Our 2016 retention analysis indicates a certain empowerment among NQs.
Retention is stable, signalling a confident market in spite of Brexit.
Large firms offer better career prospects – with a few exceptions.
The higher the NQ salary, the more trainees opt to stay.
If Goldilocks devised staffing models
Rather boringly, retention at the leading law firms has held stable at around 80% for six years now. In 2016 the 120 odd firms which we surveyed retained a total of 1,751 out of 2,190 qualifiers. There must be a universal formula for law firms: culling a fifth of trainees is surely the sweet-spot for staffing at the junior end, balancing the need to pump out work in volume and ensuring the firm’s future strength and immediate profitability. This 80% is just an average, though: the majority retain more than 10% above or below this figure; the interesting stories are in the variance.
If firms had Brexit jitters, retention is the place you’d see it, but the numbers point to a confident market. This chimes with the message from the managing partners who are telling us that they’re prepared for Brexit and far from worried; many expect an increase in advisory work as it unfolds.
A fulfilling, successful career is governed principally by the culture of the firms you work at, and retention rates offer a window on a firm’s culture.
Why does retention matter?
You're a student. NQ retention is an abstract trifle several years in the future. The important thing is that you qualify as a solicitor at a decent firm, right? Perhaps, but a fulfilling, successful career is governed principally by the culture of the firms you work at, and retention rates offer a window on a firm’s culture. First, you can tell whether a firm’s investing in you and recruiting future partners or hiring for low-level grunt work. Second, high retention rates mean you're not spending two years competing with your fellow trainees like some job interview from hell, so the culture is more collaborative and less back-stabby.
Why NQs leave law firms
There are no NQ jobs in the trainee’s favoured area of practice. Rather than stay in a second-choice department, they look towards other firms.
The firm has more qualifying trainees than jobs available. This is especially likely to happen at a firm which has recently undergone a major merger or is in some financial difficulty.
The trainee wasn't good enough. A minor percentage of trainees end up being a disappointment to their employers.
Maintaining a pyramid-shaped workforce. Large firms need a lot of manpower at the junior end, but can't provide long-term careers and commensurate salaries to all their recruits.
Personal reasons. Trainees might fall out of love with the firm, with the law, or the city they work in.
How firms performed in 2016
Last year the mid-sized firms had the edge on the biggest firms, but in 2016 the natural order was restored with some impressive figures from leading employers like Herbert Smith Freehills (98.4%), Macfarlanes (96.3%), Travers Smith (95.2%). If we were to appoint a winner in this survey, it’s Shearman & Sterling for keeping all of its trainees for two years running. Although we should also mention Freeths and Mishcon de Reya, which also netted 100%, and there are a few small firms that achieved this too.
|Firms with 1-10 qualifiers
|Firms with 11-25 qualifiers
|Firms with 26+ qualifiers
As a general rule, the bigger the firm the higher its retention rate will be. The larger the business the more resources it has to play the long game and plan for future business needs; big firms can absorb market fluctuations more easily than small ones, where even minor financial blips can lead to lower retention.
This hasn’t been the case for everyone, however. The trainees we interviewed at Simmons & Simmons this year were right to be a little anxious about qualification: after a lacklustre 2015 the firm posted just 51.4% this year. They were joined in the lower ranks by a few other serial low-performers like CMS (67.9%), King & Wood Mallesons (67.6%) and Berwin Leighton Paisner (70%).
The firms’ positioning in the retention ranking is erratic year-on-year: if a firm swung one way in 2015 it will respond in 2016, continually revising its staffing. There are however, some consistently strong performers, like Slaughter and May, Travers Smith or Burges Salmon.
A law firm named desire
The type of firm you join will determine the likelihood of you staying, as shown below:
At last trainees have some power, and the less docile will use this to their advantage and move.
We’ve explored retention from the position of the firm, which is limited by staffing budgets and the variety of mid-level work it can offer – we know this to be narrower at smaller firms. Now let’s look at the table above from the perspective of the qualifier: finally they have the opportunity to move, why not hop over to a more desirable location, maybe join their buddies in the City? Qualification is the moment a lawyer realises their value to the market, so retention is far from a one-sided decision by the firm. At last trainees have some power, and the less docile will use this to their advantage and move. We see this employee empowerment at its starkest when we look at the NQ salaries offered and whether they’re high enough to retain talent.
To keep things tidy we divided the market into NQ salary brackets and showed retention rates within those:
The upward trend in this graph needs no explanation, but there are a few zigzags that should be analysed:
The peak at the £40-49k range. This group of firms mostly comprises attractive national/regional firms (DLA Piper, Pinsent Masons, Burges Salmon, Eversheds) and London firms with appealing work like Leigh Day. Whether it’s location, work/life balance or fascinating cases, these firms have more to offer NQs than just wads of cash.
The trough at the £60-69k range. This group of 20 firms is almost exclusively mid- or upper-tier City firms. Those with specialist practices here did very well (WFW 92.9%, Mishcon 100%, Bird & Bird 88.9%, Ince 88.9%, Nabarro 85.2%), and perhaps this is telling in itself, but the group was dragged down by weak performances form a handful of big employers (Simmons 51.4%, CMS 67.9%, BLP 70% and Reed Smith 62.5%).
The unexpected drop beyond £100k. At the top end are the US firms whose intakes tend to be so small that if one single person leaves, retention falls below market. We also wonder what message these massive salaries send out: would life at a £90k firm be a little less gruelling? We see the same thing in the bottom tier, where intakes are also small, only there the departures are less puzzling.
This feature was first published in October 2016.