Unsettled weather ahead for graduates
16 July 2012 | By Christian Metcalfe
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There’s a mixed outlook for career prospects in law as firms report retention rates up, but graduate vacancies down
Those hoping to become solicitors received a mixed forecast this summer as law firms posted improvements in their retention rates, while reporting that graduate vacancies are set to drop.
So, while the outlook for newly qualified (NQ) lawyers continues to improve, the situation for current graduates is distinctly more changeable.
The biggest improvement in NQ retention so far reported is that of SNR Denton, which posted an 83 per cent retention rate. This far exceeds the 60 per cent it achieved in March 2012 and 52 per cent it reported in September 2011.
Both Farrer & Co and Jones Day achieved retention rates of 100 per cent, up from 90 per cent and 80 per cent respectively this time last year.
Another firm that has seen a rise is Ashurst, which reported a rise to 83 per cent from 78 per cent in March.
Slaughter and May, the only magic circle firm to report so far, delivered a retention rate of 87.5 per cent, a slight drop from its March figure of 90 per cent, although that figure was slightly skewed by the resignation of two trainees from the firm before offers were made.
US firm Shearman & Sterling, with an intake of fewer than 10 trainees per year, also saw a slight drop to 87.5 per cent from the 91.5 per cent it achieved in September 2011.
However, the positive news around retention rates has to be balanced against recent figures released in the Association of Graduate Recruiters’ (AGR) bi-annual survey, which found that graduate vacancies in law firms are expected to decrease by 16.5 per cent this year.
Law firm respondents, 38 of which took part in the survey, also disclosed an average of 44.5 applications per vacancy, compared with an average of 73.2 applications across all sectors.
Elsewhere in the survey the median salary for law firms remains unchanged at £37,000, behind investment bankers or fund managers at £38,250, in comparison with an average predicted rise of 6 per cent for all other sectors.
Reacting to the predicted drop in vacancies Simmons & Simmons graduate recruitment partner Alexander Brown said: “The market is likely to slim down a bit. With clients focused on who is doing what jobs, it’s clear that some work may not need to be done by trainee lawyers or even lawyers full stop. I can see vacancies slimming a bit but nothing dramatic.”
However, Clare Harris, associate director of legal resourcing at Hogan Lovells, takes a different view.
“Law firms are trying to predict recruitment requirements two years in advance and numbers of people qualifying in four years’ time,” she said. “I imagine some firms are managing by reducing their recruitment numbers slightly while increasing their ability to retain more people. The emphasis for us is always on quality, not quantity: it’s better to take a slightly reduced number of people if necessary to ensure you get the ones who are most suited to your organisation.”
News that Wragge & Co offered its September intake of trainees £5,000 to defer their start dates has heightened concern over the fragility of the graduate recruitment market, although the firm has confirmed that all 24 trainees will start in September after nobody took up the offer.
Harris said: “I suspect this is a one-off, and I don’t think any firm would want to defer trainees if they can help it. It’s likely that reducing the numbers of graduates joining training programmes is a more acceptable way of handling headcount planning.”
This is a view supported by Laura Yeates, graduate recruitment manager at Clifford Chance, who noted: “I would be surprised to see firms needing to reduce their numbers at short notice, as the industry has been planning recruitment numbers conservatively since 2008.
“Students shouldn’t be overly concerned but it would be wise for them to hedge their bets by applying to a range of firms,” she advised.
Please note, Jones Day later corrected its retention rate to 92 per cent after one trainee decided to not apply for an NQ role.