It’s common wisdom that voluntary turnover is a bad thing for law firms and should be avoided.  But what if it can’t be avoided?  Suppose that, like forest fires, turnover is a natural part of the environment necessary to clean out underbrush and give the strongest saplings the room and sunlight to grow.  Does it, perhaps, make more sense to divert some of the efforts invested in attempting to avoid turnover toward maximizing its benefits?

The Nature of Turnover
It is hard to make a case in favor of people quitting.  When lawyers make the decision to leave a law firm it is assumed that they have made a negative judgment about the firm and their place in it.  Worse, the firm is saddled with the cost of recruiting and training a replacement, plus the loss of productivity until the new lawyer gets up to speed. And, law firms never seem to lose the people they want to lose.  The people who resign always seem to be the “keepers” that are the most productive and valuable human resources of the firm.

Law firm’s concerns about voluntary termination are made greater by the very nature of their organizations.  The affected culture of many law firms is based on the assumption that associates are joining with the intention of becoming partners and staying for their entire careers.  Even if their record of attrition belies the assumption of lifetime commitment, it is still the model prized by most firms.  Indeed, many law firm leaders harbor concerns about “hoppers” who move more often than once or twice during a career.

But today’s associates and younger partners come from a generation that watched as institutional stability was undermined, both in law firms and most other business sectors.  The concept of being laid off by a law firm is a very real expectation that closely traces the economy and senior associates have seen it occur twice thus far in their brief professional lives.  This and other experiences have caused young lawyers to understand that they can not depend on their firm to manage their careers.  Associates have somewhere in the range of six to ten years, depending on a firm’s partnership track, to learn to be a practicing lawyer and earn a partnership.  They realize that there are no second chances if they fail to gain the necessary experience. The opportunity is lost forever.  Therefore, associates who are not receiving appropriate training and practice experience – or more to the point, believe that another firm will provide a greater opportunity – have every incentive to change jobs.  In fact, we routinely do surveys of law firm associates where we see almost two-thirds of the respondents anticipating that they will leave their current firm within the next two years – even if they are not currently dissatisfied.

Unlike the experiences of the current generation of law firm leaders who were told that the path to partnership was being a good lawyer, associates are fully aware that becoming and staying a partner requires some level of success as a business developer.  Associates have been listening at the marketing seminars we’ve sent them to and they appreciate the value of personal relationships in business development. In many ways, current associates are much better networkers than the partners for whom they work, and they understand that moving from one job to another offers the opportunity to expand their network ties.

Firm’s particularly fear the loss of intellectual capital that occurs when lawyers leave.  The firm has invested in their training, both in the technical aspects of their practice and through experience of functioning with clients and other lawyers.  The loss of knowledge hurts not only from the wasted energy put forth by partners in developing the associate but the associates development often involves thousands of dollars of written off billable hours that could not be charged to clients.  At the same time, firms realize that competitors will benefit from this training when they poach one of the firm’s lawyers.
But at the most basic level, turnover is inconvenient.  Lawyers and law firms dislike change and partners don’t want to lose access to lawyers with whom they are comfortable and who they trust to meet their performance standards.  What’s more, the firm must now start over with a lawyer fresh from law school or pay to recruit a lateral that may or may not have the necessary experience.

The magnitude of the problem is staggering.  The U.S. all-industry average turnover rate of employees has been stuck at a little over 23 percent for the past ten years.  Slightly less than one out of every four people quits their job every year.  And, for professional and business service firms, that rate is 28.3 percent.  And, arguably, these statistics, which include non-lawyer staff members, would be worse if we just looked at professional positions.  Perhaps it’s time to take another look at turnover and the strategies that companies – law firms in particular – have used to deal with it.

Retention Strategies
Appropriately, law firms, like all other businesses, spend great amounts of effort and resources in keeping people from quitting.  Generally firms deal with the problem of turnover in one of two ways.  The first is defensive and works off the theory that attrition can be managed by making the firm such a great place to work that no rational person would ever want to leave.  We go about that by creating benefits and perquisites that place our firms in a position of competitive advantage over other firms that want to hire our lawyers and staff.  In its most obvious form, this is the strategic underpinning for the associate salary wars, but it carries through to all forms of benefits.  The natural extension has come to be known as “golden handcuffs” where changing firms forces a person to give up pensions and other benefits that can’t be made up by a competing firm.

The other strategy is retaliation.  Firms do this by developing a reputation for making it extraordinarily difficult for people who leave.  Starting with policies of not rehiring lawyers who voluntarily terminate and running through immediate removal from all current projects and the shut off of access to e-mail and voice messages, firms use the modern equivalent of shunning “turncoats” by severing all ties.  Several large firms have a policy of asking terminating employees to pack up and leave within one hour of giving notice.  Routinely firms, under the guise of limiting defamation suits, refuse to give any reference beyond employment confirmation.  In short, departing people are viewed and treated as traitors.

In fairness, some retention strategies do seem to have an impact.  Law and accounting firms listed among the Fortune 100 best places to work have voluntary termination rates that are generally lower than industry averages.  At issue, however, is whether these retention strategies really keep the best people or if they make it harder for less successful employees to depart; and, whether the retention of marginal lawyers plays a role in driving out the stars.

Taking Advantage of Turnover
If the conventional wisdom about turnover is wrong and it is a natural phenomenon in law firms, are elaborate retention programs then akin to howling at the moon?   If so, that would seemingly demand an entirely new approach to the issue of associate turnover.

Wear Clean Underwear.  My mother used to tell me to always wear clean underwear so if I was in an accident, I wouldn’t embarrass her in the emergency room.  By the same token, if a significant portion of your lawyers are going to be joining other organizations – whether competing private practice firms, in-house legal departments or positions completely outside the practice of law – then you ought to be concerned what those lawyers are going to say about your firm.  The ability of law firms to attract work is largely dependent upon their reputations and they devote large budgets to advertising and publicity designed to portray their strengths and capabilities.  But legal marketplaces are very small worlds and when an associate moves from one firm to another, that lawyer’s training and experience contributes to your reputation with their new firm, and, by extension, the legal community as a whole.  Over time, the quality, attitude and capability of the people who leave a firm plays a major role in establishing and maintaining the firm’s reputation.  Take pride in the lawyers you are sending out into the world.

Friends may come and go, but enemies accumulate. Associates who leave your firm don’t immediately lose the network ties they have created through your firm.  Instead the ties expand.  Therefore, by maintaining a tie to an erstwhile associate, a firm now has access to a broader and ever increasing network as the associate creates new ties.  Law firm partners that are significant business developers invariably have vast networks of which a large number of ties are with competitors.  As the adage goes, “Good reputations are built on what your enemies say about you.”  Take a tip from the accounting firms and build an alumni association to maintain the ties.

“Don’t forget the cannolis.” In the Godfather movies the mobsters would say, “It’s only business.” when they were about to kill somebody as a means of separating a business event from a personal relationship.  Of course, former associates who go to work outside of private practice have the potential to give the firm business.  And lawyers who go to work for competitors have the potential to refer business.  Virtually every lawyer with a history of significant business generation has a story about a matter that was referred from a former colleague.  Make it clear to everyone involved that having lunch with a former associate is not a sign of treason.

Okay, maybe turnover isn’t exactly a good thing and we shouldn’t get rid of our retention programs.  But, in all likelihood, we are going to continue to lose some people and should make the most of those events.

Some of the above was inspired by “Rethinking the War for Talent”, by Deepak Somaya and Ian O. Williamson in the MIT Sloan Management Review, Vol. 49, No. 4 (Summer 2008)