational efficiency, client satisfaction and financial performance. Our research at a global law firm found that its most engaged departments had an average of 33% less attrition compared to its other departments.
Having undertaken further research on engagement levels in the legal sector, our report, “The state of partner and employee engagement in the legal sector 2018” confirmed that engagement levels lag behind other professional services firms.
Our research also revealed a gap in engagement levels between associates and partners (43% vs 66% engaged). However, we are also seeing legal firms playing catch-up by increasingly focusing not only on measuring engagement levels but by using feedback from partners and staff to identify the critical experiences that law firms can influence to enhance engagement of their people. By monitoring partner and employee engagement, firms are better able to uncover and prioritise key opportunities to improve the firm’s work experience and culture, and thereby enable better performance from their partners and employees.
What about employees’ financial wellbeing?
Financial wellbeing is another area of concern with a high number (93.6% ) of law firms saying they have a role to play in respect of financial education beyond pensions guidance.
According to Aon’s Benefits and Trends Survey 2019, 89% of employers also believe they will need to change their employee benefits offering to meet the needs of future generations. That creates a big challenge for current and future pension provision.
What should law firms be looking out for when it comes to their pension schemes?
The pensions and savings landscape continues to change so a firm’s pension arrangements may no longer be meeting employees’ needs or corporate objectives. For example, partnerships have intergenerational fairness issues when dealing with legacy defined benefit pension schemes and the period over which deficits are spread. Conducting an audit of current arrangements is valuable in checking the effectiveness of your pension strategy. This audit can include scheme design, investment options, value for money, as well as looking at how well the scheme is communicated to employees.
Is financial wellbeing just about providing a good benefits package?
Employee engagement was also cited in Aon’s research as being amongst the top three challenges to employers – alongside retention and recruitment. A key part of employees’ overall engagement is ensuring that employees are engaged with their benefits package. It is not enough to simply create a great benefits package and hope it will be appreciated.
What can an employer do to help promote that engagement?
Again, there are some simple steps that an employer can take to achieve this which stem from drawing up a benefits engagement strategy to include actions such as sending timely, and regular benefit communications; telling a compelling story around the benefits provided; and making use of innovative technology to help the communications process.
It should be part of an overall strategy around the creation of an employee value proposition (EVP). Relatively few companies (24.5% ) say they have a clear EVP even though, given the impact on employee engagement, retention and recruitment, developing a clear and compelling EVP should be high on the agenda for every law firm.