Law firm strategies around hiring and retaining lawyers are complex and multi-dimensional and are getting more so as this issue becomes more and more vital for the industry.
Interestingly, while many law firms go to great lengths to on-board and train their new hires, they often don’t seem to have a solid strategy around who they hire, other than seeking the highest-achieving students from the top law schools in the nation or the high-performers that they can lure from another firm.
In a new white paper, Law Firms and Law Schools: How Much Are Law Firms Losing When They Hire “Top Talent”?, Thomson Reuters looks at this question and leverages some startling data from Leopard Solutions, a competitive intelligence provider that serves the legal industry. The paper suggests a need for law firms to devote some time and resources to conducting a certain amount of deep strategic planning concerning who will represent the firm across the table from clients in the future.
The biggest problem law firms face, of course, is retention, the paper points out, showing how top hires from the most prominent law schools may not stick around the firm that first hired them for longer than a couple years, negating the investment of time and resources that went into training and on-boarding the individual.
Read and download the new white paper, Law Firms and Law Schools: How Much Are Law Firms Losing When They Hire “Top Talent”?
Indeed, the white paper points out that the cost to a company of a bad hire has been estimated to be about $250,000. If you take that number and multiply it by everyone who exited a law firm before they delivered a return on that investment, you will get a figure that is likely to make some law firm leaders’ heads swim. According to the data from Leopard Research, more than 4,000 lateral associates were hired from the top 10 law schools in the years 2012 to 2015, and roughly half left before the three-year mark, resulting in more than $500 million in lost recruitment investment.
Even just calculated on a firm-wide level, the numbers can be devastating.
As the data shows, between 2012 and 2015, the top 200 law firms hired more than 57,100 attorneys, consisting of entry-level associates, lateral associates, counsel, and partner hires. Not surprisingly, 78% of this group is associates, either newly hired or those coming from other firms (laterals).
What is surprising is that top-tier law schools, the main source of these new hires, have a rather dismal success rate with placing lawyers who will really stick with the law firms that hired them, rather than jumping ship for a better offer within the first three years of employment. In fact, while the top 200 law firms no doubt seek to take their new hires from the top 10 law schools, those schools have the lowest success rate with new associate hires and lateral associates.
The numbers show that just under half of newly hired associates, 49.31%, coming from top 10 law schools stayed with the law firm that first hired them for at least three years. Also, just 49.17% of lateral associates — those from other law firms but also coming from a top 10 law school — stayed with their new firm for at least three years.
Overall, the white paper paints a stark picture that demonstrates that despite the high cost to a law firm for bringing on talent, training them, and fitting them into the firm’s operations, culture, and practice, only to see them leave soon after, many law firms don’t have a strongly delineated strategy to combat this. Instead, firms are relying on “traditional” models of hiring (seeking the top students from the top law firms) rather than more strategic models that would have them considering schools beyond the top 10, which have much better success rates, or other non-traditional measurements.
In fact, while return-on-investment considerations are the norm throughout much of what law firms do, hiring and retaining legal talent may be the exception. Or, more precisely, if the top law schools are not giving law firms the type of lawyer they can invest in and trust with the firm’s future, why are they continuing to hire from those schools?