The Chances That You Will Still Be At Your Firm By The End Of The Year

by Legal Practice Intelligence - January 2012

In August 2011, one of our nation's top law firms, Clayton Utz, voluntarily published an Annual Review of its activities.

The review disclosed these statistics: annual staff turnover for financial year 2010 was 23.8% and for financial year 2011 it was 18.9%. The percentages include staff and partners. (source)

A staff turnover percentage of 20% means that after five years the entire population of the firm has "turned over" – in a statistical sense. Are you shocked by these percentages? We at Legal Practice Intelligence were shocked and as a result we wanted to find out what was considered to be a reasonable target for a staff turnover rate in Australian law firms.

We conducted a formal, anonymous online survey and also informally asked people who we thought would have knowledge about this.

Before we get into the feedback from the surveys, we did a little Google research:

"Lander & Rogers consistently has one of the lowest turnover rates in the legal industry. In 2010, our turnover rate for legal staff was 4.6% (7% for all staff)".  (source)

"Fair and flexible workplace policies and initiatives at Maddocks have contributed to a staff turnover rate that is well below industry averages, with 16.5% of staff having been with the firm for 10 years or more and 40% for five years or more" (published June 2010). (source) From this statement, Legal Practice Intelligence deduced that this was the equivalent of an annual staff turnover rate of 16.5%.

Minter Ellison (Perth) staff turnover was around 50% in 2006 reducing to less than 12% in 2010. (link)

As an aside, in 2011 Minter Ellison (Perth) transformed into Squire Sanders. In one sense it could be suggested that the staff turnover percentage for the firm in 2011 was 100%.

What is a reasonable staff turnover target for Australian law firms?

The formal survey conducted by us in October 2011, asked three questions:

• At what level do you believe staff turnover becomes destabilising for a firm?
• What staff turnover percentage do you think a law firm should aim for?
• Do you believe that the larger the law firm the more likely it is that the staff turnover rate will be higher?

Unfortunately, the responses fell short in number to be statistically significant. However, supplemented with informal surveying and some further indicators (see below) we arrived at our own tentative conclusions.

We noted some further pointers from both inside and outside of the legal sector:

"Deloitte was recently [2011] voted one of Australia’s top places to work by the Great Place to Work Institute, an honor that reflects the firm’s attention to employee engagement, turnover, and satisfaction ... turnover rate firm-wide average of 15-20%." (source)

"The average rate of attrition for solicitors in Australasian law firms during 2006 was more than 36 per cent (FMRC Legal, 2006)." (source)

Our conclusion: In a relatively stable, modestly-growing economy, the target rate for staff turnover in a "successful" law firm is likely to be between 10% - 15%.

By role, we estimate that this translates to:

• Partners 2.5% - 5%
• Senior lawyers 7.5% - 10%
• Junior lawyers 15% - 25%
• Management and administration staff 10% - 15%

If you knew the staff turnover rates at your firm then you would have a starting point to estimate your chance of still being there by the end of the year. 


© 2012 Legal Practice Intelligence