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Law firms came ‘dangerously close’ to losing almost a quarter of their associates in 2021, new report says

Daily Legal Briefing by Daily Legal Briefing
January 12, 2022
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Law firms came ‘dangerously close’ to losing almost a quarter of their associates in 2021, new report says
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Law firms came ‘dangerously close’ to losing almost a quarter of their associates in 2021, new report says

By Debra Cassens Weiss

January 11, 2022, 11:49 am CST

diverse group of associates

Image from Shutterstock.

Law firms “are spending huge amounts of money and putting their profits at increasing risk” as they battle to hold on to their associates, according to a report released Tuesday.

As associate turnover rates hit record-high levels, law firms will have to go further by providing the kind of glue that binds people to organizations, according to the 2022 Report on the State of the Legal Market: A Challenging Road to Recovery.

The report was issued by the Center on Ethics and the Legal Profession at the Georgetown University Law Center and the Thomson Reuters Institute. The report is available here, and a press release is here.

“In stark terms,” the report said, “at the end of November 2021, all law firms were edging dangerously close to losing almost one-quarter of their associates in 2021.”

According to the report, problems of recruiting and retaining legal and other professional staff may prove to be among the biggest post-COVID-19 pandemic challenges confronting law firms in 2022.

“The market for talent has shifted—certainly for the short term and perhaps for longer—and the competitive factors have expanded,” the report said. “The traditional law firm response of just throwing more money at the problem is not likely to work as well going forward.”

Paying employees less than they deserve can create dissatisfaction, but paying them more does not necessarily create satisfaction, the report said.

Firm employees and lawyers will have to feel value and meaning in their work, to feel appreciated and recognized, to have opportunities for growth and personal satisfaction, and to think that they are making a contribution to something larger than themselves, the report said.

The report cited these statistics:

• The associate turnover rate for law firms reached 23.2% through November 2021 on a rolling 12-month basis. That is significantly above the 18.7% rate experienced in 2019, the year before the pandemic. For Am Law 100 firms, the turnover rate was 23.7% through November 2021.

• Associate compensation increased 11.3% on a rolling 12-month basis through November 2021. For Am Law 100 firms, the increase was more than 15%.

• There is a large spread between turnover rates for the 25% of law firms with the highest turnover (dubbed “go” firms) and the 25% of the firms with the lowest turnover (dubbed “stay” firms). Through November 2021, stay firms had an annual turnover rate of 8.7%, compared to 18.4% for go firms.

• Stay firms billed 51 more hours per year per lawyer than go firms. Associate compensation at stay firms increased 9.8%, compared to 11.4% at go firms. The average size of a stay firm is 361 lawyers, compared to 514 lawyers at go firms.

The information on stay and go firms is not intended to suggest that law firms should work associates harder and pay them less, the report said. But the findings suggest that lawyers who are more likely to stay at their law firms are more productive and are not staying because of top pay increases.

Among the study’s recommendations are that law firms develop policies and procedures to assure equity and fairness in assignment, evaluation, compensation and promotion decisions.

The report also suggested that firms should find ways to foster social engagement and camaraderie, take a flexible approach to work, and provide resources through wellness and mental health programs.





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