Revealed: A&O takes biggest hit as magic circle squanders £10m on lost trainees

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  • It is absolute rubbish that a firm spends this much money on a trainee. Just because a partner gives a trainee a two hour lecture and then internally bills it at £800 it does not mean that is the true value, the reality is it costs a little bit of the partners free time every week and that is only if they train the trainee properly.

    If a partner did have £800 of work sitting on his desk it would not be discarded because of some training more likely the trainee would be doing the donkey work so the partner could earn the fees.

    I fail to see how any comparison of cost of training trainees shows anything when in reality firms are just inventing the figure.

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  • Have you just taken the 2 year salary for a trainee and multiplied it by the number of trainees leaving in order to produce a "total loss" figure? Given that trainees are billed out to clients, isn't the 'true loss' likely to be a lot smaller, if indeed it is a loss at all?

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  • This is rubbish. I billed over £250k in fees in my first year as a trainee alone.

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  • This article really is a load of rubbish. Why is there talk of loss when large sums are billed out for a trainee's work? If the article was about how some firms don't bill for trainee work, then fine. However the article doesn't do this.

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  • This is typical lawyer math.

    Step 1: take trainee salaries, kindly released for public review
    Step 2: count how many trainees are around
    Step 3: multiple step 1 by step 2
    Step 4: create a sub-total (it might exceed the number of fingers, so whip out a calculator)
    Step 5: Add in a random guess as to LPC / GDL fees (likely by simply taking the number from the CoL / BPP webistes)
    Step 6: Add in maintence grants (if any).
    Step 7: Hit "=" on the calculator and hope for the best.
    Step 8: write an article, entitle it "REVEALED" and then hope no one asks how the numbers were arrived at.

    * Note - many of the above steps will likely need to be redone multiple times as most members of the legal profession struggle to do basic maths.

    Whilst I jest, in part, this is ridiculous. Please provide a breakdown of your calculations if you want anyone to believe that the above figures are either accurate or represent a true "cost" to the firm.

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  • I would debate the absolute 'loss' figures, but a high attrition rate for trainees is a loss to the firm concerned. There is the opportunity cost to a Partner or Senior Associate training them, the fees, the loss of time for HR and with respect firms could simply take the view with regards the work a trainee does during their training (which needs to be done) that it could be done by a skilled paralegal, at higher profit and probably less hassle. Also the days of clients putting up with trainees acting as glorified photocopying clerks but being billed out at a trainee rate are long gone. Trainee costs are an overhead, one which will give dividends to the firm but long term and only if they stay.

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  • I head the in-house legal function of a financial services business. We don't pay for trainees and have not done so for several years. Who are these clients who are happy to pay for them? If any of my law firms try billing out trainees they get short shrift.

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  • Mr Burns, hopefully you weren't paying Anon | 29-Apr-2013 10:54 am for his £ 250K per year.

    No disrespect Anon but that work probably could have been done by soemone else at much more profit to the firm. In time, your training will justify such billings and much much more. Most clients wont pay for a trainee. Must NQ's are next to useless, but then they become valuable lawyers.

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  • One could argue that a magic circle firm which retains a smaller percentage of its trainees possibly ends up with a more talented bunch of newly qualifieds than its rivals who retain a higher percentage. But I'm sure there's a massive hole in this argument and someone will kindly point it out.

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  • I don't think that financial considerations solely dictate the decisions of big firms to offer training contracts.

    If that was the sole motivation, firms would simply stop offering TCs and instead swoop for lawyers at 3-4 yr PQE.

    They don't because law firms benefit in lots of other ways from the TC process.

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  • Not sure about all this, isn't the point of hiring lots of trainees these days primarily in order to provide the firm with plenty of (relatively) cheap labour? If they were all kept on after 2 years the firm would have far too many low level associates that cost far more than trainees, but whose fee earning potential would not be that great in some cases. Of course, I could be wrong and this is all about finding talent, not about working cheaper labour for maximum profit.

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  • That is a truly lightweight piece of analysis! Just a comment on trainee retention with some relatively spurious costs thrown in!

    At the same time as firms are trying to be more scientific in setting their recruitment targets they are also being hit with other trends. Not least of which is that none of the big firms really need trainees any more. Or at least not to deliver legal work, which can mostly be done by someone else for less, or by technology, or not done at all, and is likely not to be particularly profitable anyway (and/or it's so miserably awful that the trainees don't want to do it anyway). So they're mainly doing it to protect their cultures and ethos. Thank goodness.

    Anyway, a substantial number of current recruits won't want what big law offers in the long run and perhaps those firms are sick of training lawyers for other people.

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  • Actually, Anon, that is a common talent management tactic emerging at many corporates and consulting firms - called a "first bounce" approach. If they are going to leave anyway, why not take the benefit of hiring them as newly qualifieds. Of course that doesn't work long term, it is a free rider issue, so most firms know they need to keep investing.

    Agree with most of the comments made, but there is a valid point, in that firms should be seeking to optimise the investment made in trainees. It does miss the point that there is an optimum number to retain - no hiring process gets everything right, so an 80% hit rate and retaining the best could well be a great outcome.

    I wonder to what extent does this analysis factor in the incoming trainees from other firms as newly qualified. Sure, many leave the profession, but you can bet A&O picked up a few from Slaughters and vice versa. It is only the net loss that is the issue.

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  • These figures are rather vague. The true cost per trainee seems to be based only on salary + law school maintenance fees. Once you add in law school fees and the costs to run the HR teams that recruit and train the trainees, plus the budgets those departments have for events/training etc, and also consider the employer tax contributions etc - these figures are clearly out.

    Although the "loss" may also be debatable depending on the billing to clients, it is estimated it takes until about 3 years PQE to get a return on the investment of a trainee.

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  • The harsh reality of the situation is some trainees are just not good enough, factored in to the equation is the moving goal posts when firms in good times are more likely to retain.

    I always worry when recruiting a traineee, who claims they bill a high amount, that they have been used as sweat equity, and have not really learnt a lot as the high billing is due to the commoditised nature of the task perfomed.

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