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The financial wellbeing takeover edition

This week’s edition of Si’s Matters is guest edited by our friend Carla Hoppe who is on a mission to help lawyers with their financial wellbeing.

I hope that you find it useful (and please do share it with a friend or three)…

Taking care of your financial wellbeing – by Carla Hoppe

This week started with Blue Monday, said to be the most depressing day of the year. Now, the idea that a single day can be worse than any other might feel like pseudo-science, but it’s certainly the case that financial pressures can feel more acute this month. For many, credit card bills will be coming due after a period of excess and, with an early December pay-day, your income may be feeling stretched.

The relationship between our finances and our feelings is not something we like talking about in the UK. In fact, Brits are more likely to discuss their sex lives with friends or family than lay bare the details of their financial arrangements[1]. Yet how we feel about money – our financial wellbeing – has a direct impact not just on our mood and mental health but how we show up (or not) in our places of work. The Centre for Business and Economics estimates that poor financial wellbeing costs the UK economy £2.5bn annually through absences and low productivity[2].

Below, I look at the data and bust three common myths about financial wellbeing in the legal profession.

Myth 1: Lawyers don’t have money worries

You would be forgiven for thinking that lawyers are not the sort of people who worry about money – news headlines about pay rises and graduate recruitment Instagram profiles showcase law as an industry of lavish spending, success and financial gain.

However, in the Wealthbrite 2023 Financial Wellbeing in Law Report we found anxiety about money was prevalent across the profession. While 80% of trainees routinely worried about money, 78% of 10+PQE lawyers said they were in the same boat.

Last year also saw a record number of lawyers contact the mental health charity LawCare, whilst the Solicitors’ Charity saw a significant increase in the number of lawyers reaching out to them for financial support.

Law is, of course, a broad church made up of large law firms, sole practitioners, legal aid workers and self-employed barristers. Yet ask the average person on the Clapham omnibus what their image of a lawyer is and you will likely hear a description of Harvey Specter from the US TV show Suits.

Junior lawyers who spoke to us in roundtable discussions last year described the social isolation and pressure that comes with this stereotype, saying: “If I talk about budgeting or I find something expensive [my friends are] like, ‘but you’ve got big lawyer money’.”

The reality is this: lawyers are not immune from the financial stresses that so many in the country are also facing.

Myth 2: Lawyers aren’t good at numbers

The UK ranks below the OECD average on financial literacy skills[3], and as a nation we have a peculiar habit of wearing our poor numeracy as a badge of honour.

I’m a words person, not a numbers person” – I said this phrase myself once upon a time. And yet the truth was that, as a lawyer and later (how ironic) an international tax advisor, I not only assessed detailed tax calculations but also had to read a balance sheet or profit and loss account, work out whether there were sufficient distributable reserves available for a dividend, calculate the lock box mechanics on a corporate transaction and consider the complexity of earn out provisions for management teams.

So whether it’s corporate deals, litigation settlements, property transactions, family law disputes or simply the daily grind of time recording and invoicing, I cannot think of a single area of law where you don’t come into contact with numbers. Financial acumen isn’t a ‘nice to have’ in law, it’s fundamental to understanding how the business of law is managed and how your clients’ businesses operate.

So why do we expect so little from ourselves when it comes to the numbers?

My supposition is this: financial literacy isn’t taught as standard at schools or at university and in a profession where it pays (literally) to be an expert, it is difficult to raise a hand and admit, “I’m not sure where to start” or “I need help”.

The truth is that everyone can learn the language of money, and practical financial skills can be taught. In a world where economics is everything, financial acumen deserves a place in law firm talent development programmes.

Myth 3: Being ‘good’ with money is a lot of hard work and effort

A 2021 study found that the average Brit thinks about their finances at least four times a day, which adds up to almost a full week of worry in a year[4]. Despite this, many of us still see acting on our finances as ‘life admin’ at the bottom of the to-do pile.

So how can we flip the script and make it easier to start doing something about it?

a) Start with the basics

Get to grips with your financial habits – what do you spend your money on and why? Consider whether your financial choices are moving you closer to, or further away from, your life goals.

