Key insights:

• • • The awareness crisis — Nearly half of Gen Z workers have never been exposed to local government career opportunities, which means that an entire generation enters adulthood unaware these jobs exist.

    • Values alignment paradox — Gen-Z individuals trust local governments more than other institutions, and they strongly align with public service values like making a difference and solving community problems.

    • Beyond salary solutions — Some cities are proving that targeted marketing campaigns can be successful; and connecting public sector work to meaningful impact rather than simply raising wages can attract interest.

San Francisco’s local government has been stretched to its breaking point. Mayor Daniel Lurie signed his this summer, which would eliminate 1,000 positions permanently, potentially resulting in layoffs for 140 employees. The city still grapples with a vacancy rate among its city workers that hit 13.7% two years ago, with . Residents have experienced delayed emergency responses, understaffed public hospitals, delayed city buses, and other gaps in public services.

State and local governments have sought workforce stability in the five years following the Covid-19 pandemic. Generational retirements, the so-called Great Resignation, a shrinking workforce, low unemployment rates, and heightened work environment expectations have had a dramatic impact over the last five years, leaving many states and public sector organizations trying a myriad of approaches to build and enhance their talent pipeline.

The root cause of our public sector workforce woes may surprise you. A decline in civics education in the classroom means that young people aren’t as exposed to government institutions as they once were. And many enter the workforce wholly unaware of the problems governments can solve or the career paths open to them within it.

Invisible institutions: Bridging the civics gap

Depending on your age, you may recall civics exposure as a mandatory part of your K-12 education. Civics education has been largely absorbed into the social studies curriculum, and the results are damning. Less than of one-quarter (22%) of 8th-grade students in the United States are working at a . Civics exposure and knowledge have a direct correlation to higher rates of voting and participation in civics activities, but currently, cannot name a single branch of the federal government.

Now, many states are taking matters into their own hands through legislative action, with states like requiring that all 8th graders take a civics test aligned with a year-long course on citizenship and federal and state government.

For adults already out of the K-12 system, the U.S. Chamber of Commerce Foundation piloted a geared toward employers in 2025. The Civics @ Work program addresses the unfortunate fact that an estimated 70% of Americans could not pass a basic civic literacy test. When civic awareness is low, young people enter adulthood with a limited sense of how government institutions function and what professionals are needed to keep those institutions running reliably.

Interestingly, members of the Gen-Z generation are quickly becoming the largest demographic in the workforce, but they are overwhelmingly not choosing public sector careers. Gen-Z members currently represent 18% of the US population but as of this past spring. A on civic learning and engagement found that while Gen-Z has higher rates of trust in organizations, they appear to be less likely to see themselves working there. And a McKinsey study on attracting Gen-Z talent into public service notes that this demographic is more likely than other generations to be aligned with public service values.

Rebuilding the pipeline through exposure

The city and county of Denver is no stranger to targeted public sector recruitment campaigns. The city and county have partnered with AOR, a Denver-based branding and marketing firm, in 2016 and in 2025 for public sector recruitment marketing efforts. The , for example, targets individuals in the hospitality, security, nursing, education, and coaching industries to consider a career pivot to public safety.

The 2025 city and county-wide campaign launched with AOR, , highlights career paths that many may be unaware exist within local government. Denver saw increased growth in both awareness, click-through rates on Google and LinkedIn, and an increase in job application rates.

Successful methods in this area could potentially find a wide audience, research shows. Mission Square Research Institute’s on undergraduate attitudes toward careers in public service notes that business, accounting, and finance undergraduate students had the lowest level of awareness around public sector career paths. Exposure to a public sector career path is just the beginning, however, these organizations need to connect to the issues young people care about and demonstrate that a public sector career offers meaningful work and growth opportunities.

Investing in the next generation of public servants

Mission Square’s findings noted that in 2025, undergraduate Gen-Z students are prioritizing salary, work/life balance, personal satisfaction, and job security. Those students who were surveyed perceive government salaries as negative (when compared to the private sector).

How the public sector paints the picture of a career is crucial to success and presents an opportunity for recruitment. Gen-Z, as a demographic, is highly motivated by public service values, and can relate strongly to messaging around making a difference, solving local problems, and delivering real impact. The Minnesota Citizens League report on points out that employers should consider loosening restrictive job requirements (such as degrees, years of previous experience, etc.) and instead recruit for mindset and soft skills and invest in the talent development of younger employees.

This doesn’t come without some risk, of course. Job tenure for younger workers averages 2.8 years — less than one-third of the tenure of Baby Boomers and Gen X in the workforce, according to Mission Square.

Civics education as the first step, not the final one

As San Francisco is reconciling, increasing wages can’t always be the final solution. Exposure and education around public sector opportunities are a critical first step to building a workforce pipeline. Legislative approaches taken in recent years at the state level — include for example, requiring student-led civics projects in middle and high schools; and forming a task force to study civics education, engagement, and media literacy — can certainly help, because civics education alone is likely insufficient.

Students need a formal introduction, in K-12 and beyond, to public sector opportunities, and these introductions should address the stereotypes that government is inefficient, clarify the non-political role of day-to-day operations, and highlight meaningful work, problem-solving, and personal career satisfaction.

For those governments and local organizations that are already struggling with persistent vacancies and a shrinking workforce, investing in the student pipeline is essential.

You can find out more about the challenges around talent and other issues faced by government agencies and their workers here

Key findings:

• • • Expense growth is accelerating — Both direct and overhead costs are rising faster than in Q1, posing a potential risk if revenue growth slows.

    • Law firms are adapting strategically — With Am Law 100 firms leveraging pricing power over headcount expansion, other firm segments are investing in technology and smarter resourcing to manage costs.

    • Overhead spending trends are shifting — Increased investment in tech and benefits, and a decline in occupancy costs are signaling a move toward hybrid work and operational efficiency.

The story of 2025 has been the ongoing trade war, which has driven uncertainty around global economic and policy matters. Coupled with rising geopolitical instability, the situation has left economists and business leaders holding their breath. Yet the US legal market’s second quarter was unexpectedly calm — and surprisingly prosperous, according to the Thomson Reuters Institute’s Law Firm Financial Index for Q2, which rose as more clients turned to their outside counsel for guidance.

