Most law firms lose an average of 15% to 20% of associates per year. Let’s consider the investment a firm makes in hiring a new associate.

A Flawed Business Model

The cost to the firm of a departing associate is enormous.   With each associate loss, a law firm loses an estimated $200,000 to $500,000 connected to original recruiting costs, sunken training and development costs, resource shortage and replacement costs, administrative and human resource costs, and other factors. In addition, firms face other non-financial losses as a result of associate attrition, including the potential for client dissatisfaction with turnover and the negative impact on firm morale, both of which can quickly manifest into hard dollar signs if not carefully managed.

Breakdown of Costs Per Associate

Associate Salary:                                                                  $160,000

Partner Recruiting time                                                     $135,000

(50 hours at a billable rate of $500/Hr.

Recruitment Charges @25% of salary                             $ 40,000

Training (100 hours of partner @ $500/Hr.                 $ 70,000

plus (100 hours for associate training $200/Hr.

Subtotal of loss per associate due to Attrition:           $405,000  

Additional costs:

  • Lost productivity starting a replacement
  • Firm disruption
  • Retraining new associate
  • Recruitment time to hire new associate
  • Administrative costs for new hire
  • Loss of client confidence client disruption of service

Many Managing Partners state that they easily lose between $200K to $400K per attorney. With 15% to 20% of associates leaving it is easy to see how the loss easily begins at $12 Million to $50 Million per firm.

A Better Business Model

 It is interesting to note that it is rare that associates cite money as their reason for leaving.

Law firms want to keep in mind that headhunters are constantly circling your firm looking for a way to recruit your valuable asset. To ignore this fact does not make good business sense. It does, however, make sense to be proactive to protect your investment.

Look at it this way, if you had a client who brought in $425K to your firm each year, you would have utmost customer service, finding ways to retain your client. However, many firms have the outdated mode of “churn and burn” for their associates.

Although the legal profession operates pretty much on precedent, outmoded ways of handling personnel needs must be updated in order to increase bottom-line profits within the firm.

Project No Associate Left Behind

Open a dialogue with associates. Obviously, a partner is not going to sit with an associate and ask about job satisfaction and get an honest answer.

Hire a consultant, similar to the services that I offer to take an independent, blind and confidential survey among associates to find out the major objections and dissatisfaction among associates.

Upon discovering problem areas, addressing these concerns with a consultant/coach.

Ongoing CLE’s designed webinars that enhance partner and associate communication.

A savvy firm in the Midwest realized that, despite the fact that each year they increased client-based revenue, their net profits suffered. Once they realized the high rate of associate attrition, in their case the number was 18%, they took decisive action.

Once I was able to survey the associates using a blind and confidential survey, conducting webinars and CLE presentations, a dialogue began between the firm and associates. They made minor changes and within a year, they dropped attrition down to 7%. This was substantial savings and profits for the firm soared.

Avoid Being Blind Sighted

Let’s face it because someone is a good attorney does not mean he or she are a good manager. Also, with Biglaw, a firm needs to be alerted if there is large dissatisfaction in a particular practice area or at a specific office.

The worst thing for a firm is to be blind-sighted by a mass exit of associates. These things can be handled using a coach/consultant.

All associates do not have the goal of becoming a partner. There needs to be a delineation of approach towards the specific categories of associates appropriate to in their goals.

Finally, most firms are still run by Baby Boomers with a more of a patriarchal ironed fist approach. Many associates will be Millennials and a different style much be instituted to retain your valuable asset.

Proactive law firms who learn to acknowledge and blend multi-generational mindsets and values find that their attorneys are happier, attorney attrition decreases and law firm bottom-line profits greatly increase.

Pamela DeNeuve

Attorney Coach for Increased Profits

I help Law Firms Increase Profits through Retention, Decreased Attrition, Increased Engagement & Productivity

45 – Minute Free Consultation

Law Firm Assessments Available

pameladeneuve@intrinsicsolutionsnow.com

www.intrinsicsolutionsnow.com

904-607-1211