By Pieter van der Hoeven, Senior Director, Business Development, Litera
Part of a series of articles from Litera leaders on themes related to the ILTACON 2022 event.
It's no secret that law firms face enormous challenges in finding and retaining enough talent to keep up with the demand for their services. In 2021, law firms had an average attrition rate of 26%, according to NALP's annual Update on Associate Attrition. In a recent Thomson Reuters report, law firm business leaders identified lawyer recruitment and retention as the most significant risk to profitability. Fifty-one percent said the risk was high, and another 35% considered it a medium risk. The next highest threats to profitability are poaching of staff by competitors and associate salary increases. Of the many things firms see as risks to profitability, the top three all relate to the war for talent.
Losing attorneys is a costly process. According to NALP, replacing a single associate can cost as much as $500,000, measured in recruitment fees, lost productivity, and training and onboarding costs.
The traditional law firm response, throwing money at the problem in the form of higher salaries and signing bonuses, is not sustainable, nor is it working very well. It might solve an immediate problem – getting enough bodies in to complete the current deals – but it leaves the firm with longer-term structural issues. And the firms that saw the highest salary increases are not seeing lower turnover, just higher costs.
Then why are associates moving on? A recent Chambers survey showed that the top factors influencing whether younger associates stay or leave are related to the work, not the compensation. Specifically, the opportunity to specialize and engage in more interesting work and to see a more clearly-defined career progression are among the top factors in their decisions.
If younger lawyers aren't finding rewarding and interesting work or seeing clear progress in their careers, is it any wonder that chasing a signing bonus or a larger salary becomes the next best option? "If you're doing work you don't like and have no autonomy in your work life, you might as well be paid a lot" seems to be a common sentiment.
We believe there is much more law firms can do to engage and retain those associates. The solution is to empower the workforce, train them well, and give them more influence over their work and career path.
And there is a role for technology and data in driving that engagement. Technology can support the entire talent management lifecycle, including recruitment, work allocation, and learning. Firms can do much more to enhance the management of an associate's acquisition of skills and find the right people for the right work across multiple projects and teams.
Talent wars are unsustainable; adding more lawyers or paying them more does not scale well. When a firm's most significant assets are walking out the door, it's time to build better systems to develop their talent and provide them with the challenging and interesting work that will make them never want to leave.
Want to see Litera's talent management software in action? Get a demo of Micron here.
Posted in ILTACON