This rise can be attributed to an increase in legal demand of 1.6% and robust worked rate growth of 7.4%. Together these gains offset a 1.3% productivity decline. While these topline gains are encouraging, law firm leaders should remain vigilant on the expense side.

Both direct and overhead expenses saw a modest increase in growth this quarter compared to Q1, rising to 7.9% and 6.6% respectively, continuing a trend underway since the second half of 2024. Revenue growth is still outpacing expense growth, keeping profits strong, but any slowdown in revenue could leave firms in a lurch, just like we saw in 2022.

After the robust level of demand and rate growth of the first half of 2025, an increase in spending might have been expected heading into the rest of the year, as law firms continue to chase the opportunities in front of them. However, the broader instability shows no signs of easing, suggesting continued volatility across the global market that will eventually impact firms.

This may leave firms stuck between a rock and a hard place — the strength of the legal market offers opportunities for growth; however an increase in spending in that push for growth could leave firms overexposed to a slowdown if clients may become reluctant to spend. This means firms should consider ways of slowing expense growth in other areas, in order to be able to continue to invest in their growth strategies.

Breaking down direct expense growth

When looking at how firms can limit their direct expense growth, one option that should be considered is to adopt the same strategy observed among Am Law 100 firms since 2023. While direct expense growth is at 7.9% for the market, the Am Law 100 firms saw a slower growth rate at 6.9% as these firms have limited their headcount growth.

Reducing hiring classes and stricter performance management is one of the easiest ways to slow direct expense growth, but it has opportunity costs. As previously mentioned, legal demand remains strong so law firm leaders will not want to miss out on the chance to increase their market share. Indeed, the Am Law Second Hundred and Midsize firms have seen much greater success by seeking to expand their market share in recent years.

Other options such as reducing compensation packages or cutting benefits are unlikely to be successful solutions for firms because those solutions may see talented individuals leave and dampen firm morale amid an ongoing talent war. With very little wiggle room on the direct expenses to maneuver, one way to slow expense growth will rely on leveraging process improvements, technology, and smarter resourcing — not pay cuts.

Changing overhead expense trends

Over the past three years, the proportion of firms’ overhead expenses has seen shifts as well, indicating a change in priorities. The proportion going to occupancy and office expenses has been trending downwards, while technology and benefits expenses have been on the rise.

Rising technology spend will not surprise firm leaders; it’s widely seen as essential to long-term efficiency and profit margins. In fact, many law firms have shown a willingness to invest, especially in AI driven tools. Certainly, leadership will want to see a return on these investments — and if results are not produced or are not at the levels expected, firms could be tempted to cut their losses and scale down investment into technology, especially in the event of an economic downturn. Given the arms race brewing around these tools, however, such pullback may reduce the long-term competitiveness of the firm.

Occupancy’s share of overhead expenses has decreased by 1.9 percentage points in recent years, suggesting that even while firms pushed for a full return to the office, commercial real estate costs have not kept up with revenue growth. With long‑term office leases up for renewal and negotiation, leaders may again embrace a shift toward broader hybrid work to further increase those savings.

Support staff compensation has remained at almost one-third of all overhead expenses, maintaining essentially the same proportion of overhead expenses over the last three years. That does not tell us the full story, however, as support staff covers several different functions for law firms and the growth and the changes in those areas tell us about what business functions firms are prioritizing.

The Thomson Reuters Institute’s Staffing Ratio Survey indicates that the growth of full-time equivalent (FTE) support staff per lawyer mirrors broader overhead trends — one which emphasizes technology, business development, and management roles. Firms are focusing on improving internal business processes to better support lawyers, with the aim of enhancing efficiency and quality across their operations. At the same time, functions that are declining are in more manual-task roles such as word processing and research, signaling that technology investments have been delivering tangible results to the bottom line. This shift is particularly significant because word processing staff constitute the largest share of support staff at 28%, down from 36% in 2016.

What is next for the legal market?

Despite — and partly because of — a turbulent economy, the US legal market remains resilient, posting another quarter of continued demand growth and robust worked rate increases. Yet the memory of rapid expense inflation is fresh for law firm leaders, and with ongoing trade tensions and geopolitical uncertainty, the threat is real.

As firms choose expense strategies, they must balance supporting short-term opportunities with long‑term sustainability. Actions such as cutting headcount can lift near‑term margins but risks leaving firms under‑resourced when growth returns, given the time required to ramp up headcount. Data suggests that firms are willing to invest in process and productivity improvements, which may increase near‑term pain to secure longer‑term gains.

In the second half of 2025, leadership decisions made amid volatility will be pivotal. Firms that pair disciplined cost control with smart, forward-looking investment will be best positioned not only to weather the pending storm but to accelerate when conditions improve.

You can get a fully copy of the����������® Institute’s Law Firm Financial Index��for the second quarter of 2025 here

And my own research with American Law Media focusing on the legal profession supports these findings. To more clearly understand how frequently lawyers and legal professionals were experiencing different aspects of the three burnout dimensions, I created 17 statements and asked respondents to rate how frequently the statements applied to them. In all, 887 lawyers and legal professionals responded, and a small portion of the results are summarized in the chart below. It’s not that lawyers and legal professionals are experiencing some of these factors that is concerning — it’s the frequency.

For leaders of legal organizations to match this moment and continue to build teams and cultures that are both high-performing and engaged, they need to first understand four macro factors, which help explain some of the discontent.

FACTOR 1: The pandemic altered our collective perspective about work and life — While it may seem ages ago now, the pandemic was an upheaval event that impacted literally everyone on the planet. During this time, many people were scared, chronically stressed, overwhelmed, and frustrated. Upheaval events such as this for meaning and purpose through post-traumatic growth.

FACTOR 2: Uncertainty & instability are here to stay — People analytics leader, : “Companies are confronted with a series of organizational shifts that have significant implications for structures, processes, and people. These include complex questions around finding an optimal balance between in-person and remote work, building new organizational capabilities in the face of challenging (and changing) workforce demographics and talent gaps, and focusing on developing a healthy, inclusive, and thriving company culture.”

These types of changes — both large and small, acute and ongoing — create psychological pressure and strain in unexpected ways and continue to drive stress and exhaustion. Volatility, change, and uncertainty will continue to define work for the foreseeable future; however, change and instability often strengthen for well-being, meaning, and work-life balance.

