Faced with a shrinking talent pool, insurance defense firms are scrambling to add attorneys – fiod quesquers

Faced with a shrinking talent pool, insurance defense firms are scrambling to add attorneys

New and veteran attorneys alike are moving away from the insurance defense industry, creating a problem for shops currently flooded with work: How do you recruit and retain talent in a hiring era focused on work-life balance, flexible work arrangements and ever – an increase in compensation?

This is a question that full-service businesses must grapple with as they try to get back to “normal” after the pandemic; but these recruiting difficulties for insurance defense firms are compounded by a shrinking talent pool coupled with already thin profit margins and the demands of budget-conscious clients.

Behind the talent shortage

“Insurance defense attorneys often retire from the practice of insurance defense. They choose to move into litigation where they can make more money and deal with less stress. … They've done their time, they're burned out, and they're ready for a new opportunity,” explained Tyson & Mendes managing partner Casey Lynch.

“[And] when you look at lawyers coming out of law school, our salaries offered in this practice are much lower than other litigation firms outside of the insurance arena,” she continued. “If they have two offers and one is higher, then they I will accept the higher offer.”

As Lynch went on to note, smaller profits and less aggressive rate increases make it difficult to increase compensation to compete with full-service firms. Add to that strict guidelines on how to prepare and litigate cases, and lawyers begin to consider less stressful options.

“When you combine higher stress and lower pay, it leads to a lower quality of work life for litigants,” she explained. “Particularly after 2020, we see lawyers choosing to leave insurance protection for higher paying practices with clients with less stressful requirements.”

Nor was Lynch the only firm executive to recognize the effects of stress on talent.

“As insurance carriers become more aggressive with auditing and exclusions and cost containment, this is a hindrance to our ability to retain talent,” said Marshall Dennehey CEO and President G. Mark Thompson. “It has an adverse effect on morale.”

Competition for work

Even with these structural obstacles, insurance defense firms are aggressively hiring to help handle the national flood of filings. Marshall Dennehey, Tyson & Mendes, Goldberg Segalla, Wilson Elser and Gordon Rees Scully Mansukhani indicated they are looking to add new attorneys to their rosters as demand continues to grow.

However, according to several business executives, their companies have already been successful in significantly increasing their headcount since the last days of the pandemic.

According to the firm's chairman, Daniel McMahon, Wilson Elser has added just under 400 attorneys to its headcount since 2020, in addition to launching four new offices across the country.

“Our headcount has grown significantly since 2020 to meet the needs of our customers,” McMahon said. “We are in aggressive hiring mode and have been since the pandemic as there is a huge demand for our services.”

Looking at Law.com Compass data, Wilson Elser isn't the only insurance defense firm to see significant growth since the pandemic. Gordon Rees has added more than 300 lawyers to its headcount since 2020, increasing its headcount by 15% between 2023 and 2024 alone; and Goldberg Segalla has seen steady growth in headcount since 2021, going from 393 lawyers to 433 lawyers, growing by approximately 10%.

“We have been proactive in recruiting attorneys since we emerged from COVID, throughout 2022, 2023 and 2024,” said Goldberg Segalla recruiting partner Joseph Hanna. “It's just a matter of staying ahead of the hiring market. You can't react, or you'll always be playing behind and never catch up with the work.”

“If you've got ahead of him, you can take the job,” he concluded.

Recruitment and retention strategies

In the immediate future, insurance protection firms are using compensation to attract talent, raising rates and tightening profit margins to help subsidize the effort.

“We needed to deliver significant increases beyond 2020 to be able to hire people, meet wage demands and retain talent. … Other businesses should have done it as well,” Lynch said. “We were only able to raise rates a fraction of the amount of the increases we paid out to our attorneys. … It comes from profits, which can be very difficult because we have the lowest margins, dare I say, of any area of ​​law practice.”

Despite the tension between compensation increases and earnings, Lynch added, Tyson & Mendes remains financially sound as the firm grows quickly and on pace to increase revenue by about 20% annually.

Companies also don't use promotions solely to retain talent. In the case of Goldberg, Segalla Hanna cites the firm's compensation system as attracting talent, in conjunction with the firm's other cultural incentives.

“We have a remote optional hybrid policy at our firm that lawyers are very interested in, we have very strong practice group leadership and a strong mentoring program so we can attract younger associates to the firm, and we have a transparent compensation system that partners like” , Hannah said. “We try to represent as much as we can to our candidates, and we've been able to attract very strong ones.”

Gordon Rees and Tyson & Mendes also embrace telecommuting as a means of retaining talent, with policies allowing lawyers to work wherever they are most productive. Marshall Dennehy, meanwhile, remains committed to hybrid work, requiring attorneys to come into the office at least three days a week.

“Young lawyers don't become better lawyers working from home … we know we operate on an apprenticeship model,” said Thompson of Marshall Dennehey. “It's not to everyone's liking and it's impacting our ability to recruit.”

Conversely, Gordon Rees managing partner Dion Kominos praised technology and flexible working as tools that have helped the firm expand its talent pool.

“Technology has allowed us a lot of flexibility to be able to expand,” he said. “We've fully embraced remote working and given people tremendous flexibility in that regard. … We've reimagined the whole notion of how the personal aspect of the profession is handled, and that … has expanded the scope of the workforce you have access to.”

In addition, firms cite investments in recruiting, training, diversity and engagement efforts as methods of recruiting and retaining talent.

“Insurance firms must innovate to attract, train and retain the best talent,” said Tyson & Mendes' Lynch. “We are committed to our industry, our firm, our attorneys and staff, and we are dedicated to continuous improvement, education and DEI efforts. … These are the things we need to do to move this industry.”

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