Legal employers should make financial wellness part of employees’ well-being benefits
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As employee wellbeing becomes a priority, the stress-inducing financial element of these dynamics should become part of this equation.
In 2021, the starting annual salary for first-year employees at major law firms rose to $ 205,000; and while that can be a life-changing sum if you’re one of the few thousand law graduates to earn a freshman associate slot, that’s nowhere near everyone’s experience.
Approximately 80% of law school graduates fail to enter and earn this salary, and many exit law school with six-figure student loan debt. According to the ABA Young Lawyers Division Law School Student Loan Debt Survey, about 75 percent of respondents had more than $ 100,000 in student loan debt after graduation, and many reported that the high exposure had a negative impact on their mental health, particularly when it came to “Stress.” , Anxiety, depression, anger, and mental wellbeing. “
Addressing financial well-being
Wellbeing has been a hot topic in the legal industry in recent years, but the financial component of that dynamic has largely been left out of discussion. Financial stress and related money problems can lead to further mental and physical health problems. And when employees are financially healthy, in many cases they have better mental and physical health. The legal industry is generally viewed as a stressful profession due to the intellectual rigors of day-to-day work, and additional psychological pressures related to money can affect lawyers’ ability to make informed decisions.
Minimizing mental stress through sound financial planning helps ensure the peace of mind that any urgent and stressful situation that arises can be addressed with a clear mind, eliminating the possibility of finances distracting from a clear legal decision.
The good news is that legal employers have become aware of this. For example, during Lawyer Well-Being Week in May, Winston & Strawn brought Jacquette M. Timmons, a financial behaviorist, to a financial management workshop in addition to the firm’s regular retirement and financial planning services.
Some legal employers also offer longer-term holistic solutions by working with third-party providers. LearnLux, a provider of financial wellbeing in the workplace published on its website, works with legal employers to provide independent digital and live financial planning services. According to Rebecca Liebman, CEO of LearnLux, these planning services can help employees create the building blocks of personal finance, including understanding spending patterns, debt repayment, emergency savings, and investing in the future.
LearnLux only hire certified financial planners (CFPs) because of their ethical obligation to be fiduciary, explains Liebman, which means they must act impartially, transparently and in the best interests of the client. Using an external financial planner also eliminates many conflicts of interest, as independent partners often do not sell financial products.
Many lawyers don’t understand personal finance
It is assumed that high earners with higher degrees understand money and investing, says Liebman, but that is often not true. Liebman says she first saw this while working in an MIT lab with many colleagues who had PhDs but were struggling to fill out a 401k form. At the same time, some high-income attorneys do not prioritize sound financial planning because they assume they will have the cash flow to meet any high-dollar emergency expenses.
In addition, lawyers come from a wide variety of backgrounds who have unique cultural and family influences when it comes to money. Lawyers from humble beginnings who then earn six-figure salaries often have expectations for support from family members, which can be overwhelming when entering a new, highly stressful profession. Working with outside external financial planners can help attorneys with these competing priorities and create a financial and spending plan that provides built-in accountability while ensuring that the attorney’s conduct is in line with the plan.
Financial well-being amid job changes
Sometimes job and career transitions are planned and sometimes not. Unexpected changes, like job loss, usually cause sudden stress and are usually made worse without the building blocks of a financial plan. At the same time, an in-house attorney who wants to go into the house or work in the public sector will almost certainly accept a pay cut, and a financial plan with a significant debt settlement strategy will make these personal career transitions much easier.
Studies show the majority of Americans are money stressed, and Gen-Z experts, especially lawyers at a young age, are no exception. Some estimate that nearly half of Generation Z workers name student loans as their top financial concern. The financial burden and stress of paying back student loans is likely to be a major concern for young lawyers as well. Legal employers that offer a holistic feel good strategy that includes financial wellbeing will only bolster the employer value proposition of potential new hires.
Diane Costigan, director of coaching and well-being at Winston & Strawn, says she has spoken to dozens of attorneys on the subject. “My clear observation in my own career is that the happiest lawyers are the debt-free,” she says.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which are committed to integrity, independence and bias under the trust principles. The Thomson Reuters Institute is owned by Thomson Reuters and operates independently from Reuters News.
Natalie Runyon has over 20 years of experience working and volunteering for multinational organizations including Thomson Reuters, Goldman Sachs, and the Central Intelligence Agency. She is currently the director of corporate content for talent, inclusion and culture within the brand marketing function of Thomson Reuters. Prior to her current position, she led the strategy and operations team supporting key account programs in the legal business, and prior to that, she led global security in the Americas for 3 years. As a volunteer leader, she has led strategic leadership and change initiatives at global and local levels for corporate resource groups at Thomson Reuters. She completed an Organization Development & Leadership Certificate from NYU in April 2016 and is a Certified Leadership Coach. She lives in New York City with her husband and two sons.