FACTOR 3: A technology-enabled future will require a human-centric leadership approach — GenAI is in the process of transforming certain aspects of the legal profession, and this will only evolve as the technology becomes more sophisticated and legal organizations learn how best to use it. Legal leaders must now in a way that promotes community, creativity, communication, teamwork, and other human-focused qualities that GenAI tools will have a difficult time replicating.

FACTOR 4: Leaders need to incorporate practices that amplify meaningful work and promote an alignment of values — People want a sense of purpose and meaning in their work, and legal leaders need to be able to connect the dots to this higher level of aspiration. While meaning and values alignment are important generally, they are critical must-haves for younger Millennials and Gen Z workers.

Great leadership has always been needed for companies and firms to grow and thrive, but the how of going about it has changed. To be able to effectively lead as the legal landscape continues to evolve, leaders need a blueprint that will give them the tools to: i) address the root causes of both stress and high-performance; ii) build thriving teams that stay engaged, connected, and inspired; and iii) help their teams adapt to and navigate change, complexity, and uncertainty. Collectively, I call this approach Lead Well and have created five mindsets for legal leaders to practice:

• • • Mindset #1 — Prioritize sticky recognition & mattering
    • Mindset #2 — Amplify ABC needs (Autonomy, Belonging & Challenge)
    • Mindset #3 — Create workload sustainability
    • Mindset #4 — Build systemic stress resilience
    • Mindset #5 — Promote Alignment of values & meaning

The TNTs (Tiny Noticeable Things) that help

What I have discovered is that the skills, tools, and frameworks underpinning the Lead Well concept typically fall into one of two buckets: good teaming practices and good human practices. And there are some tiny, noticeable things that can get help, including:

Say a thank you “plus” — When you acknowledge someone, add an extra sentence to specify the strength or behavior you saw in them that led to the good outcome. This creates sticky recognition & mattering and also amplifies the B in ABC needs.

Hold a debrief — When a legal matter ends, or at key inflection points, pause to debrief by checking in with the team and asking what’s working or not working. This practice increases team resilience and can also help with workload sustainability by giving people clarity.

Conduct a meetings audit — Good meetings have an explicitly stated goal, an agenda, a default standard length of 15 to 30 minutes, and a meeting facilitator. Better meeting practices often lead to fewer or shorter meetings, which also helps workload sustainability.

Get on the same page — Effective teams are about direction, priorities, and roles. Your team should regularly discuss and have a clear understanding of what success looks like and what the project’s top priorities are, while delineating clear roles. Teams can then take control of and feel ownership over their actions, which enhances both the A and C of the ABC needs.

Talk about impact — Employees need a clear line of sight between what they do and the impact it has on other people’s lives. Lawyers wade into the toughest challenges that business and society face, yet the extraordinary impact isn’t often discussed. Talking about the being done was found to be the pathway most strongly associated with achieving meaningful work.

The traditional model of leadership development in the legal profession starts way too late in a lawyer’s career and typically does not account for teaching skills associated with building strong teams and the psychological factors associated with motivating and encouraging others. Nor does it help legal organization leaders better understand the factors that underpin a great culture, and which factors make people want to stay long-term. The good news is that all of this is teachable and science based — ultimately, the stronger your team, the more you will have time to focus on your legal practice.

You can find more about Paula Davis’s recently published second book, , here

In the panel, which dealt with talent retention and attraction issues, panelists explained that firms’ marketing partners and their teams are seeing their roles become more critical for attracting and retaining talent through deliberate efforts involving messaging, branding, and storytelling. “Marketing partners need to be creative and offer ways to tell their firms’ stories by connecting the dots throughout their firms,” one panelist said, adding that hiring, integration, and on-boarding of new employees are the key areas where this can take place.

As compensation levels have challenged some firms to keep up, the legal industry overall also is experiencing much less stickiness since the global pandemic, one panelist noted, and this is creating an environment in which many legal professionals are looking to move to other firms.

Marketing partners need to be creative and offer ways to tell their firms’ stories by connecting the dots throughout their firms.

Other panelists agreed, stressing that it’s important for firm recruiters and marketing professionals to understand the motivations of their prospective hires in seeking out a move in the first place. Indeed, one panelist noted, underlying the lateral hiring process is the critical question of why do talented people in the legal industry move? “These firm professionals need to understand this motivation on a personal level and create a narrative around the firm that helps bring top talent over,” another panelist offered.

Check out the recent video from����here

Surveys over the years have shown that compensation isn’t traditionally the main reason for a move, often ranking behind such factors such as feeling underappreciated and a lack of progression. In fact, a firm’s focus on these other factors — along with other considerations such as professional well-being, mentorship, flexible working arrangements, and improved work culture — can create an overall environment that is far more conducive to fostering higher satisfaction among lawyers who then in turn will want to stay at the firm, resulting in the kind of stickiness that has faded from the legal industry since the pandemic.

Not to mention that fostering a work culture that promotes higher satisfaction among its professionals is a much less expensive proposition than paying increasingly higher salaries each year.

Telling your firm’s story

The panel also observed that it is this internal conflict of feeling underappreciated or not being valued — whether the feeling comes from brand or origination issues or from problems with management or personnel — that is critical for firms’ marketing professionals to understand. And this is important not only to improve recruitment of top legal talent to the firm, but to mitigate any outward migration of the firm’s own top talent. “Whatever the cause that results in lawyers not feeling valued, that feeling is often at the heart of their leaving,” one panelist explained.

A key part of solving this question of why is being able to tell the firm’s story and leveraging that information to improve recruitment and retention, the panelist added.

Another panelist explained that she saw marketing budgets going up across the board because many new hires are insisting on a level of marketing support that they were missing in the places they left. “And that means that firms need to ask themselves, ‘Do we have a marketing team ready and deployed to support our partners?’” she asked.

Other panelists agreed that while platforms and support are important, it is the ability to tell the firm’s story that will determine success much of the time. The panel stressed that those marketing and recruitment professionals who use their resources and cite real-world examples and real-life numbers — such as examples of past hires or laterals who then thrived at the firm — often see those factors make a greater impact.

