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The winners in law’s ‘Great Resignation’ will be firms that focus on innovation, not compensation

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Law had an attrition problem before the pandemic hit. Now it’s in hyperdrive, dovetailing with a wider movement of dissatisfied workers quitting their jobs in the wake of lockdown restrictions, in what economists have dubbed the “Great Resignation.”

According to Codex Edge, a London-based legal market analytics firm, the average associate attrition rate for the “top 1,000 law firms in England and Wales” has increased from 10.44% in 2020 to 14.31% in 2021. That’s a 37% increase over a single year.

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The situation in the U.S. is even more troubling. The average associate attrition rate in Am Law 100 firms was reported to be 16% before the pandemic. Figures recently released by Leopard Solutions, a New York-based legal market research company, put that figure at 27% in 2021—a staggering 61% increase.

Using the 16% associate attrition rate, one study found that for every 20 lawyers hired by a firm, 15 would leave within six years. So law’s ballooning attrition problem is as much about the wasteful hemorrhaging of talent as it is about filling the growing number of empty desks in firms across Europe and the U.S.

And the latest data shows it’s largely juniors who are choosing to move on, with many leaving private practice altogether. Data from Codex Edge shows more than 40% of all movers were in the first six years of their career post-qualification experience (see graph below).

MYB graph William Dougherty

Given that associate attrition costs firms between $200,000 and $500,000 per lawyer lost, this is an issue that they can no longer afford to kick into the long grass. And firms’ knee-jerk response has been to hurl money at talent, catalyzing a wage war that saw associate compensation rise 10% between late 2020 and the end of 2021.

But the pay-to-stay solution is not sustainable. Surveys of lawyers consistently find higher wages and better benefits actually fall outside the top five changes that might have kept outgoing employees in their roles. So compensation incentives look a lot like rearranging deck chairs on the Titanic, while the real reasons lawyers are jumping ship remain largely unaddressed.

These reasons all boil down to the job itself, which junior corporate lawyers are increasingly finding to be unacceptably arduous and unrewarding. Some 20% of these lawyers are reporting extreme exhaustion, leading them to reassess their work-life balance. Associates too often feel like a cog in the wheel: undervalued, overworked and overlooked when exciting opportunities land on senior lawyers’ desks. Associate satisfaction and retention are plummeting as a result.

There’s a sound business case for addressing these problems. Increasing profits are being sacrificed by firms just to keep hold of talent. Still, across the sector, there’s now too much work and too few lawyers to do it. With one insider recently quipping that major London firms are now hiring “anyone with a pulse” just to plug their gaps, a productivity and talent deficit looms as graduates assume desks vacated by lawyers with four-to-six years’ post-qualified experience.

Then there’s the fact, backed up by several studies, that the attrition rate in Britain for Black, Asian and minority ethnic lawyers is higher than non-BAME lawyers, with marginalization, driven by conscious and unconscious bias, partially to blame for this discrepancy. Female lawyers also leave firms at a higher rate than male lawyers, resulting in a gender imbalance in law’s most senior roles.

It’s promising to see firms aggressively hiring lawyers of color and female associates in response to the diversity equity and inclusion expectations of their clients. But it’s disheartening that little is being done to guarantee their retention and advancement, bar offering higher wages.

And more can be done. Firms are being urged by analysts to join the 21st century, innovating in spaces that will help them differentiate via their culture, not the wage packets they’re waggling in front of juniors. And it’s not as if junior lawyers are making outrageous demands; they want more autonomy, better training, more inclusive work distribution and a better quality of life in the job.

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I’d understand if current partners felt reticent about these quality-of-life complaints. They rose to seniority through the current system—so why shouldn’t the new generation of lawyers be put through it, too? Might law’s Great Resignation simply be the manifestation of a softer, more entitled generation that can’t hack the pace?

