According to a recently released report – The Melbourne Law School and Thomson Reuters Peer Monitor® – Australian law firm partners are hopping from one firm to another in record numbers – based on the seven years covered by the report.
After three relatively stable years, the number of partner lateral moves suddenly increased by 19% in the 2018 financial year compared to the previous year.
Staff turnover at every level of seniority is a fact of life. Up to a certain point it can be regarded as healthy for an organisation to replace its people. However, when the ‘owners’ of a firm leave, it has an extra destabilising effect.
While the percentage turnover of partners is not tracked in the Peer Monitor report, it looks as though it passed the 10% mark in FY18. The Peer Monitor focuses on large firms. That would mean that one in ten partners switched firms, not including the numbers that changed firms as part of a law firm merger.
What was different in FY18 compared to the three previous years? It was overall a better year with more revenue growth than the preceding years. The increase in lateral moves could be a sign that partners were jumping onto opportunities rather than being pushed out the door. The statistics in Peer Monitor show declining partner lateral movements in years when business conditions were tough – during 2013 and 2014.
According to separate ALPMA research, staff turnover in law firms for the last two consecutive years has been 23% for all staff. ALPMA’s research shows no overall increase in staff turnover. Staff turnover amongst fee earners was 21% and amongst non-fee earners 30%.
Although the ALPMA research covers a more diverse range of firms than Peer Monitor, the general sign is that FY2018 was the year that partners took advantage of opportunities to move.
For the last two years, the ALPMA survey listed the same top two challenges for law firms: 1. Employee Retention and 2. Finding Quality Staff. Perhaps Partner Retention will makes its debut in the next survey.