For example, one panelist described how their own firm — using its own data around previous legal talent hires made over the past decade — determined which individuals succeeded and what particular attributes those hires had. The firm then was able to go into the market for new hires with a clear blueprint for what kind of talent would best thrive at the firm. In this way, the firm saw some clear strategies it could enact to increase the chances that any new hires would thrive at the firm, the panelist explained. “We saw that if we immediately kept new hires engaged in work and didn’t lose sight of giving new and younger talent a voice in the firm, that we were better able to create that glue that keeps our talent satisfied,” the panelist said.

Another panelist agreed, adding that integration during the on-boarding process is also key. “Firms should look for organic situations in which to place new talent to help them find those opportunities within the firm,” the panelist noted, adding that law firms need to invest in their marketing professionals to enable them to tell their firms’ story. “Equipping the messengers to be the hands and feet of the organization brings the brand to light,” she said. “Storytelling is the key.”

Many on the panel agreed that the role of law firm marketing professionals in talent matters is not something that just happens upon hiring but should continue throughout any new hires’ tenure with the firm. “It’s important for the firm to remember why this or that particular person was hired in the first place,” one panelist said. “And it’s not just about whether new hires are meeting expectations or are meeting their metrics — rather, it’s about whether we, as a firm, are meeting their expectations that we set out when they were hired.”

You can find out more about here

In the final part of this series, we discuss the recommendations in the NPAG’s regarding the need to “enhance the employee experience,” which includes offering higher starting pay and improving the work/life balance of career accountants.

Thomson Reuters Institute: In the NPAG’s report, one sentence that was bolded for emphasis says, “…we must transform the reality of the workplace to have a truly better story to tell.” Can you talk about how this transformation might take place, and what positive change in the accounting profession might look like, starting perhaps with addressing salary concerns and improving work/life balance?

Jennifer Wilson: One of the core messages in the report is that we have to tell a better story — but to do that, we have to have a better story to tell, right? In the report, we discuss employer solutions in four or five big categories. One was starting salaries, and the second was reducing overwhelm, which you could call improving work/life balance, but it’s much bigger than that. The others were providing clear career pathways and making workplaces more inclusive where people have more of a sense of belonging and community.

For the salary data, we referenced a few credible third-party sources and found that universally, across the board, the tax & accounting profession had a lower average starting salary than many other professions that business majors might consider. [Note: For example, recent business graduates in 2022 going into computer sciences or engineering could command starting salaries of $86,964 and $76,249, respectively — whereas accounting majors had an average starting salary of $60,698.]

You can find out more about here.

It’s hard to get Gen Z graduates excited about the prospect of working harder for less money, so we have to change that dynamic. For a long time, the story of accounting was, come on in and we’ll show you the ropes, you’ll pay your dues, apprentice for a few years, and someday you’ll make a lot of money. That delayed gratification of earnings is not a sellable message today.

Thomson Reuters Institute: So, is the solution then simply to pay accounting grads more money?

Jennifer Wilson: Yes, in part. We really need to do is look at ourselves as a profession that isn’t just competing with other finance departments or accounting firms, we’re competing with other businesses that attract accounting and business majors as well. When I talk about starting salaries with accounting firm leaders, they’ll say, Oh, we’re competitive with other firms — but that isn’t the benchmark anymore. We have to be competitive with other business majors.

Thomson Reuters Institute: And not just on salary, but also on work/life balance and other cultural factors in the workplace, is that correct? After all, there is almost a culture of pride about how hard accountants work, especially during tax season. And it seems that many young people have decided they don’t want to work in that type of culture.

Jennifer Wilson: If you study anything about Gen Z, you’ll find that they are focused on wellness and mental health. They don’t want to work in a profession that isn’t focused on how to work smarter, not harder. So then, the question becomes: How can we transform our business model to have a workplace that gives us joy? One in which we serve clients we love, doing work we love, in a way that gives us joy. And one in which we have a realistic workload and the right return on investment.

Thomson Reuters Institute: The burden of tax season seems to be a big deterrent for many people. How do you recommend that the profession address the “overwhelm” during its busy season?

Jennifer Wilson: In the report we go into this subject at length. There is a Red Badge of Courage thing in which people like to talk about how hard they work and how busy they are. Some of it is valid, and some of it is a bit of folklore, but it doesn’t serve our profession well, so we really have to look at our value system.

There are many things accounting firms can do, and are doing, to ease the tax-season burden, such as saying goodbye to difficult and unprofitable clients, or clients who aren’t ready, raising fees, and right-sizing the client base to match the firm’s actual capacity. Offshoring, outsourcing, and bringing on contractors and part-timers are all options as well. The larger question is how to provide employees with the flexibility they need and create a work culture in which the workload management makes sense.

Thomson Reuters Institute: How does workload management during the rest of the year play into the crunch during tax season? Are there ways to spread the pain around?

Jennifer Wilson: Workflow and project management can always be improved. Automation and technology are components in the formula for success as well. Technology can help us strip away unnecessary and mundane work, which can help with the workload. In the report we also emphasize that firms can benefit from much more non-traditional staff — non-accounting grads — added to the work stream, so that we’re not having accountants and CPAs doing operational and customer-service functions like calling clients for their K1s.

If you strip away the administrative work so that accountants are not overwhelmed by it, they then can focus on the more technical work, on relationships with clients, and on higher-value strategic activities.

Thomson Reuters Institute: In addition to the talent pipeline problem, the profession also faces issues of burnout, retention, and dissatisfaction with opportunities for career advancement. What strategies can firms implement to address these issues?

Jennifer Wilson: The career pathway discussion is multi-faceted, but one aspect of it is that we need to do a better job of letting folks know that there is more to a career in accounting than tax and audit here — that there are all kinds of cool paths people can take in this profession.

The other thing is that you want to make sure people know what it takes to progress in your firm. We could progress our people much faster if we had clear competency models that were published by level and by discipline, so it becomes super clear what specific skills and knowledge people need to demonstrate to progress. There are templates available for these competency models, these pathways, and firms could leverage these resources to create their own model. The clearer we can be about all the options and opportunities available for people in our accounting firms or departments, the better retention is going to be.

Thomson Reuters Institute: It sounds as if there are no easy answers to the talent pipeline problem — indeed, that it needs to be a coordinated effort on many different fronts. Is any single starting point more important than the others?

