Trainee retention rates across the UK’s elite legal profession have remained steadfast, with many firms keeping hold of more than 90% of their intake despite a sharp dip in City lawyers’ overall business confidence.
Eighteen out of 25 of the UK’s top firms are holding on to more than 90% of their March class of qualifying lawyers, including six firms with a 100% retention rate.
Retention across the magic circle remains high. Slaughter and May made offers to all of its 29 qualifying trainees, while Freshfields Bruckhaus Deringer offered places to 45 trainees out of an intake of 47. Allen & Overy offered places to 96% of its intake, while Clifford Chance’s figure rose to 91% this year, compared with 86% a year ago.
The picture for the chasing pack and mid-tier also remains positive, with overall retention rates marginally lower than the magic circle. SJ Berwin, Norton Rose and Nabarro are among the firms retaining their entire intake, while Lovells, Herbert Smith and Ashurst have all taken on more than 90%.
Several firms including Osborne Clarke and Denton Wilde Sapte with low retention rates are a reflection of small qualifying rounds for the March intake.
The results come despite business confidence among the UK’s top lawyers recently faltering, as City partners anticipate the economic turmoil hitting the profession. Legal Week’s quarterly business confidence poll this week has shown just 30% of partners are expecting double-digit revenue growth over the next 12 months, down from last year’s high of 70% (see page 8).
Nabarro senior partner Simon Johnston said: “Once you get great people in and spend time and money investing in them, you want to give them the best shot. There is uncertainty, but we do not know which way it will go and work levels have not fallen off a cliff. You cannot take a short-term view.”
Norton Rose chief executive Peter Martyr added: “Playing around in the short term with trainee intakes is a dangerous game. There are few benefits and a lot of downsides.”
With a potential downturn on the horizon, litigation specialist Barlow Lyde & Gilbert is well-placed to benefit from a rise in disputes. The firm is offering places to 16 of its 17 trainees.
But top national firms have shown the biggest rise in retention rates, with many of the firms which lost more than a fifth of their lawyers last year now maintaining more than 90%.
Meanwhile, US law firms are keeping their qualifying UK lawyers closely guarded with many of the top US firms in London boasting rates of more than 90%.
One magic circle partner close to the process said: “The market is not clear for the coming months and firms are holding onto their talent.
Talkback: Will law firms continue to invest in junior talent in a slowdown? Click here to have your say.
The figures in this article and the references to firms "holding on to" significant numbers of trainess are misleading. My firm, which has a small March intake compared to September, did offer places to all trainees who applied. However, some chose not to apply at all and others offered places still chose to leave, meaning less than half the intake will be staying.
So English firms fire 10-15% of trainees each 6 months (around 10-15 lawyers per year), even in boom times... the diversified US firms (unlike Cadwalader) are unlikely to lay-off more than that if any, unless a real catastrophe will emerge...
These figures are incredibly misleading. They do not take account of resignations, which account for a large amount of leavers. Many firms 'doctor' their figures by offering places to trainees in departments which they do not want.
I am one of those trainees moving on qualification and yes, our figures are 'doctored'. I don't know any trainees who are going to be unemployed in March - we had more roles than qualifiers.
2008 Forecast:
Most UK Trainees will avoid the crunch; they are the future revenue generation of the firms. In a similar fashion qualified lawyers will remain in demand at salary rates which are inflated by the annual 'keep up with the Jones' factor. These two things are somewhat sensible in order to invest in the future.
The real impact will be elsewhere. Due to the timings of such things, at the same time that firms will be announcing record turnover and improvement to PEP they will shortly afterwards be announcing low(er) rises to support and secretarial staff due to the "impending crunch". Given the net profits that many firms enjoy then this does not need to be the case, however 'overheads' are always an easier target than making rate increases stick or looking at leverage ratios, innovational offerings etc.
I suspect there will be many mid-tier (non lawyer) professionals; IT, Busines Development, Finance etc who will be moving this year.
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