The Judge Rules: Anything less than a 100% qualifying lawyer retention is a law firm fail

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By Judge John Hack on

Training contracts provide large global practices with a recruitment safety net — but that’s not good for their businesses

Newly-qualified solicitor retention rates are really the preserve of legal profession anoraks.

And as Legal Cheek has a full collection of the finest law train-spotters known to mankind, this website has been dutifully covering every announcement to seep from Square Mile and other corporate law firm personnel departments.

Of course, the obvious problem with retention rate figures is that the headline percentages are subject to disproportionate fluctuations owing to the relatively small cohorts of qualifying lawyers involved.

Even the most of muscular magic circle firms will not produce a qualifying pool of more than, say, 50, which means that retaining or jettisoning four or five here and there will significantly affect the top-line percentage.

Now the Judge is certainly no statistician — he generally ducked out of maths classes in favour of working out how many boys could sit round the elaborate ice-chilled bong one of the lads had fashioned from a water-cooler bottle.

However, common sense suggests that any cohort short of 50 is not going to supply very meaningful data regarding percentage shifts. So when some of the offices of the US firms in London record high retention rates, they do so against the backdrop of having as few as 15 — or even fewer — qualifying lawyers at their practices.

But the real issue about retention rates is this: should any firm be happy with anything less than 100%? Or put another way: Should anything less than 100% be deemed a management failure?

What other business — apart from multi-national corporate law — spends a fortune recruiting talent in the knowledge that it is not doing so for the long term? Banks and others in the financial sector and large corporations generally do not recruit with the caveat that in two years’ time as many as 30% or even 40% of those newbies will be walking out the door.

Those businesses are likely to put recruits on a six-month probation period, but the starting proposition is that everyone hired is there for the long term; if 40%, 30% or even 20% or 10% were gone after two years, serious questions would be asked of recruitment managers.

Law firm NQ retention rates highlight again the bizarre role of the training contract in the legal profession structure. It creates an extended probation period that arguably encourages laziness in graduate recruitment departments.

That laziness — which potentially allows law firms to take a punt on some candidates without being fully convinced of their suitability — will be good news for some wannabe lawyers: sneak under the wire and have a pop at proving yourself.

But it seems like poor business practice. For example, when Wall Street law firms recruit fresh blood in their home jurisdiction they must do so without the safety net of a training contract that allows them to bin those that did not work out two years down the road. Sure, they can get rid of people — but they have to fire them properly, with all the hassle and soul searching that should involve.

City law firms spend a lot of money and management time on their trainees. They not only pick up the tab for their vocational training fees, but they also lay on grants and then, of course, reasonable salaries when the greenhorns start their contracts.

Should the undoubtedly well-paid human resources executives at those firms be patting their own backs when they hit a retention rate of 80% or 85%. Shouldn’t every newly-qualified lawyer that they don’t retain be considered a mark of failure for those “talent” experts?