Addressing Employee Turn-over in Law Firms

Many law firm owners I speak to are having difficulty growing their practice, and a major reason for this they reason is lack of retention and the overall issue of employee turn-over within the firm. There are many articles that address this issue in the legal industry and in other industries as well – usually blaming this on the millennials and generation Z. The argument goes that this current generation of lawyers focus on social media and the next best job offer, find themselves jumping to new firms after several years, and there are few that maintain loyalty with the same firm over a longer period of time. Within these articles, there are some useful tips that provide recommendations: building a culture and brand, investing in work-life balance and perks for staff, mental health support and professional development. This is all useful information – but even with all of the above, poor retention remains rampant in the legal industry. I’ve heard plenty of stories from sole proprietors who attempt to grow their practice by hiring associates, training them, following the above recommendations with understanding and associates still leave after a short period of time. This article is written for those partners and proprietors to help them address retention.

Note that I am stating here how to grow your practice and address turn-over and retention issues, not how to prevent or even minimize this. There is a general sense that retention of employees is in control of the leaders of the firm, but I would argue this is a fictional perspective. Everyone has their own individual goals and concerns that have nothing to do with the company, owner, or leadership. For example, each individual employee has their own health issues, family issues, personal goals etc. While a leader can spend specific time tailoring employment with one or two employees – there is a point at which this is not scalable. Even if everything is done correctly, an unforeseen event can still cause staff turn-over. A popular example is location – an employee can be hired to work in a location, but if the owner or client base moves, then it will be difficult to keep the employee even with work-from-home benefits. As a result, even the best culture will always suffer from employee turn-over. So, the strategies that are rampant in articles such as building culture, while helpful, can only at best slow down the timing of turn-over (ie. an associate staying on for 3-5 years instead of 1-2 years). Moreover, I would also argue that successful firms will always have a certain amount of turnover over time in a positive way that the owner wants because it proves that the culture a firm is building as it grows will always keep certain types of individuals longer than others.

Instead of focussing on preventing turn-over, I would argue that turnover can only be slowed down (per above) and growth achieved in spite of it. To address staff retention issues there are 2 major strategies I would propose. The first strategy is obvious and relates to compensation. Again, much has been written on compensation strategies in law firms by those smarter than I, but as it relates to employee turn-over I would recommend a hands-off and commission approach. This approach involves providing staff with general guidelines, resources, and tools to use and earning percentage commission to the extent allowable by the employee to earn a share of their work and then – hands off. This applies both to lawyers and support staff. Providing trust to associates and allowing them to work at their pace and location, puts the onus on employee lawyers and staff to generate the revenue they want and creates a feeling of ownership and responsibility. So long as the owner checks in with the lawyers on specifically what they need help with and what they want to achieve, this can slow down turn-over because the employee lawyer feels like an entrepreneur while the owner or “boss” is there as a helpful resource to help them achieve their goals. Many lawyers have a lot of trouble with delegating their clients to associates without years of training – these are real client relationships and there are liability issues as well. I am not suggesting no training time but there is a point at which there needs to be trust that a licensed lawyer has the competence and ability to service a client. Without this trust, the relationship will suffer and create resentment. Similarly, an articling student needs training but also space to make mistakes and the costs of these mistakes will be appreciated. Clients are typically understanding of trainees so long as they are getting quality of service and discounts for mistakes. So long as service is being provided to the clients, the owner is being consulted on matters outside of expertise, and there is a large commission component to compensation, virtually entire client files can be delegated to new hires and this trust will slow down turn-over. Again, while this will slow-down turnover, it will not prevent turn-over.

The second approach to address turnover is the focus on sales growth. Again, the key issue for most law firm partners is a general feeling that a lack of retention of staff is preventing growth. For example, many law firms are effectively insolvent overnight when their highest billing lawyers are poached by a competing firm. While building a recognizable brand to clients is helpful to avoid this, it certainly is not perfect. The best way to address lawyers leaving is to ensure that while lawyers are important in running the practice and executing the work coming in, they are not essential to the growth of the firm. On the contrary, the firm should always be growing, such that if any one lawyer leaves and takes their clients with them, it is only a minor blip in the further growth of the firm as a whole. This means identifying firm sales and business development strategies and ensuring they are the responsibility of ownership and not a staff-member. These strategies could be anything: third party institutional relationships, technology, branding, acquisitions etc. So long as growth of leads continues, employee turnover will mean very little to the firm as a whole. This is because, ironically as a result of the very turn-over we are trying to address, there are always lawyers (and articling students) in the market looking to jump to a new firm situation and these lawyers can be used to fulfill the growth plan. This is what I mean by addressing employee turnover. It is not a means of preventing but recognizing its futility, slowing down the rate of change, and instead making it a minimal issue in your firm’s growth plans.

 This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.