Jennifer Wilson: Well, employers have the most to gain from solving the pipeline challenge, and they have the most to lose by not taking action — so, not surprisingly, they have the most actions to take.

The most transformative actions currently live in the employer realm, for sure, both in accounting firms and corporate finance departments. We need every employer focused on this, because it will feed all other aspects of the pipeline if we can create better word of mouth about what it’s like to work in this profession. That’s the tell a better story part, and it will help us immensely.

You can find all three parts of this series about��the National Pipeline Advisory Group (NPAG)��and how to address the talent shortage in the tax & accounting industry, here.

Jennifer Wilson — co-founder and partner of�� and the NPAG’s independent facilitator — discussed with us why the accounting profession needs to “tell a more compelling story” in order to address its chronic talent shortage.

Thomson Reuters Institute: In our earlier discussion, you went over the key themes that the NPAG outlined in its research, and one of them — “Make the academic experience more engaging” — seems like it would fit into another — “Tell a more compelling story” — in order to get more students interested in the options that a career in accounting offers.

Jennifer Wilson: Exactly. We need to really look hard at getting into middle schools and high schools, and to evangelize at the university level as well. Right now, accounting classes are disappearing from high schools and being replaced by finance classes, which are mandated by many states. So, one solution could be to get more accounting education into finance classes at the high-school level.

Those of us who are in the profession should also seek opportunities to share our story with high school and even middle school students. It doesn’t matter if you’re a CPA, you say: “I’m in the accounting profession, and here’s what I do inside it.” It’s actually better if we’re not all auditors and tax people going into schools, because students — especially college students — need to know that they are not on a one-way track to public accounting, or on a two-way track to either tax or audit. There are so many career pathways available inside our profession and so many roles and different ways of participating, but we need to tell that story better.

Thomson Reuters Institute: Not to nurse a stereotype, but many accountants may not be comfortable talking to a group of students about their work. What do you say to those folks?

Jennifer Wilson: I tell people that the first place I want everybody to look is at your kitchen table. What kind of story are you telling there? Because your kids are listening, and they are telling their friends. I don’t care who it is or where, we need to start looking at the youth in our midst and saying: “Hey man, this is a cool profession, it has unlimited opportunity, and you really should consider it.”

This is something all of us can start doing today, by the way. For example, there’s a woman named who is a tenured professor and CPA at a community college in Michigan. Her daughter just became a newly minted CPA, by the way. Michelle goes all over the place, individually promoting the holy heck out of the profession in high schools and community colleges. She uses an online platform called that teaches students basic principles of accounting by running a simulated lemonade stand. Part of her passion is to tell a better story and get people hooked on how cool accounting is, how entrepreneurial it can be, and how interesting it is. She’s not waiting for a large organization or university to organize action — she’s in action herself, evangelizing accounting, and doing her Lemonade Stand work. And she has been at it for quite some time.

Thomson Reuters Institute: Did your research uncover any other people or projects that might serve as an inspiration to accounting professionals?

Jennifer Wilson: There’s an organization called the (CAQ), which is focused on audit quality — but in order to ensure audit quality, we have to have talent who want to become auditors. So, part of the CAQ’s organization is Accounting+, which studies the talent pipeline and is engaged in telling a better story about accounting. They reached 110,000 high-school students last year through their Q-Plus program in conjunction with , which is an online platform that exposes high-school kids to different careers. The CAQ also is focused on reaching out to underrepresented minorities, which is another one of our themes.

Likewise, has their boot camps and summer exposure programs that are reaching thousands of students and could reach more with additional amplification, support, and funding. So, there is a lot of cool stuff in the “tell a better story” chapter that people are already doing — but we need to do more of that and support it better.

Thomson Reuters Institute: There is something in the report called “The Pipeline Pledge.” What is that?

Jennifer Wilson: The Pipeline Pledge is a personal pledge that we’re asking individuals to take, committing them to participate in activities that can influence and grow the talent pool. It’s a personal pledge, but you can take it as an individual contributor, as a firm leader, or as an academic — but it’s a pledge we want everyone to take.

If you take the pledge, you’re committing to doing two things in the next 12 months to help shift the profession’s image. The report includes a list of solutions that can serve as suggested activities to get out there and really impact the pipeline individually. One of the easiest activities includes promoting the profession and telling a better story.

Thomson Reuters Institute: You’ve pointed to a lot of things that people are already doing to help solve the talent crisis, but it always seems as if the accounting profession’s talent problem is an uphill battle — as if no matter what is done, nothing seems to change. After working on this report, are you optimistic that progress in this area can actually happen? Or is it all still a pipe dream, pardon the pun?

Jennifer Wilson: In the report, we emphasize that in order to create real change, we need a more unified effort across the profession’s associations, organizations, academia, and employers, as well as a recognition that the root causes of the talent shortage can’t be addressed in isolation, because they all affect different parts of the pipeline.

In fact, one of the things we also wanted to stress is how critical it is that each of us in the profession — regardless of our role and whether we’re a CPA or not — recognize that we’re all fed by the accounting profession. We love it and care about it, and we can all make a difference immediately — we just need to get to work.

I think I can speak for all 22 of the NPAG members working on the report, sharing that we left feeling encouraged that there is hope, and if we take personal responsibility to drive change, that we can genuinely move the needle on this.

This is the second in a series of three blog posts about��the National Pipeline Advisory Group (NPAG)��and how to address the talent shortage in the tax & accounting industry.

Despite a general awareness of the issue, however, the accounting profession has yet to devise a comprehensive strategy for addressing its talent woes.

To tackle this issue, the American Institute of Certified Public Accountants (AICPA) Council passed a resolution in May 2023 calling for a National Pipeline Advisory Group (NPAG) to use a data-driven and transparent approach to identify the core dynamics that are fueling the accounting profession’s talent shortage and recommend constructive solutions. NPAG was formed with 22 independent stakeholders, representing all facets of the accounting profession — public accounting firms of all sizes, corporate finance departments, academics, regulators, and industry associations.

After a year of intensive meetings and research, the NPAG issued a draft report on its findings in May 2024 and, after weeks of public comment, published its final report, , on July 31.

