If you are putting your house up for sale, the very best thing that can happen is for an auction to break out among multiple prospective purchasers. You can just sit back smiling; you let the bidders “duke it out,” while you calmly wait to hear what the highest number someone is willing to pay for your home.
Historically, some employees have used a similar technique — getting current employers and “suitors” to bid against each other — to ensure that the employee maximizes the value of what the market will bear for their services. This is classic free-market capitalism. After all, the notion of “at will” employment cuts both ways. And, not surprisingly, this “auction” strategy creates the most leverage for people with specific, valuable, mission-critical skills.
So, it should come to no one’s surprise that a similar phenomenon has broken out in the market for top-flight legal staff. Savvy legal assistants and paralegals are pitting current employers against “suitors” in “bidding wars.” And there is every reason to expect that this phenomenon will continue and become increasingly frequent. To any employer, staff turn-over (“attrition” in business jargon) is extremely costly — typically involving multiple expenses, some of which are not easy to quantify. Those expenses can include:
• Recruiting costs
• Revenue lost when attorneys spend time interviewing (opportunity cost)
• Time spent on-boarding new employees
• Time spent training new hires in the firm’s culture
• Limited productivity while a new hire gets up to speed
If the cost of replacing an employee is more than the cost of matching a competing “bid” it makes business sense for the employer to meet or exceed what’s being offered by another suitor. This is especially true when a mission-critical employee has the employer over a barrel, perhaps due to a specific time-crunch.
On the other side of the coin, the calculus is not always simple. There are many, extremely important non-economic aspects to employment including job stability, benefits, work hours, work environment, supervisorial structure, and culture. In short, from the employee’s side, it is not usually just about the money.
The legal staffing market is unquestionably headed in the direction of more auctions. Employers and employees can and should incorporate an understanding of this phenomenon into their business planning.