Attrition is a hidden cost-driver: here's how firms can reduce the risk
Across the legal industry, competitive pressures are rising. As well as contending with the threat of new providers entering the legal services market, litigation firms must adapt their fee models to comply with the Jackson reforms of 2013. To successfully navigate their way through a period of significant change, it is more important than ever to ensure high levels of operational cost-effectiveness.
At first glance, measuring cost-effectiveness may seem like a simple calculation: just take the total amount of billable work that each employee has booked for a given week, month or year, and divide it by their salary and benefits over the same period. However, this reductive approach fails to consider one of the most significant cost-drivers for law firms: employee attrition.
Revealing the true costs
Whenever a lawyer leaves a firm, the need to replace them triggers a time-consuming and resource-intensive process: advertising the position, interviewing candidates, evaluating the applicants and training the new hire. Although many firms do not measure the amount of management time spent on all these activities, it is often significant. Senior partners and other top talent in the firm may be diverted from value-added work for an extended period, which creates a significant drag on efficiency.
Attrition is almost always a source of operational disruption. Whether mild (for example, the time lost to external recruitment and re-training) or severe (for example, a key client following the departing employee to their new organisation), this disruption drives costs in ways which can be difficult to measure. One study by Oxford Economics suggests that the average cost of replacing a legal professional totals around £40,000, and that the typical recruitment and training period for a new hire takes 32 weeks.
Lawyers who routinely work on matters that are a good fit for their specific skills and professional development goals are far more likely to stay with a firm than those who are stuck doing low-grade, unchallenging work. Maintaining high levels of employee satisfaction is therefore one of the most effective ways to mitigate the risk of attrition.
When it comes to driving up satisfaction, law firms have a powerful tool at their disposal: the lawyers themselves. By empowering employees to take a proactive role in choosing the matters that they are most interested in working on, organisations can take the guesswork out of the equation and ensure that they are promoting a working environment that fosters employee engagement and long-term loyalty.
However, despite the clear benefits, many firms currently lack the capabilities to assign work in this way. To solve this challenge, law firms should target a future-ready approach to resource management that engages legal professionals more closely in the decision-making process.
Targeting new capabilities
At its core, a future-facing resource management solution should be able to capture accurate, granular data on each employee’s unique skills, competencies, experience and availability for work—offering the firm a clear picture of capacity, committed matters and potential skills gaps.
Crucially, the solution should also enable legal professionals to view upcoming matters and express a preference about which projects they work on next, enabling decision-makers to assign each case to the optimal lawyer.
With more than 25 years of experience in legal resource planning, Retain offers a proven solution that enables law firms to democratise their approach to resource planning. By engaging lawyers more closely with the decision-making process, firms can promote working environments that allow legal professionals to pursue and achieve their career development goals: boosting satisfaction, reducing attrition and helping to keep operational costs under tight control.
That’s why all of the Big Four and 40 percent of the Magic Circle already trust Retain to manage their resource planning processes. Whether you work for a multinational organisation or a small practice, Retain is ready to help. To arrange a consultation today, call us on +44 20 7538 4774.