Legal Business Blogs

Guest comment: How are law firms retaining the top talent?

Nathan Peart, managing director of the Associate Practice Group at Major, Lindsey & Africa, analyses associate retention

The race to recruit and fill multiple vacancies in 2021 was a surprise to all after the first year of the pandemic. Law firms were busy across several practice areas and keen to attract the brightest and best lawyers into firms. However, after the rush of hiring, increase in salaries and sign-on bonuses paid out with guarantee periods long expired, how are firms keeping their new and existing lawyers, while balancing the tightrope between transparency and remaining competitive in the market?

In my experience, millennial associates largely want transparency, structure and mentorship – several studies point to the importance of these qualities in an employer. To some extent, this is achievable in Big Law, particularly the US firms where salaries are often lockstep, meaning as long as hours are hit, everybody is getting roughly the same. It’s a meritocracy with little room for movement. In contrast, the alternative to lockstep is a banding or fluid system, in which multiple factors are taken into consideration when awarding bonuses and promotions. This approach allows flexibility to reward exceptional performers, but also allows individuals to carve more of their own path.

Promotion prospects, particularly at the senior end of an associate career, are a hot topic. A range of tactics are being adopted by law firms, especially in this recruiting market, as a way to retain their potential future rainmakers. After all, there will be a peak to the salary war, so firms cannot simply resort to throwing cash at the problem.

Some firms are taking a fully transparent, ‘up or out’ approach. When there are doubts over whether an associate can progress within the firm, encouraging a client to hire their associates who are not gunning for partnership gives the firm a strong chance of retaining that business in the future. Other firms are laying out more detailed tracks to partnership – either by way of a uniform process with targets to hit, or by providing realistic guidance and advice on what makes a good partner at the firm. Then, of course, there are those who have not changed at all and partnership, and the process to get there, remain as elusive as ever.

Regardless of process, most firms offer some form of non-equity position as a way to soft land associates into the transition of a revenue-generating role. The law firm model of feeding work still hinders some associates’ ability to consider the commercial nature and pressures of their new promotion, which is why the use of these positions still exists. They frequently offer a transitional period to experiment and use the firm platform, without the full pressures of partnership, but still offering some of the perks. This year’s record-breaking 29% increase in partner promotions within the Magic Circle points to successful associate retention strategies. This approach reassures associates that there is a new, longer-term challenge on the horizon that will inspire their loyalty to the firm.

For more junior associates, partnership is not necessarily the most attractive option. Core career conversations that are transparent, structured and offer mentorship are still important, but this is where lockstep systems can be particularly helpful. Early in their careers, junior lawyers seek a level playing field to succeed. While that can change over time as their role in a firm becomes geared towards revenue generation, the greater transparency about their progression, the more likely they will stay.

Maintaining law firm culture centres on good training programs, supportive environments and an open-door policy, which all allow associates to feel heard. When seeking lateral opportunities, it is not always about the money. While that of course may be a driver for some, a lot of associates now want to evaluate benchmarks across the wider market and consider all the options available. Firms that allow prospective lateral talent to meet associates to get a real sense of culture and have partners who offer quick feedback are going to keep taking the best people. If associates arrive and it is the opposite experience to the one they were promised, they will be quick to leave – particularly because job-hopping is not as frowned upon as it once was.