Attrition is Back!
A question was posed recently in the press: – "Why are lawyers such terrible managers?"
The article appeared in CNN’s online Money/Fortune magazine. It cites statistics from the National Association for Legal Professionals Foundation that in 2010 law firms with 100 and fewer lawyers and 251-500 attorneys lost nearly one fifth of their associates. This is after the mass firings that occurred in 2008 and 2009, when reduced demand required that firms also reduce their overhead.
So this is a 20% attrition rate among lawyers who by all lights should feel lucky to have a job. What's also interesting about the 20% annual rate is that that is the same rate at which, prior to the recession, associates were leaving their law firms. We consultants then were claiming that at such an alarming rate of departure, law firms would no longer be able to sustain their pyramid business model--they would no longer be able to work the drones till they dropped and then keep the keepers, as too many would have left. The more things change, the more they stay the same?
Why such fleeing from the law when jobs are scarce, salaries and prestige are high, and even big bonuses are coming back? As the article points out, the law firm turnover rate is almost 10 times the 2-3% turnover rate at Fortune's 100 Best Companies To Work For. Of course, associates leave for many reasons, not the least of which is poor performance. But this article also points the finger at poor management.
“Aside from salaries and bonuses, law firms spend thousands of dollars recruiting and training each associate, often paying for bar exam preparation courses, moving expenses, and continuing legal education. So when a lawyer walks out the door, that investment walks out with him... Considering the money law firms invest in every newly hired attorney, it would make sense for partners to pay closer attention to lawyer satisfaction [but] most law firms have not seriously considered the costs they incur as a result of poor management – the loss of an unhappy associate being just one example."
In fact, according to law firm consultant Gerry Riskin, "most firms are oblivious" to attrition costs.
Staunching attrition costs poses another challenge to law firm managers: improving their workplace environment so as to promote the practice of a satisfying career. A mid-level associate at Schulte Roth & Zabel puts a point on it, according to the CNN article: "The general sentiment when people leave is, 'thank God I don't have to deal with this abuse anymore.' Because at the end of the day, it's constant abuse or fear of abuse."
We don't have the NALP breakdown by gender on those leaving the law, but it is women who historically leave at the highest rates. Jordan Furlough in his latest post on why women leave law firms suggests that rather than come to the conclusion that the statistics mean that women can't hack it, we might consider that they have been our canaries in the coal mine, quickly assessing early on an environment that is not productive or healthy and taking their talents elsewhere.
"Here’s my theory: women aren’t leaving law firms at an abnormal rate. They’re leaving law firms at a perfectly rational and normal rate. It’s men who are staying in law firms at an abnormal rate. Women aren’t the faulty outliers; men are... Women who enter law firms quickly and accurately diagnose that these are amateurish organizations that employ archaic workflow systems, inept pricing mechanisms, skewed compensation structures, and largely ineffective management, not to mention a whole lotta personal dysfunction. The typical contemporary law firm is nobody’s idea of a good business model, a satisfying workplace, or a solid bet for long-term future success. It shouldn’t surprise us that women abandon this model in droves. The question we ought to be asking ourselves is, why are men sticking with it in greater numbers than should rationally be expected?"
It remains to be seen how much longer the men will hold out. In the meantime, the prize will go to the firms that figure out what a competitive advantage it is to have satisfied associates who stick around.
Law People Management, Inc.
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