Lawyer salary

To stem attorney attrition, law firms must look beyond cash flow – report

  • Nearly a quarter of partners have moved to another firm in the past 12 months, study finds
  • Winning the war for legal talent will require more profound changes than the pay hike, experts say

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(Reuters) – Law firms can’t win the war for talent with money alone.

They must find other ways, in addition to competitive compensation, to make lawyers feel invested in their firm so that they stay put, according to the latest annual report on the legal market from the Thomson Reuters Institute and Georgetown Law’s Center on Ethics and the Legal Profession.

“Reinventing the way the law firm works will be the core task of every law firm executive this year,” said report co-author James Jones, senior researcher at the Georgetown Law Center.

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The report is based on data submitted by 171 large and mid-sized US law firms. The Thomson Reuters Institute shares the same parent company as Reuters.

The past year has been busy and lucrative for law firms, with demand and billing rates up 4% from 2020 and double-digit profit growth per partner across all segments of law firms. ‘lawyers, according to the report released on Tuesday.

But above those metrics, data shows law firms are spending more money than ever on associate pay, only to see record revenue. As of November, 23% of partners had left their firms in the past year, according to the researchers. And this despite several rounds of bonuses throughout the year and widely adopted increases in the salaries of partners in large law firms.

Associate compensation in November rose 11% from the previous 12-month period for all companies surveyed, and more than 15% among the top 100 most profitable companies, according to Tuesday’s report. These increases have contributed to an almost 9% increase in direct business spending, according to the report.

“In response to the fierce competition for talent, companies are spending huge sums of money and putting their profits at risk for fairly modest returns – at least when you consider the real costs of high levels of lawyer turnover. », Wrote the authors.

Leaders of law firms hoping to limit staff turnover need to rethink their structure and operations to allow for greater flexibility and a better work-life balance, according to the report. This means creating fair and equitable remote working policies, providing mental health support, giving lawyers more pro bono opportunities and making their physical offices more welcoming, he said.

“Businesses need to understand that it’s not just about money,” said Bill Josten, strategic business director of thought leadership for the Thomson Reuters Institute. “In fact, it won’t be primarily about money. There are going to be changes in lawyer workflows unlike anything we’ve seen before. “

Read more:

Cravath joins the rush to raise wages, bringing more New York businesses

Law Firm Bonus Wave Continues, With Help From Davis Polk

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Karen sloan

Karen Sloan reports on law firms, law schools and legal affairs. Contact her at [email protected]