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LegalJuly 05, 2022

How corporate legal departments can adapt to high levels of law firm turnover

This article was originally published by Legal Dive.

Across industries, employee turnover has increased dramatically in the wake of the pandemic. During the Great Resignation, as the mass exodus has been named, the rate of employees leaving their jobs hit a two-decade high. The legal industry hasn’t been able to buck this trend. Indeed, over half of young lawyers are considering quitting their jobs in the next five years, according to the International Bar Association. Some already did during the height of the COVID-19 pandemic.

High levels of turnover undoubtedly weigh on law firms directly; the National Association for Law Placement calculated the cost of replacing an associate to be between $200,000 and $500,000. But there’s a ripple effect, too. Staffing is a critical driver of cost and quality, and corporate legal departments (CLDs) need to prepare for the tough reality that their law firm partners are facing high levels of turnover that could disrupt their business and relationships with outside counsel.

Here are three things you and your corporate legal teams can do to adjust to this new reality and mitigate the impact of law firm turnover on your organization.

Assess your law firms. If law firms can’t control turnover, they aren’t in control of staffing. Thus, it’s important to assess the law firms you work with regarding turnover. The higher the rate of turnover, the less attractive a place is to work, particularly for younger people.

Attrition is not equally distributed across demographics; according to McKinsey, people of color, women, and LGBTQ+ employees are more likely to feel like they don’t belong in their workplace. When assessing your law firms, compare their turnover to any data you have on diversity to see if the law firm is fostering an environment in which a diverse array of talent can thrive. If they’re not, people will continue to leave.

If you’re working with law firms struggling with attrition, take a step back and consider if those firms have the potential to make the changes necessary to stem their attrition rates. If they do not, it may be time to look at your panel of firms and seek help from other outside counsel with better retention rates.

Don’t forget billing guidelines. With greater turnover, it’s important to keep a closer eye on invoices and adherence to billing guidelines. If a junior associate leaves, for instance, a senior person may step in to complete their work. In such a case, you may be paying double the price for the same task.

Similarly, having new faces come and go can also impact a law firm’s ability to adhere to billing guidelines. New hires will be less familiar with the guidelines and thus less likely to stick to them. Therefore, it’s crucial to continually educate staff on billing guidelines. They must understand expectations for invoice tracking, review, and rejection and keeping an open line of communication with law firm partners.

Lean on technology. Technology can help law firms retain talent, as working with old systems that are unpleasant to deal with is likely to drive savvy associates away. But it can also help CLDs ensure business continuity even in the wake of turnover.

To start, technology can help with visibility into many of the metrics mentioned above, from turnover and diversity levels to invoice and billing review. In the wake of high turnover levels, CLDs need to keep a closer eye on their law firms—and need data to back up any trends they see.

Let’s say you have a small team of seven attorneys at a law firm doing a very particular type of work. They’ve done a great job for years but suddenly lose several people. That’s quite a blow. You’ll only be able to spot such trends with sufficient visibility into everything from staffing to spend. The right technology can provide you with this level of insight.

Law firm turnover doesn’t have to have a massive impact on your organization. With the right processes and tools, you can mitigate most of the effects of outside counsel churn and keep your operations running smoothly.

Nathan Cemenska
Director of Legal Operations and Industry Insights

Nathan Cemenska, JD/MBA, is the Director of Legal Operations and Industry Insights at Wolters Kluwer's ELM Solutions.

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