The findings of Lawyer 2B’s annual retention rate survey have revealed encouraging signs for trainees and newly-qualifieds. The average retention rate across the UK’s top 50 firms has jumped from 79 per cent to just over 85 per cent (see feature).
But once trainees overcome the hurdles of qualification, a relatively large proportion of them will part company with their firms before being promoted to partners.
The average assistant turnover rate across the UK’s top 50 firms was 14 per cent in the 2004-05 financial year. A law firm’s assistant turnover (attrition) rate is very revealing indeed. A high attrition rate may, for example, be due to a large team quitting to join another firm, which is what happened with Denton Wilde Sapte. But a high assistant turnover rate may also be a result of redundancies, or indeed low morale.
Take Allen & Overy (A&O) for instance. The Lawyer reported in recent weeks that A&O has suffered a 25 per cent attrition rate, which is at the higher end of the City spectrum. Indeed, concern over the number of lawyers leaving A&O prompted the magic circle firm to hike its junior assistant salaries by up to 20 per cent (see News). The firm is also consulting associates about alternative career paths as a substitute to becoming a partner.
Nevertheless, a low attrition rate, especially in the big City firms, is not necessarily a good thing either. Clearly, if associates are rushing to the exit six months after qualification, law firms should be concerned. But most firms’ financial models assume that a certain percentage of associates will leave in any given year. Otherwise the bottleneck created by the rising number of senior associates waiting to become partners will continue to get worse. It is therefore in everyone’s best interests for a certain percentage of associates to leave a firm each year. Consequently, if a firm has a low attrition rate, it is very possible that the firm will also have a longer partnership track.
So, as with all things, read the small print.