Jennifer Wilson — co-founder and partner of , and named by CPA Practice Advisor in 2024 as one of the most powerful women in accounting — acted as the NPAG’s independent facilitator. We spoke with Wilson to learn the progress of this project and where it’s going now.

Thomson Reuters Institute: How did you get involved with the National Pipeline project, and what were the project’s initial goals?

Jennifer Wilson: The AICPA resolution that created NPAG also called for a very data-driven, inclusive study of the pipeline issues in our profession, and that a plan be built to develop strategies to address the issues. The goal was to bring together a whole bunch of people from different mindsets and backgrounds to study this issue and then create solutions in the form of a strategic plan. I was then asked to become the independent facilitator for NPAG.

Thomson Reuters Institute: How did the process for creating the NPAG unfold?

Jennifer Wilson: The 22 people in the advisory group were volunteers, and they gave us an unbelievable amount of time. We met six or seven times in two-day, in-person meetings, and met over video for two hours every month. We also had working groups meeting regularly, we reviewed almost 30 research reports around the talent pipeline and generated some of our own data through focus groups, feedback sessions, and a profession-wide survey in 2024. There was really an unbelievable outpouring of energy and interest in solving this problem.

Thomson Reuters Institute: Can you talk about what you learned during this process, and what came out of the report?

Jennifer Wilson: Before talking about the report, I just want to give the data some context, because one of the things we had to do was check our biases and entrenched thinking at the door. We all came from different perspectives, and we had to represent those perspectives, but we also had to let go of already knowing — or thinking we knew — what the root cause is of these talent issues, and we had to let go of our opinions about how to solve it.

Thomson Reuters Institute: Did letting go of that “already knowing” lead to any deeper insights?

Jennifer Wilson: One really big aha moment I had early on was that we — everybody — were looking for somebody else to be responsible for causing and solving the problem, whether it was accounting firms, academics, professional associations, regulators, employers, or whomever. So, we had to drop way of thinking – “This is someone else’s problem” — and learn anew what the true causes of it are. And what we realized is that no single entity is going to solve it. Rather, the solution will come through a unified effort across these associations and organizations.

We need to work better together and prioritize together as a profession to implement institutional energy — energy that I’d love to see pulled together to work on solutions.

We also realized that we don’t have to wait for any individual organization or association to begin implementing solutions to the pipeline shortage. Instead, we all can individually make changes and take actions to make our profession more attractive and to retain top people within it.

Thomson Reuters Institute: How did you go about identifying the root causes of the talent shortage, and did you learn anything you didn’t already know in the process?

Jennifer Wilson: We studied nearly 30 independent research studies from a range of sources, many of which are . As a group, we read and summarized these studies, looking for common themes among them. Six themes that did emerge are outlined in the and — and are the themes that we feel need to be addressed. These are the root causes of the tax & accounting industry’s talent shortage, and our proposed solutions are organized around these six themes.

Thomson Reuters Institute: Are the themes identified in the report arranged in any particular order? Are some more important than others?

Jennifer Wilson: No, we didn’t present the themes in any particular order of importance — they’re all equally important. The other thing we noted is that you can’t address them in isolation, and that’s bad news, because we’ve got to get to work in all areas in order for any meaningful change to happen. We have to change in all six theme areas, not just one or two, because they all affect different parts of the pipeline.

Thomson Reuters Institute: So, you’re saying that the talent shortage is really a systemic issue, one that affects — and is influenced by — all aspects of the profession?

Jennifer Wilson: When we started, I kept seeing this visual of the talent pipeline being like a PVC pipe with a few holes in it. What we discovered, however, was that the talent pipeline is more like a colander with a lot of holes, and they’re in a lot of different places. We don’t have to plug them all, but we have to plug more than one or a few.

Thomson Reuters Institute: Can you offer an example of how one or more of these holes might be plugged?

Jennifer Wilson: Okay, for example, take the last theme listed, “Tell a more compelling story.” We can tell a better story right now, because the story we tell about the profession is really a mostly negative story. Many, many people when they talk about their work in this profession do so in the negative. They talk about how hard the work is, how technical it is, how difficult it is to keep up with standards, how many hours they work, and how rough their peak period or busy season is.

We make ourselves sound like we’re a victim of the work rather than focusing on how cool this profession is, the difference we can make for others, and how critical that is to the success of the global economy.

I like to say that accounting professionals are the guardians of the global economy, and that we have a major-league important role in assuring the world’s markets. We help individuals achieve financial wellness, and we help entrepreneurial businesses think strategically, understand where they are, and what they can do to perform better.

We fuel America’s business, and that is fun and interesting. It’s also a tech-forward profession. We have a profession full of really top-quality people — good-hearted people, community-service-minded people, givers. There are so many cool things about this profession we could list right now that are 100% true, but nobody’s emphasizing them — so we have to tell a better story.

This is the first in a series of three blog posts about and how to address the talent shortage in the tax & accounting industry

Recently, at the third annual Legal Value Network Conference Experience (LVNx), several industry experts discussed driving change in the legal industry and other pressing issues for law firms today and in the future. My team and I had the opportunity to present on a topic we consider extremely important and forward-looking: evaluating lawyer productivity.

A month ago, the Thomson Reuters Institute released the Relative Performance Measure (RPM) report, describing on a new metric for measuring lawyer productivity. The RPM report detailed the theory, motivation, and potential application of the RPM metric, which finds a timekeeper’s relative performance in fees worked and adjusts it for their relative performance in collection realization.

To offer an example, RPM evaluates an associate in an Am Law 100 firm, working in M&A in Boston, by comparing that associate to similar associates in the same law firm segment, location, and practice area. In the graphic below, we can see that this associate’s performance in generating fees is 3% below replacement level, while their collection realization is 6% above. After adjusting for these factors, their final RPM score is 2.1% above replacement level. Essentially, RPM is a profit-focused metric that measures an attorney’s relative output, rather than their total hours worked, providing a more comprehensive assessment of their economic impact.

To further the discussion, we created a workshop under the framework of a fantasy football-style draft, in which the audience and general managers (GMs) selected between two lawyers instead of professional football players. We enlisted four GMs and split them into two teams. Each round, we presented two anonymized lawyers from the dataset, provided productivity and demographic-related statistics, and asked the audience to debate and then choose their pick.