Build a regular habit of saving – use technology to take the friction and effort out of it. Automate it with direct debits or standing orders to separate savings pots or accounts.

Keep an eye on lifestyle inflation – as one participant in our roundtable put it: “You might be making really good money but there’s a constant pressure to spend more, essentially”.

You deserve to enjoy the money you work hard to earn, but ask yourself: are you spending beyond your means?

b) Know when to get an expert involved

Ask yourself these three questions:

  • Do you have the appetite to learn about managing finances?
  • Do you have the aptitude to manage/optimise your finances?
  • Do you have the time to manage your finances?

If you answered ‘no’ to any of these, then it’s probably time to get support. What support you need will differ depending on what stage of your life you’re at and your financial goals:

  • If you’re a beginner, a short programme to build foundational knowledge and confidence may be enough to get you started.
  • If you want more one-on-one support, a financial coach can help you start to organise your finances and empower you to take action directly.
  • If you prefer to outsource the management of your affairs to a regulated financial advisor, then do your diligence like you would in any client scenario – speak to multiple advisors, ask yourself who is really listening to your needs and who is transparent on pricing.

c) Ask for help if you need it

If you are struggling to make ends meet or your financial situation is having a detrimental impact on your health and/or relationships, it’s important to know that help is available. A few of our favourite confidential resources are:

Mental health support – LawCare

Financial support and money advice – The Solicitor’s Charity

Debt management – Step Change

Gambling addiction help – Gamble Aware

Key takeaways

Lawyers aren’t immune from financial stress or low financial confidence. Financial acumen is a critical tool for success as a modern lawyer. Small actions can have a big impact on your financial situation.

About Wealthbrite:

Wealthbrite offers a range of in-work training to build financial skills and confidence, and is shortlisted for the Mental Health and Wellbeing Initiative of the Year in the Women & Diversity in Law Awards 2024.

[1] https://www.ucl.ac.uk/news/headlines/2015/sep/wed-rather-discuss-sex-our-salary

[2] https://cebr.com/wp-content/uploads/2022/03/Financial-Wellbeing-report-v1.2-1.pdf

[3]https://web-archive.oecd.org/2018-12-10/417183-OECD-INFE-International-Survey-of-Adult-Financial-Literacy-Competencies.pdf

[4] https://www.paragonbank.co.uk/blog/money-on-my-mind

In other news

Like lawyers to the Slaughter

The powers that be at Magic Circle firm Slaughter and May are cracking the whip and demanding that the firm’s lawyers comply with its edict to come into the office at least three days a week. Employees have been informed via a memo that “gate data” (i.e. the times at which people enter and exit the building) will be monitored, and persistent perpetrators of absenteeism taken to task.

When it comes to this continual debate surrounding WFH vs being in the office, it is my considered opinion that not enough is made of the fact that this doesn’t have to be a binary choice: what about, say, spending two days in the office, two with clients, and one at home? Just my two cents, but I can’t help feeling that there’s more than one way of skinning this particular cat.

Read the full story here.

Time to bring in the NEDs?

This week, The Lawyer argued that more firms should consider the benefits of adding a NED to their board – no, not a Scottish hooligan (though the images of boardroom mayhem this conjures in my head are hilarious), but a non-executive director. Currently, only two of the UK200’s top ten firms have one, namely DLA Piper and Herbert Smith Freehills.

When asked by The Lawyer why the latter firm has decided to go against the grain of this particular industry trend, a spokesperson stated that it “strengthens our corporate governance arrangements and reflects best practice”. They might well be onto something.

You can find the article in question here.

A poor decision on the part of penurious councils?

News broke this week that councils with severely depleted war chests have opted to stop paying the fees for practising certificates as a cost-cutting measure. This has very serious implications, as it fundamentally changes the nature of the advice that lawyers within the respective council’s legal team can give – in light of the intense pressures that councils are under, their overworked lawyers may unwittingly advise on reserved matters, which could have all sorts of unintended and disastrous consequences, both for the individual lawyer and the council itself.

Read more here.

When treading the boards gives way to treading on feet

Here is a fascinating story of celebrity, governance and law with which to end this week’s haul of legal news – the row surrounding the Actors’ Benevolent Fund (ABF) continues.

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