Possibly. But junior lawyers have friends and contacts outside the world of law who they see as happier and more fulfilled. Some work for professional services companies with highly developed well-being programs. Many are given access to commonsense technological solutions that were first built to address pain points highlighted by workers. Junior lawyers aren’t demanding anything these peers don’t already have.

Plus, the current system has delivered far too few women and minorities to partner level, with white male solicitors six times more likely to be made partners than BAME female ones. Progress on DEI simply won’t keep pace with the diversity demands of clients if firms fail to recognize why women and minorities are leaving their posts at a higher rate than their white male counterparts.

On a sinking ship, it’s wiser to plug the holes than to bail out the water. Those firms that remain buoyant through the Great Resignation will do so by engaging with the root causes of their attrition, not through crude associate compensation. And that means engaging in an innovation war—not a wage war—to earn the loyalty of current employees and the trust of new applicants.

We’re already seeing the LegalTech sector delivering products that make junior lawyers’ lives easier. There’s Define, which sets out to optimize the process of contract drafting and reviewing. Juniors are often tasked with combing through hundreds of pages of contracts that are entirely alien to them. It’s exhausting work, made more cumbersome by the task of hopping between screens, tabs and databases to cross-check specific, complex terms within the document.

Define allows users to instantly access all defined terms and references without ever having to leave the clause or provision they’re working on. The result is an easy win-win: firms enjoy a productivity boost, and junior lawyers experience less friction and frustration in the job.

Another common source of tedium for junior lawyers is administration. Having trained in the law for years, junior lawyers can spend the majority of their time managing data rooms, or performing due diligence checks, rather than getting into the meat of matters and contracts. Lacking a sense of career progression, it’s unsurprising that a heavy workload of administrative tasks gives juniors cause to consider their future at their firm.

Recognizing this pain-point, Avvoka is an online document automation platform designed to radically reduce the administrative burden on junior lawyers. The tool offers end-to-end document automation—from automated first drafts through to the negotiation process and e-signatures. Avvoka’s UX design is particularly impressive: it’s a “no-code” solution, which means anyone can learn how to automate specific administrative tasks without weeks-long training in coding, or the need for external consultants.

User experience is something I’m taking seriously with my own LegalTech platform, Capacity. Informed by my experience as an associate at Dentons, Capacity is a work-distribution platform designed to address significant inefficiencies and inequalities in how firms hand out work. Firms’ current work distribution processes are informal, with emails or phone calls from senior lawyers dictating a junior lawyer’s work-life balance and their access to exciting opportunities. That leaves some juniors overworked and others overlooked—decreasing productivity and quality of life across legal teams. Studies suggest it’s minorities and women who are most often overlooked.

Capacity is built to spread work evenly across legal teams, through a simple interface that presents employee availability alongside their eligibility for certain tasks. Senior lawyers can quickly tender tasks to their whole team, giving juniors a chance to pick tasks that suit their career ambitions and level of experience. And crucially, Capacity supports “blind allocation”—getting tasks on the desks of the most appropriate lawyer automatically. It’s a solution designed for retention as well as productivity, given that outgoing associates commonly cite work distribution frustrations as reasons for their departure.

On top of these tools, a recent slew of incubators and accelerators, hosted by forward-thinking law firms, demonstrates a growing appreciation of how technology can make legal work more inclusive and rewarding for junior lawyers—all while boosting productivity. But if innovation is a rising priority for law firms, it’s those that engage soonest with tools designed to make associates’ lives easier that’ll capitalize off the Great Resignation.

Editor’s note: A version of this article was previously published on ArtificialLawyer.com.

William Dougherty is a co-founder of Capacity and was an associate at global law firm Dentons.

Mind Your Business is a series of columns written by lawyers, legal professionals and others within the legal industry. The purpose of these columns is to offer practical guidance for attorneys on how to run their practices, provide information about the latest trends in legal technology and how it can help lawyers work more efficiently, and strategies for building a thriving business.

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This column reflects the opinions of the author and not necessarily the views of the ABA Journal—or the American Bar Association.

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