Round 1: Is productivity the same as hours worked?

First, we kicked off the first round by presenting two associates from the same class. Lawyer A had worked significantly more hours than Lawyer B, but Lawyer B had a higher collection realization rate. Following the initial presentation of the draft options, the audience was divided on their potential draft selection: supporters of Lawyer A argued that higher hours indicated greater dedication and potential for improvement in realization rates, while proponents of Lawyer B emphasized the immediate financial impact due to better collection realization.

After a spirited debate, one GM group selected Lawyer A, valuing the potential to improve realization rates, while the other group selected Lawyer B for the direct financial benefit. We then revealed the RPM scores: Lawyer B had a score 9% above replacement level, while Lawyer A had a score 2% below. The key takeaway was clear — hours worked are not the sole measure of productivity, and collections can significantly impact a lawyer’s economic contribution to the firm.

The GMs that drafted Lawyer A did so because they considered hours to be the primary area on which to focus with regards to productivity, however as I mentioned earlier, RPM is a profit-focused productivity measure; and under this lens, hours only matter if those hours lead to revenue generation.

While the argument that realization is out of an associate’s control is a fair one, we don’t see it like that exactly. Rather, we believe that realization is also a reflection of the quality of work that the associate provided which sometimes can lead to their partner discounting a certain amount during billing. Additionally, realization essentially captures the actual economic impact on the firm that the lawyer’s efforts have brought — bringing us, in turn, much closer to measuring what we consider productivity.

Round 2: Should productivity be absolute?

The draft continued as I presented another set of lawyers, both hailing from similar demographics, except for their office locations. (In this draft, Lawyer A came from New York City, while Lawyer B worked in Chicago.) Unlike the first round, however, their absolute productivity stats were nearly identical. They both commanded the same rate, while Lawyer A worked slightly more hours and collected a slightly higher percentage of their fees compared to Lawyer B.

With these much closer outputs, the audience and GMs leaned towards selecting Lawyer A, impressed by that pick’s marginally superior hours and realization rates. Then, however, one astute audience member pointed out a crucial detail: Lawyer A and Lawyer B were from different cities — one from NYC, the other from Chicago. This revelation prompted a quick re-evaluation of their choices. I could see the wheels begin to turn in the four GMs’ heads as they quickly re-evaluated what they had previously considered to be nearly identical stats. After a minute, both groups entered their pick: Lawyer B.

But why? Because despite similar rates, their performances were not identical when considering their respective markets. Lawyer A’s rate was nearly $100 less than the average for their peers in NYC, while Lawyer B’s rate was $40 higher than the average for their peers in Chicago. This meant Lawyer B had a greater financial impact on their firm relative to their market, despite a lower realization rate.

The key takeaway from this round, was that relative performance matters. We weren’t comparing Lawyer A to Lawyer B, we were comparing Lawyer A to Lawyer A’s peers and comparing Lawyer B to Lawyer B’s peers. Lawyer B’s financial impact in Chicago outweighed Lawyer A’s impact in NYC, showcasing that productivity should be measured in context, not in isolation.

Final rounds

Our session at LVNx concluded with additional draft rounds, further emphasizing RPM’s significance in evaluating productivity beyond mere hours worked and absolute measures. Each round highlighted how RPM could simplify the quantitative portion of talent evaluation, allowing law firms to focus more on qualitative attributes similar to the way that NFL GMs focus on non-measurable factors like attitude, coachability, and leadership. This balanced method ensures a comprehensive performance evaluation, aiding in better decision-making and talent management.

Overall, our workshop demonstrated that RPM is a profit-focused metric that measures an attorney’s relative output rather than their absolute output. By incorporating RPM into their evaluation processes, law firms can make more informed decisions, ultimately leading to better talent management and improved overall financial performance.

You can download a full copy of the Thomson Reuters Institute’s Relative Performance Measure (RPM) report here.

Now, in addition to acting as an accredited museum docent at the Philadelphia Museum of Art (where he also serves on several curatorial committees and acts as guide coordinator for major exhibitions), Pagliaro is a frequent invited guest speaker and lecturer on art history at several universities in the Philadelphia area and southwest Florida, where he resides in winter.

Not surprisingly given his past position, he has strong opinions on how lawyer succession should be handled, and how clients should be brought into the situation.

“The great mistake most firms make is not maintaining a firm culture that institutionalizes client relationships and not making institutionalizing clients a core value of the partnership,” Pagliaro says, adding that in most law firms, partners with clients benefit from referring to clients as my client and using ownership language and practices to insure they control the relationship, which is all the better to drive compensation their way and to resist pressure to retire when the appropriate time comes.

“That is often not in the interests of the client or the firm,” Pagliaro explains. “Many firms are content to let the primary relationship go on largely unsupervised, as long as the client relationship partner generates income.”

A culture of institutionalizing client relationships

One way to instill a true culture of institutionalizing client relationships, he says, is for the firm to create a new role — Managing Partner for Client Relations (MPCR) — and ensure the professional in that role also sits on the firm’s compensation committee. The person in this new role should be charged with meeting with clients, eliciting honest feedback independently, and then exploring the full scope of each client’s needs. The MPCR should have as their main charge the job of supervising the cross-selling of the client to a broad spectrum of partners within the firm and creating client service teams, while acting as the team coach.

Importantly, it would also be their job to inspire all partners to understand that it is in every partners’ interest to expand client relationships as much as possible — even if there is a lead partner in the relationship.

“That process needs to be transparent and supported in the compensation process,” Pagliaro explains, adding that once an MPCR enters the mix, it opens the door for that individual to i) seek client feedback; ii) gather input from the client on succession; and iii) effectuate the transition of work and relationships.

Indeed, it is a culture that most firms say they want but struggle to achieve. That may be largely because firms lack discipline and follow through, and refuse to invest resources in creating infrastructure, empowering personnel, and providing support to drive true institutionalization of firm clients. Most critically, firms that are serious about creating such a culture need to back that up with a firm compensation process that reinforces the right outcomes.

Best practice for firm leaders is not to wait too long to address partner succession. A clear policy on when partners should begin to start planning for succession, which is fairly applied and religiously followed is crucial and should have the MPCR meeting with partners in the retirement zone at least three years before actual retirement. That way, this time can be used to manage the relationship, solicit input from the client, and introduce the client to more talent.

