Retention rates at top 50 firms promise stability for trainees

Burges Salmon, Salans and Wragges employ 100 per cent of trainees but attrition still costs £43m. By Gemma Charles

One in five newly qualified lawyers at the UK’s top law firms departed last month on completion of their training contracts. This is one of the key findings from the first comprehensive survey of the retention habits of the top 50 firms by The Lawyer’s sister title for law students and trainees Lawyer 2B.

Across the largest 50 firms, the average retention rate for 2004 was 79 per cent, the same as in 2003. Barring some huge and swift economic shift, the pattern should continue at least into next year as firms continue to recover from the slowdown.

In some instances, of course, it will be the trainee who, come qualification, is sprinting for the door rather than being shown it by the boot of the senior partner. However, the majority of those 288 newly qualified solicitors who left the firms that trained them this September will have wanted to stay. If the oft-quoted figure of £150,000 to train and produce a single lawyer is true, then that is a whopping £43m wasted across the firms.

During the past two years, the magic circle firms have displayed consistently high and stable rates, with retention rates in the 80 and 90 per cent ranges.

DLA and Eversheds did not quite match the magic circle, losing 16 trainees apiece, giving them retention rates of 80 and 83 per cent respectively.

And pity the trainees at Denton Wilde Sapte (DWS). In 2004 and 2003, the firm has held the unenviable record of letting the highest amount of people go. In 2004, 18 of 49 trainees left, giving the firm a retention rate of 63 per cent. Worry-ingly, this actually represents an increase, as last year the firm bid farewell to an alarming 20 of its 48 trainees.

A spokeswoman said that as a result of the Denton Hall and Wilde Sapte merger in 2000, the new firm needed fewer newly qualified lawyers than the amount of trainees to which the two firms had guaranteed training contracts. As separate firms, Denton Hall took around 30 a year, while Wilde Sapte took around 25.

DWS has stated that it intends to recruit fewer trainees – around the 35 mark – in the future, so this should go some way to improving retention.

As a percentage, though, it is Lawrence Graham that posted the worst retention rate, at just 50 per cent. Trainee partner Hugh Maule was not impressed. “It’s a disaster to be honest. I’m not pleased with it at all and I don’t expect it to be repeated,” he said.

Maule said there were three principal factors which gave rise to the low retention rate. Two people did not want to stay at the firm, some did not make the grade and the rest left because they were not able to work in their desired practice area. “The three things together gave us much bigger numbers than normal. It’s just a dreadful result for us,” he added.

Before this year, Lawrence Graham recorded much better retention rates, with a low of 82 per cent and a high of 95 per cent.

Trainees could do worse than consider a trip to Birmingham. Although no longer such a keen advocate of the ‘single site’ outside-London policy, Wragge & Co continues to be a flagship firm for the city. It is the only firm able to boast 100 per cent retention of its trainees in both 2003 and 2004.

Wragges senior partner Quentin Poole said this was a deliberate strategy to invest in the future and labelled firms with low retention rates as “short-sighted”.

“When you get corporate downturns, the easiest way to cut costs quickly is to lose people. Making people redundant costs money, so the cheapest way is to tell trainees not to come for a year or not to take them when they qualify,” said Poole. “The alternative is that you recruit those people and carry significant costs.”

Poole admitted that the firm’s profits are down, but said the decision not to “slash and burn” will pay dividends when a boom time emerges.

Of course, for some of the smaller firms which recruit a limited number of trainees, the departure of one or two individuals will have a far greater impact on retention rates.

For example, Salans takes on a small number of trainees given its size and had a retention rate of 100 per cent this year because all three of the trainees were kept on, but had a 25 per cent rate the year before because three out of four left.

At Taylor Wessing, the problem with retention was not simply a question of not having any jobs available for the qualifying lawyers. Graduate recruitment manager Sophie Ferguson said: “The difficulty this year was we had more interest in some of the smaller departments. There were six people interested in employment and pensions, but they could only take three. We had less interest in corporate and finance, which would have taken more. Our trainees were adamant about what they wanted to do. It wasn’t a business thing, it was very much about the trainees making those decisions.”

Ferguson said that in future, the firm will try to make sure trainees have a sense of the needs of the business and are aware that their preferences, to some extent, have to tie in with this. But it is not all bad news for Taylor Wessing’s choosy charges, as all those who departed in September have secured jobs at other law firms.

In total, 1,097 trainees did make the grade and were happy enough to stay at their firms.
Those staying have gone on to earn an average of £45,917 – a small increase on the previous year. Last year a fifth of the top 50 firms, including magic circle giant Clifford Chance, shaved a few thousand pounds of their newly-qualifieds’ salaries. In 2003 none of the firms surveyed had increased their salaries, with the majority leaving them fixed.

This year, the situation is rosier. None of the firms have made paycuts, although most have shied away from increases. Clifford Chance, SJ Berwin and Travers Smith Braithwaite have reversed their decisions of last year to cut trainee salaries from £50,000 to £48,000, and their salaries are now back at the 2002 level.

Masons, the firm that held the dubious honour of making the largest salary cut, from £47,000 to £43,000, has this year given newly qualifieds a modest 3.5 per cent payrise, putting the salary at £44,500.

Meanwhile, Linklaters has the distinction of becoming the first UK firm to break the £50,000 threshold, albeit by only £1,000, after a firmwide 2 per cent salary increase.

Wragges has again distinguished itself by rolling out a 14 per cent pay increase for its London-based newly qualifieds, which is the largest payrise this year.