COMP NEWS – A new 2022 report shows that law firms have been bleeding money during attempts to remedy their high turnover rates, with mixed success. Many law firms lost nearly a quarter of their associates in 2021.
As associate turnover rates hit record-high levels, law firms will have to go further by providing the kind of glue that binds people to organizations, according to the 2022 Report on the State of the Legal Market: A Challenging Road to Recovery.
The associate turnover rate for law firms reached 23.2% through November 2021 on a rolling 12-month basis. That is significantly above the 18.7% rate experienced in 2019, the year before the pandemic. For Am Law 100 firms, the turnover rate was 23.7% through November 2021.
Specifically, many law firms almost lost up to a quarter of their associates last year. The market for talent in the law industry is seeing substantial shifts, resulting in higher turnover rates for most firms. Traditional compensation structures are not enough to lure in talent in today’s market.
“The market for talent has shifted—certainly for the short term and perhaps for longer—and the competitive factors have expanded,” the report said. “The traditional law firm response of just throwing more money at the problem is not likely to work as well going forward.”
Although most law firms are experiencing high turnover rates, average compensation still went up by around 11%.
Associate compensation increased 11.3% on a rolling 12-month basis through November 2021. For Am Law 100 firms, the increase was more than 15%
The findings of the report show that more than just a raise is needed to maintain employee satisfaction, even among major law firms.
Firm employees and lawyers will have to feel value and meaning in their work, to feel appreciated and recognized, to have opportunities for growth and personal satisfaction, and to think that they are making a contribution to something larger than themselves, the report said.
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