City firms use short-term NQ contracts to inflate retention rates

Major City firms are manipulating their retention rate figures by handing out short-term contracts, The Lawyer has learned.

US firms Mayer Brown and Orrick Herrington & Sutcliffe are among those understood to have offered trainees a short-term contract in the last year, while Travers Smith is facing a claim from pregnant trainee Katie Tantum who alleges pregnancy discrimination and unfair dismissal after the firm offered her a contract of just two months (15 February 2013).

In September 2012 Mayer Brown retained 70 per cent of its 20 trainees, two of whom were subsequently given short-term contracts of three and six months.

It is also understood that Orrick Herrington & Sutcliffe has offered NQs fixed-term contracts over the last 12 months of varying lengths.

Travers Smith, which denies Tantum’s allegations of pregnancy discrimination, offered five NQs fixed-term contracts of between two and 12 months last summer.

Retention levels at Mayer Brown have fallen over the last year from 80 per cent in March 2012 to 62.5 per cent in March 2013, when just five of the eight trainees were offered contracts. Apart from the September intake the firm usually offers NQs fixed-term contracts of 12 months.

“I think it’s something that firms will move more towards unfortunately, especially ones making redundancies across the firm, and with more trainees qualifying than they can afford to keep on it gives them more flexibility,” said one City trainee.

“As an added incentive for the firms, the temporary contractors count in their retention statistics, but then they can free up places for the next qualifying intake by not renewing the fixed-term contracts.”

Those who had been offered short-term contracts were told it was because of “uncertainty” in work flow and a lack of finances.

Recruiters in the City said the trend for firms offering NQs short-term contracts is growing, particularly among US firms.

The same is said by recruiters outside of London, with one Midlands-based recruiter saying: “We’re seeing plenty of September qualifiers from regional firms now looking for a new job after only being offered six-month contracts. Whether that’s to fudge figures I don’t know, but it’s certainly recent.”

A Mayer Brown spokesperson said it was the first year that the firm had offered shorter contracts, adding: “It isn’t an approach we normally take.”

Orrick declined to comment on employment terms.

Have you or someone you know been offered a fixed-term contract? Email us in confidence at lucy.burton@thelawyer.com