X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
It is no secret that attrition rates at law firms have gone sky high, with associates fleeing to dot-coms, investment banks, start-ups and boutiques. From a business point of view, the exodus should spell disaster. Firms spend time and money training associates who abruptly leave, and then the firm spends even more — somewhere around $200,000, by most accounts — recruiting and training a replacement. Even worse in terms of profits, the talent drain has left firms so short-handed that they are turning away work. In response to the mass desertions, a growing number of firms are taking steps to keep associates on board, with initiatives such as longevity bonuses, mentoring programs, forced vacations, even sabbaticals. But for all that firm leaders bemoan high attrition, there is a reality that often goes unspoken: As long as law firms maintain a traditional pyramid structure, there absolutely must be attrition — and significant attrition at that. It is not only unavoidable but downright necessary that the vast majority of associates leave within a decade of being hired. After all, if a firm hires 100 first-year associates, but only makes 10 equity partners, and puts another 10 or so into non-equity partner or lifetime counsel slots, any associate who does the math will figure out that the odds are against a long-term career with the firm. For firms with a pyramid structure, then, the question is not whether associates will leave but when. Most do not want to wait until their eighth or ninth year, when it is clear that they are being passed over for partnership; but the firms do not want them leaving at years two or three, right after they have been trained and can work autonomously. Yet, in today’s economy, an associate who is not going to make partner might be better served by leaving sooner rather than later. “Right now, there’s a very dramatic tension between what’s in the best interest of the firm and what’s in the best interest of the associate,” said Joel Henning, a legal consultant with Hildebrandt International. The tension, according to Henning, comes from the fact that associates are most marketable to other firms at around their third year, which is when they have developed the skills to work independently, but are not as expensive as the senior associates and are not yet expected to have their own clients. “At year seven or eight,” said Henning, “an associate better have a book of business in addition to skills.” Since associates know that chances of a long-term future at a firm are slim, many have been taking what might be their best career opportunities and getting out while the getting is good, at years three through six. For this reason, some in the industry are now saying that no retention program under the sun will make good business sense unless law firms decide to overhaul the pyramid structure. OPTING OUT OF UP OR OUT “We have to be the only business model that exists in the universe that spends a fortune recruiting people, training people and then discarding them through the funnel of partnership,” said Bruce McLean, chairman at the 900-lawyer Akin, Gump, Strauss, Hauer & Feld. Two years ago, Akin Gump decided to improve retention rates by changing the basic paradigm and removing even the vestiges of the traditional eight-year up-or-out system. “If you looked at our firm today, you would say we have the classic pyramid structure, leveraged at one equity partner to three associates,” said McLean. But, he added, “over time, we actually want to change our pyramid structure.” So far, Akin Gump has substantially beefed up opportunities for lawyers to stay at the firm in non-partnership capacities. There are currently 55 lawyers in permanent “senior counsel” positions, which is approximately double what the firm had two years ago, according to McLean. And the firm intends to continue to increase the percentage of senior counsel/lifetime career positions, so that significantly more people can remain without becoming partners. While an increasing number of New York firms have some version of a senior counsel/non-equity partner category, these firms typically consider only a small percentage of lawyers as candidates for these positions. And many are still making decisions about who can become a lifetime employee at around an associate’s seventh year, if not later. But McLean said that at Akin Gump, the firm is changing the old model by not only offering significant percentages of attorneys senior counsel positions, but also by letting them know after five years whether they have a chance of getting one of these jobs. After an associate’s fifth year, there is a formal review and if the attorney stands a good chance of either making partner or senior counsel, he or she is promoted to a position called “counsel.” McLean estimates that about 75 percent of fifth-year associates were promoted to counsel at their review and that attrition among that group has virtually ceased. Unlike some of its more conservative New York counterparts who are turning away business, Akin Gump is aggressively expanding. “We’re out trying to compete, trying to increase our market share,” said McLean. NO CRYSTAL BALL Even though the top New York firms are actually declining to take on new matters right now, profits-per-partner are still high enough that few firm leaders seem motivated to change. “This has been a very successful time for law firms,” said Larry Richard, a legal consultant with Altman Weil. “When it’s not raining, no one wants to fix the roof.” That said, some New York firms are making an effort to stop attrition by letting associates know where they stand. Shearman & Sterling tells people at the end of their sixth year or during their seventh year whether it is likely that they will have a long-term career there. If so, the firm gives them a $50,000 bonus; if not, it helps them get another job, preferably with a client of the firm so that spurned associates will at least be a source of future referrals. Other firms say they have started giving comprehensive performance evaluations that should clue in associates about the prospects for the future. Still, many New York firms do not tangibly distinguish among mid-level associates. The common refrains of New York partners are that any kind of merit-based compensation would be divisive and that the firm cannot always determine who is “partnership material” until fairly late in an associate’s tenure. “I don’t know how you target the people you really want to stay,” lamented Shearman & Sterling’s Douglas Bartner, the partner in charge of personnel. Although Bartner said that a “vocal minority” of associates wants some sort of meritocracy instead of the lockstep system, the firm overall feels there are too many risks. But perhaps more significantly, firms say they have no way of knowing who is a candidate for a long-term career early on. “It’s not scientific, where you can say, by year X, this person’s going to be a partner,” said Mindy Spector, a partner on Weil Gotshal & Mange’s recently created five-member associate retention committee. “An associate’s professional development is done over a period of years,” agreed Yukako Kawata, the partner who heads Davis Polk & Wardwell’s legal personnel committee. “Different abilities don’t show themselves immediately.” Kawata added that some skills that might make for a great senior associate, such as an ability to gain a client’s confidence and the ability to gain the confidence of peers, are not necessarily the skills that are prized in the junior associates. Still, even if firms cannot assure long-term job security for associates at years one through five, some are toying with other incentives. Shearman & Sterling and Weil Gotshal both give bonuses to younger associates for remaining at the firm a certain number of years. In the end, however, some observers think that asking associates to stay at a firm without offering them long-term career prospects might simply be unworkable. “The firms want to improve attrition — but not too much,” said Robert Hillman, an expert in legal partnerships at the University of California Davis School of Law. And, said Hillman, the junior associates are fully aware that their firms do not know which among them are partnership candidates, which ends up encouraging everyone to leave. “There is a lack of long-term emotional commitment to the firm on the part of younger associates, because the associates don’t know who the firm wants to keep.”

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.