Market shift sees firms pay for overambitious trainee policies
September’s NQ retention figures are trickling in and, as always, some firms have had good years while others have resigned themselves to the fact that the thousands they invested in LPC fees and trainee salaries may as well have been spent on a giant statue of their managing partner.
Among the firms watching sadly as little piles of cash on legs walk out of the door are the two Os: Orrick and Olswang. Both have been burned by the simple fact that trainees are recruited well in advance of their start dates.
Orrick launched its training scheme in the mid-noughties, rapidly increasing numbers as it vowed to double the size of its London office. That ambition has failed and the firm has been left with large trainee intakes and nowhere to put them. While the likes of the magic circle can often make space for a surplus NQ here and there, it is a different proposition at smaller firms.
None of the five autumn 2013 qualifiers are staying on at Orrick. Even if you accept the firm’s argument that two of three who finished their training contracts early were kept on, a 25 per cent retention for the calendar year is not a good return on investment. Taking just salaries, LPC course fees and maintenance into account, Orrick’s spend works out at close to £100,000 per trainee. And this is the second bad year in a row: five of 11 NQs stayed on in 2012.
A similar scenario has emerged over at Olswang, where six of 11 autumn finishers have been retained. Combined with its spring qualifiers, 13 of 20 NQs (65 per cent) have been kept on in 2013, the latest in a run of mediocre years for retention at the firm, stretching back to 2010.
In time, things will rebalance. Orrick has admitted its goals were overly ambitious and says it will recruit four or five trainees a year in future. Olswang made the decision to halve its trainee numbers as long ago as 2011 and will take on far fewer from 2014 onwards. But for both firms, a misjudgement made half a decade ago has proved costly.