Too often, Pagliaro adds, partners don’t want to focus on this. “Good succession planning is when you allow others on the team to succeed.”

Planning for succession is critical

If a lawyer plans ahead properly, they can envision their best post-law firm life, says Pagliaro, adding that partners should ask themselves: i) how do I transition at a pace that makes sense; and ii) what is my objective for my post-law firm encore career?

That dream encore career can come in any form, and provide something that fills your life not just your time. Clearly, lawyers are used to being busy, engaged, and challenged — so they must recognize that they need to ensure their encore career presents opportunities for engagement, without the stresses of law practice.

Finally, know that there is no guarantee as to how long you will live or how many healthy years you have ahead, Pagliaro notes. “Never assume you are invincible,” he says. “Never say ‘I don’t know what I would do if I didn’t go to work.’ There is a world of activities, opportunities, and needs out there — places in which people and organizations are desperately seeking intelligent, organized, and articulate folks to help, add value, lead, and instruct. It is actually fun to find your new niche.”

This is the second part of a two-part blog series on the view of succession planning from the client side. In our last installment, we discussed the importance of keeping clients informed of changes in firms’ key partners.

This targeted approach to recruiting, on-boarding, and retaining employees is designed to address the unique financial concerns and social priorities of younger generations.

Fresh attitudes toward candidate recruitment

The Gen Z generation, born between 1997 and 2012, is gradually entering the workforce, but their representation in the public sector lags previous generations. In 2021, the percentage of Gen Z individuals in the federal workforce was , compared to the 9% that they represent in the entire labor force. Recognizing that often had prior exposure to it through internships, job shadowing, or fellowships, it’s important for these entities to engage with these potential candidates early on.

As 30% of the federal workforce reaches retirement eligibility by 2029, barriers to entry should be actively removed to broaden the prospective talent pool. Government agencies are encouraged to review and identify positions that do not require advanced or four-year degrees and remove such screening criteria. Shifting to skills-based hiring can attract individuals with non-traditional backgrounds, including re-skilled workers, community college students, or former interns or apprentices.

In a job market in which employees hold more sway, the quest for the perfect candidate may be futile. Mission Square’s report indicates that 93% of human resource managers have had to reopen recruitment processes due to a lack of qualified applicants. And a recent survey of state and local government human resources managers indicated that reported hiring candidates below the minimum qualifications with the intention of re-skilling them after they’re hired.

Modernizing a byzantine hiring process

Government agencies suffer a poor reputation for having complex and opaque hiring processes, despite the pressing need to fill more than 1 million vacant positions. For example, fewer than 10% of government organizations have a mobile application for employment application tracking, according to Mission Square. Indeed, completing and sharing organizational compensation and classification studies can counter this perception of wage opacity as well.

Wages are not the sole or primary factor that is attracting younger generations to the public sector. A report of highlights job security, work-life balance, health insurance, and personal job satisfaction as key attractions. Also, government organizations need to strongly communicate the message that their job offers candidate the opportunity to be part of a meaningful mission — and that message needs to reach younger audiences in spaces where they are active. For example, Gen Z workers tend to use as a search engine, but government agencies are hesitant to utilize the platform. Recruitment efforts should extend beyond federal career listings on sites like USAJOBS and LinkedIn.

Provide empathy & solutions for younger generations’ financial uncertainty

Mission Square’s report on younger public sector workers notes the significant personal stress many Gen Zers and Millennials experience over their finances, debt, and the overall economy. Numerous employees shared with Mission Square that they feel that they are unable to save more in the current economy, with one-in-four reporting having to take a second job beyond their primary employer.

Despite the financial benefits that government agencies can offer these generations, there is a gap in financial literacy that keeps younger workers from fully understanding available benefits. Financial wellness evolves greatly during different life and career stages, and employees under 40 years of age show greater interest in topics like (rather than retirement) and prefer learning through digital tools such as interactive online courses or mobile apps.

To increase the financial well-being of young professionals, government benefit programs should focus on:

• • • Assigning benefits mentors to new employees to ensure benefit literacy and utilization;
    • Providing education on tax implications of various benefits programs;
    • Offering resources for debt management;
    • Furnishing legal consultation services to employees;
    • Delivering education on credit building, homeownership, and building of emergency savings; and
    • Giving insights on risk tolerance and tools for tracking retirement readiness.

Gen Z and Millennial generations have a particular interest in social causes, and government agencies should take note that these groups () are more likely to be exposed to environmental, social & governance (ESG) investment opportunities. An increasing number of mutual funds and exchange traded funds (ETFs) have been modified in recent years with an ESG tilt. And deferred benefit retirement plans — such as 403(b) or 457(b) plans — offer investors autonomy in choosing their fund investments. Mission Square reports that less than half of public sector employees under 35 utilize these plans, likely due to a lack of education. Incorporating ESG funds and emphasizing the autonomy younger employees have in deciding where their funds are invested could lead to increased participation.

Younger employee participation in deferred benefit plans is highly important, given the frequency of career changes, as these employees may otherwise walk away from public retirement programs which require a number of years-vested in order to receive an employer match.

Maximize the public sectors unique position to address student loan debt

The public sector also holds a unique opportunity to address employee student loan debt, but utilization of these strategies remains underutilized. The Student Borrower Protection Center reveals that despite that more than 9 million public service workers are eligible to pursue debt cancellation through the Public Service Loan Forgiveness Program (PSLF), have submitted proper paperwork to start the process. Managers can provide education and reminders to employees on certifying public employment and pursuing PSLF.

Several offer direct federal student loan payments as an employee benefit. This can help offset out-of-pocket expenses for employees while they fulfill the 10-year requirement for loan forgiveness. For non-federal agencies considering such a benefit, employers can contribute for employees annually without subjecting the benefit to income tax. Starting in 2024, employers with defined contribution plans can count employees’ student loan payments as contributions for purposes of employer matches. This approach not only promotes employee retirement plan participation, but also acknowledges the financial strain of student loans.

Private sector solutions are available to offer employers student loan assistance programs as well. One program, Summer, reports that employee retention rates have in cases in which employers implement these programs, and that adoption of these benefit programs by employees outperforms typical financial wellness benefits fivefold.