By Legal Futures Associate BigHand
Law firms have hemorrhaged talent to the lateral hiring market at higher rates than ever. A recent Law.com article reports that, on average, major law firms are making 1,765 more lateral associate hires over entry-level hires.
When associates leave, your first instinct may be to fill the gaps with lateral hires ASAP. But seeing the hidden costs and heavy impact of lateral hiring on the firm’s bottom line drives many firm leaders to rethink that strategy.
Retaining your best associates is often much more beneficial. And today, you can easily get the tools and insights you need to keep your best associates happy and engaged and attract new talent.
The hidden costs of lateral hires
Losing skilled associates through the lateral market is costly, as firms then must recruit and train new lawyers. The average cost to replace an associate looms at $200,000 to $500,000 (a 2017 figure that can only have risen in a post-covid and inflation economy).
Lateral hires also come in at high costs in terms of salary and recruitment fees, particularly as associate salaries have soared in recent years. Costs can run exceptionally high if firms rely on contingency recruiters. Plus, firm partners often spend many hours on recruiting efforts rather than client-focused work.
It’s an expensive merry-go-round all the way around.
It’s time to stop the spin cycle. Now, you can incentivize your skilled associates to stay by strategically prioritizing their career development opportunities, balancing their workloads better, and supporting their well-being.
Commit to improving associate retention rates
Over a third of UK and North American law firms confirm lateral hiring has increased in the last two years, according to BigHand’s Legal Resource Management Report.
Today’s associates expect more than salary increases. They want career progression and improved work/life balance, too. That’s one reason nearly half of the law firms (49% NA, 48% UK) BigHand surveyed say reviewing career development options for associates is now an operational priority.
Data can offer contextualized insights to identify top associates and provide the career progression they deserve. Yet, more than half of surveyed firms have only partial or no data on the opportunities available for associate career development (54% NA, 55% UK). The same lack of visibility into lawyer training and development needs plagues around half of the law firms (51% NA, 49% UK).
Using law firm resource management software, you can now unearth relevant data to prioritize associate retention in several ways, including allocating work assignments that align with associates’ growth goals.
Strategically support associates’ career progression
With real-time visibility into team capacity, individual lawyer workloads, availability, expertise, interests, and more, you can assign work to strategically advance associates’ careers. Ensure the right people with the right skills are on the right projects while aligning assignments with individual development goals.
Understand associates’ career goals to provide fitting professional development and training opportunities such as conferences, continuing education programs, and mentorship from senior attorneys.
Show associates a clear path for career progression in your firm. Identify chances for advancement, such as promotion to partner or firm leadership positions. Lay out what performance metrics it takes to get there. Set clear expectations, then track performance and deliver regular feedback on progress.
With data-driven clarity into performance levels, your firm can consider competitive compensation packages that reflect the value of associates’ contributions. Use bonuses, profit-sharing plans, and other financial incentives to reward high performance and encourage loyalty while providing other incentives such as remote work options and flexible schedules.
Better meet the needs of a new generation
Resource new matters objectively and apply associates’ talents effectively to help them grow. Provide career-enhancing work assignments and purposeful training opportunities for junior lawyers that support their long-term goals.
In making associate retention a strategic priority, you also build a law firm that is a magnet for talent. Read the full Legal Resource Management report here to learn more about how improved resource management can help your firm.