How Memphis law firms are adjusting their strategies and compensation to address record levels of associate turnover nationwide. - Memphis Business Journal

High demand, an unparalleled hiring surge, and increased compensation are hallmarks of the legal landscape.

And yet, law firms across the nation struggle to retain associates.

According to a report by the Center on Ethics and the Legal Profession at Georgetown University Law Center and the Thomson Reuters Institute, law firms in the U.S. were unable to retain associates despite offering a record increase in compensation and benefits.

As demand for law firms recovered in 2021, firms began hiring aggressively. Tempering this hiring surge was the highest associate turnover in a decade — at 23.2%.

Firms have been struggling to retain talent nationally. According to the report, law firms were “edging dangerously close” to losing almost a quarter of their associates this past fall.

Recruitment strategies included increased compensation and benefits for associates. Average associate compensation at U.S. firms tallied the highest growth in a decade, rising by 11.3%.

The return on this investment, however, was relatively modest. The increase in lawyer head count in the U.S. was only up about 1.5% in November 2021 compared to the same month in 2020.

Some of the largest local law firms have similarly revised their compensation policy for associates.

Baker Donelson — Memphis’ largest law firm — implemented a new compensation structure to adjust to the shifting market.

“Our leadership worked with a team of senior associates over more than six months to develop this new structure, which we believe is extremely competitive and rewards our associates for the outstanding work they do,” a Baker Donelson spokesperson said in a statement.

According to MBJ research, almost a third of Memphis’ largest law firms reported a reduced number of associates. And over 60% reported a drop in total attorneys in 2021 compared to 2020. However, most local firms said this was nothing out of the ordinary.

“I would not characterize our turnover as being more than usual,” said Jon Smith, president and managing partner at Apperson Crump PLC.

His firm’s number of associates went from four to two. A total of five attorneys left the firm, but Smith said none left because of pay competition.

“On the flip side, when we have looked for people, we’ve been able to find them,” he said, “which may mean people are more willing to leave where they are.”

The reason behind more people being willing to leave, according to Smith, could be workplace flexibility — particularly with regard to being able to work from home.

The Georgetown Law/Thomason Reuters report highlights that increased pay and benefits are no longer enough to hire and retain talent; work-life balance and workplace flexibility are equally crucial.

“This is a time when COVID created a change in the mindset of a lot of people,” said Cindy Ettingoff, CEO of Memphis Area Legal Services.

Thinking back to her time as an attorney, she recalled clocking 16–18 hour days. Attorneys today “don’t want to be beaten to death,” she said.

“COVID has taught us that life is unpredictable and that I can work from home,” Ettingoff said.

If an employee doesn’t want to return to in-person work, she said, they have other options to explore.

Siskind Susser PC experienced it firsthand — both in terms of hiring and losing an employee. The firm was able to hire paralegals based across the country to work remotely and also lost an employee who chose to work for another firm outside of Memphis without having to move.

“It’s a threat and opportunity,” said firm partner Greg Siskind.

While remote work competition is ramping up the pressure for higher salaries — as his firm is experiencing — it also provides them with better recruiting opportunities. The big challenge, Siskind said, will emerge when firms based in bigger cities that offer better pay “decide they want to start poaching lawyers from firms and offering remote work.”

source: https://www.bizjournals.com/memphis/news/2022/01/27/record-associate-turnover-at-law-firms.html

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