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VOL. 124 | NO. 24 | Thursday, February 5, 2009

Associate Retention Challenge For Firms In Tough Times

By Rebekah Hearn

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When a young lawyer joins a firm as an associate, it used to mean they were on partner track at that firm.

Changing times combined with the struggling economy, however, have transformed the partnership track idea for many associates. In a recent article published in The Memphis Lawyer titled “Stop Loss: The Scoop on Associate Retention,” several co-authors wrote, “Firms across Memphis are getting frustrated by an attrition rate many see as alarming.”

Several aspects go into keeping associates, experts say: hire good people on the front end, provide a mentor for new and young lawyers, manage young lawyers’ expectations and offer financial incentives.

Adam Simpson, an associate at Martin, Tate, Morrow & Marston PC and a co-author of the article, said times have changed.

“An associate used to come to a firm expecting to stay there and work there until he retired, and the firms, I think, also expected that,” he said. “But I think it’s different now. There’s a lot more mobility. People cross firms all the time now.”

Simpson said the issue of high associate turnover rates is more prevalent among larger firms. He noted that a good number of his attorney friends have “jumped from job to job” in the past few years.

“I think there are generational differences,” Simpson said. “The younger generation, like mine, may be a bit more restless, or want to explore their options, or … if they feel they’re not appreciated, I think there’s not as much holding them back from looking elsewhere.”

Keeping associates

One important aspect of practicing law for associates is to latch onto a mentor.

Marcy Magee, a non-equity partner at Thomason, Hendrix, Harvey, Johnson & Mitchell PLLC, said her firm has an official mentorship program.

The associates are assigned individual mentors, but Magee said their office has an “open-door policy” that allows any associate to grab any partner for answers to their questions.

“It does (work out well),” Magee said. “We get feedback from the associates as a collective group at the end of the year, and we ask if it’s been beneficial for them.”

Also at the end of the year, associates at Thomason Hendrix are usually assigned new mentors so they have the chance to work with a variety of people.

Another important aspect of retaining associates is the issue of the billable hour system. Some firms have a strict minimum billable hour number associates must meet, putting unequal stress on young associates who are struggling harder to fit their niche in the practice of law.

“Make no mistake – the associate who is under-billing is the most stressed out person at the firm,” said the authors of the “Stop Loss” article.

“It adds a whole set of pressures that I think take away from your professional abilities to practice law,” Simpson said, adding that Martin Tate operates on a billable hour system, but there is no formal minimum associates must achieve.

“I understand there’s got to be some way of making the money and running the business and keeping track of how much clients are charged, but I’m not sure that’s the best model. The billable hour is a maybe mid-20th century creation, and I’ve heard … that John Martin Jr., one of the founders of our firm, when they were trying to switch over to the billable hour, said, ‘If I wanted to bill by the hour, I would have been a plumber.’”

Similarly, Magee said she’s “always had a problem telling somebody they have to bill a certain amount of hours.” Much like Martin Tate, Thomason Hendrix does not have a set billable hours rate.

“The partnership thought there were a lot of negative connotations associated with that,” Magee said.

Instead of casting a wide net and hiring many attorneys who are given a minimum billable hour requirement, “we try to hire people that are hard workers on the front end,” she said.

Where have all the lawyers gone?

As Simpson noted, many associates now will leave firms for other positions more readily than they perhaps used to. The partnership track is not quite as important to many lawyers today as balancing their work and personal lives are, and if an attorney finds a better opportunity elsewhere, he or she is more likely to take it. An in-house counsel position is one option.

As in-house counsel, attorneys have one client, so there’s no need for the client fishing that keeps many young lawyers floundering about. Also, the hours are steadier.

“Essentially, (that) job allow(s) the attorney to practice law and practice law only,” reads the article in The Memphis Lawyer.

Although that sounds too good to be true, in-house counsel positions have their drawbacks, some say. Simpson and Magee both pointed out those jobs require a great deal more travel than a law firm position, which can pose problems for people with young children and families. Also, if something goes financially wrong with the company, that attorney has all his eggs in one basket.

“I think it’s the associates who have been out three, four, five years or even longer that (take in-house jobs),” Simpson said. “There are plusses and minuses to doing it.”

In these times, there is also the ever-present worry of layoffs, especially among younger attorneys who have less experience practicing.

How to help

A 2008 survey by Hildebrandt International and Citi Private Bank showed that of 140 law firms surveyed, demand for legal work remained steady or declined, depending on a firm’s practice areas, while firms’ head counts grew by 5 percent – the same growth rate firms have seen since 2000.

What should firms do to right themselves? The Hildebrandt-Citi survey suggested firms “dump associated locked-step pay and start paying associates based on merit work” and “use more creative staffing structures, including naming fewer partners and instead keeping more lawyers in some form of in-between stage between associate and partner,” said an article in The American Lawyer that summarized the survey’s findings.

Magee is one example of an attorney who is currently in that “in-between stage” as a non-equity partner.

Non-equity partners typically still receive a set salary, but they aren’t required to buy into the partnership at that point.

“So you have a one- or two-year period to get acclimated to becoming a partner and buying into the partnership,” Magee said. “I think it’s a pretty common practice. We actually have a program for part-time attorneys who remain non-equity if they choose to do so.”

The Memphis Bar Association will address the topic of associate retention at its next board meeting Feb. 26.

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