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Pssst … could your law firm use an extra million bucks? Partners who have taken pay cuts to finance ballooning associate salaries realize only too well that the economics of law firm management have changed. Unlike most businesses, law firms traditionally have focused on revenue generation rather than the bottom line. Firms are becoming increasingly aware that they need to pay closer attention to costs. Recent figures indicate that, on average, it costs a firm $200,000 to replace a second-year associate. This means that every time five associates walk out the door, it costs the firm $1 million. To make matters worse, associates often leave before they become profitable. At the new high associate salaries, law firms typically are in the red until a new lawyer’s third or fourth year of practice. By that time, close to half of the new lawyers are gone. A 1998 study by the National Association for Law Placement (NALP) found that one in four associates leave within their first two years, and 43 percent leave within three years. William Lake of Wilmer, Cutler & Pickering spoke for many partners when he said, “We are spending substantial amounts to recruit [associates], keeping them here and training them for the first two or three years, in which they are not profitable, and then we see them begin to leave at about the time they become profitable.” Attorney retention has become an economic necessity. How to “keep the keepers” is a crucial question for law firm management today. The most common approach today is to raise salaries �- and hours — sky high. In fact, this only exacerbates the problem. It is creating a generation of “cash and carry” associates who “are pocketing the financial rewards and grabbing the practical experience with little thought of investing in the long haul,” according to the ABA Journal (June 1999). Sociological research suggests that the current spiral of salaries and hours will actually decrease retention rather than increase it. Why? Studies of Generation Xers show that they are much less willing than the baby boomers to “give their all” to their employers. Many saw their fathers give up everything for firms that later fired them. Compared to today’s baby-boom partners, Gen Xers are less likely to be men married to stay-at-home wives or to women who work part time and take care of virtually all household matters. Many Gen X lawyers, men as well as women, do not want to raise their children in absentia. Many have elder care responsibilities as well. This leads to high attrition in an environment where the “legal work week makes [such] dramatic demands on the practitioner’s time [that it is] difficult or nearly impossible to have a life in which family obligations and other nonwork activity may be experienced in a conventional way,” says sociologist Cynthia Fuchs Epstein’s influential study of New York law firms. “Who cares whether Gen Xers are good or bad?” asked one executive as quoted by The Associated Press. “The bottom line is that they are the future.” An American Management Association survey of 352 companies found that employers reported more success in retaining employees by “giving them a life” than by offering more cash, according to a column by Sue Shellenbarger in The Wall Street Journal (Sept. 22, 1999). Another study by Harris Interactive and the Radcliffe Public Policy Center found that slightly over 70 percent of men in their twenties and thirties (in contrast to only 26 percent of men over 65) said they would be willing to take lower salaries in exchange for more family time ( The Washington Post, May 3, 2000). When I speak with managing partners, these statistics are often met with disbelief. What we see, they say, are associates who just want the highest salary possible. Such associates do exist. But will they ultimately stay at a law firm? Probably not. Young lawyers focused on compensation will often find a better deal elsewhere. Law firms often find they can’t compete with the stock option packages available at many startups, even with the more generous bonus packages available at some firms. Law firms need to replace the short-term strategy of high salaries and high hours with a longer-term strategy that responds to lifestyle goals. Firms can offer the same high base salary, but allow attorneys to trade off hours for salary. This would allow a firm not only to attract attorneys looking for high salaries, but also to attract and retain those looking for a life. It would avoid turning the latter group into “cash and carry” associates — as long as reduced-hours associates can be convinced they will be taken seriously in the long term. THE PART-TIME PROBLEM A long-term strategy is particularly important for retaining women. “You know,” said one partner, “attrition rates among women are so high that we have only two choices. One is to stop hiring them, which I know is illegal. Another is to change how we do business so we can retain them.” Recent data reported by the NALP indicate that annual attrition among women is slightly higher than among men. Why? One statistic says it all: 92 percent of mothers work fewer than 50 hours a week. Law firms can’t attract and retain women if they go after only 8 percent of the labor pool. Reduced hours are the key both for Gen X and for women lawyers. But isn’t this a problem that’s been solved? Don’t most firms already have part-time policies? They do, but these policies aren’t working to stem high attrition rates. A little story can help explain why. A senior partner of a well-known firm (not in Washington) admitted recently that his firm had model part-time policies and worked hard with people to make sure the arrangements worked. He spoke with sincerity. But the prior day, several women who worked at the same firm confessed that, when they met up with each other in the library, they put the “L” (for loser) on their foreheads — so demoralized were they by what they perceived as the firm’s failure to take them seriously because they were part time. A communication gap exists between management and associates. Once we identify it, its causes are not hard to identify: Partnership depends, in part, on one’s reputation as a team player. That makes associates wary about expressing dissatisfaction. Instead, they leave. Countless conversations behind closed doors testify to continuing dissatisfaction with many part-time programs, as do low usage rates and high attrition. Evidence suggests that many lawyers leave in search of time for life. While many attorneys who work part time are well satisfied with their situations, two common scenarios signal some widespread problems. One common situation is where only a few attorneys are granted part-time schedules. “We’ve solved that problem: We have a part-time partner” is a common response. Yet studies show that only 2.7 percent of lawyers work reduced hours, and many are off the partnership track. Retaining a few lawyers is certainly better than retaining none at all, but this is not a scenario that offers equal opportunity. Moreover, research in cognitive bias psychology shows that, when relatively few women are in a predominantly male environment, the tendency is for a few to be treated very, very well, whereas most other women drop off the map — even women who are as qualified as the males in their class. Firms with part-time programs need to ask whether they have the “superstar problem”: i.e., successful use of their part-time policies is limited to a few superstars. A second common scenario occurs when a part-time attorney finds herself barred from partnership. Often this bar is combined with anxiety among part-timers that they are no longer getting the most desirable work, and with “schedule creep” — where part-time hours creep toward a full-time schedule. Many part-time attorneys thus find themselves both blocked from professional advancement and working full-time hours for part-time pay. Even if the firm has a “lookback” provision (to pay retrospectively for hours worked in excess of an attorney’s time budget), that is no solution: If the attorney had wanted the money rather than the time, she would never have gone part time in the first place. The Project for Attorney Retention of American University Washington College of Law’s Program on Gender, Work & Family, funded by the Alfred P. Sloan Foundation and supported by the Women’s Bar Association of the District of Columbia, is currently developing a model reduced-hours policy for Washington law firms. PAR is focusing close attention on methods for successful implementation of effective reduced-hours programs that provide attorneys with satisfying professional lives and an opportunity to have a meaningful personal life, but still ensure that work gets done and clients get served. The model policy will be available in May. Some firms are out front on the issue of reduced-hours schedules. Some firms just think they are. But for any firm to become an employer of choice, it needs to stop focusing exclusively on salary and start thinking about how to “keep the keepers” over a life cycle that typically includes child-rearing, elder care, and a life outside the office. Firms that do so will be rewarded with impressive savings — maybe more than a million dollars. Joan Williams is professor of law at American University Washington College of Law and co-director of the Project for Attorney Retention (http://www.pardc.org/). Cynthia Thomas Calvert practices employment law in Maryland and the District of Columbia and is a co-director of PAR. Managing attorneys who believe that their firms have effective reduced-hours programs or such best practices as part-time work coordinators, management accountability for retention, and training for effective implementation of reduced-hours policies are encouraged to contact PAR at mailto:[email protected] to share their ideas and experiences.

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