The Australian Financial Review published its mid year statistics from a survey of Australia’s largest law firms as well as some smaller partnerships that are part of global firms. Not all law firms disclosed numbers. From those that did, some significant outcomes are evident.
The most shocking revelation is the rate of partner turnover that has occurred over the past twelve months. High staff turnover is not uncommon in law firms. Moving from one firm to another to take advantage of career progression opportunities is par for the course for younger lawyers. However, high turnover has now moved up to the partnership level.
Achieving partnership at these types of firms may at one time have been considered the ultimate destination for status, financial reward and security of tenure. What the AFR numbers show is that security of tenure may have to be removed from this list.
The AFR survey revealed that these firms appointed 296 new partners in the past twelve months while the overall number of partners (equity and salary) hardly changed.
How were they able to appoint almost 300 new partners when the overall number of partners did not change by much at all? It is evident from the statistics that a similar number of partners left their firms over the same survey period.
The shocking statistic is that the turnover rate of partners in this group of firms was almost 10%. Almost one in ten partners left their firms to be replaced by new partners. This was the average. Some firms were a lot higher than 10%. Some were a lot lower.
A 10% turnover rate for employed staff is perhaps manageable but a 10% turnover of partners has to be destabilising. Partners are the leaders of a firm. What effect is such a high turnover rate of partners having on the culture and morale of the people working in our “big name” law firms?
Other notable results from an analysis of the AFR numbers are:
- Average number of fee earners to each partner was 3.3 fee earners
- Ratio of senior associates to each partner was 0.83. On average there was less than one senior associate for every partner.
- The average ratio of the number of equity partners to salary partners was two thirds to one third. Some firms had no salary partners and only equity partners but the average was two thirds of partners being equity partners and one third being salary partners.