Market Focus

In our blog last month, Spring Retention Rates Reflect Brexit Uncertainty, we looked at the early spring retention rates published by some of the larger London firms.

Since then nine more leading firms have released their figures, among them magic circle firms Allen & Overy, Freshfields and Linklaters. Let’s start with these three heavyweights.

Freshfields just edged it with a retention rate of 84% compared to Linklaters’ 83% and Allen & Overy’s 82%. Freshfields offered NQ positions to 31 of its 37 spring qualifiers, all of whom accepted. This is the same number as last spring although it had 38 qualifiers at that time. The NQs will start on a healthy £85,000 a year.

Linklaters had 51 spring qualifiers – the highest number of any UK law firm – of whom 48 applied for NQ positions and 44 will be staying with the firm. They will be on £77,500.

Over at Allen & Overy, 36 out of its 38 spring trainees applied for jobs as NQs with all but five being successful. Its retention rate of 82% is down on last autumn’s 86% and its impressive 91% this time last year.

These results place Linklaters, Allen & Overy and Freshfields comfortably between rivals Slaughter and May (an impeccable 100%) and Clifford Chance (a less than impressive 67%).

Elsewhere, Simmons & Simmons has announced a spring retention rate of 80%, with 12 of its 15 qualifiers taking NQ positions. This represents an impressive bounce-back from its stumble last autumn when it kept just 50% of its 24 qualifiers. But is all as it seems? There have been accusations in the legal press that “several” of its NQs are on fixed-term contracts. Is this a dastardly attempt by the firm to skew the figures? We couldn’t possibly comment (as we don’t know).

But there’s even more to this than meets the eye. Last year, the firm announced a spring retention rate of 78% (seven trainees from nine). Later, there were suggestions (again in the legal press) that it started with 13 trainees. If this is true, and again we don’t know, the true retention rate would have been only 54%.

Silver circle firm Herbert Smith Freehills will be disappointed with the 77% retention rate at its London office because it marks a dent in its impressive recent record. In the past four rounds it has managed to retain more than 90% of its trainee solicitors and this is the first time since 2009 the figure has fallen below 80%. Offers were made to 28 (out of 35) trainees, all but one of whom accepted.

Better news was to be had at fellow silver circle firm Macfarlanes. It proudly claimed a clean sweep, though from a modest six qualifiers. This is an improvement on a more than respectable 85% last autumn from 21 qualifying trainees. This spring’s new crop of NQs will start on £71,000 a year.

Norton Rose Fulbright will be pleased enough with its spring retention rate of 83% though it is a reduction on its 96% this time last year. The 20 qualifiers remaining with the firm (out of 24) are split evenly between male and female trainees and will start on £72,000 a year.

Transatlantic firm Hogan Lovells is keeping 23 out of 29 spring qualifying trainees (79%). This is in line with its performance last autumn when it retained 80% (24 out of 30).

Finally, good news at Osborne Clarke which is keeping all six of its trainees. Three will be based in its London offices, two in Bristol and one in its Thames Valley office (Reading). Last spring, the firm kept on all seven of its qualifiers.

Once again we have a mixed bag, with (not surprisingly) the best results coming from the firms with the smallest intakes. The figures are not consistently good across the board, though, which as we mentioned in Spring Retention Rates Reflect Brexit Uncertainty is probably due to prevailing uncertainty. Lawyers are renowned for their caution and taken as a whole these figures reflect that.

We will be bringing you further updates as more firms announce their retention rates in the coming days and weeks.

So far only six of the larger London firms have published their retention rates for spring 2017, but they make interesting reading.

Slaughter and May tops the list with a 100% retention rate for their 25 spring qualifiers. This is great news for those trainee solicitors and comes as little surprise as Slaughters is a habitually strong performer when it comes to the retention of trainees. This year’s full house compares to 95% last year (38 out of 40 trainees retained) and 88% the year before (37 out of 42). It seems the firm’s policy of taking on slightly fewer trainees has done the trick of boosting their already impressive rates.

This is in stark contrast to Clifford Chance, which is keeping on just 31 of their 46 spring qualifiers. The firm has fewer trainees qualifying this spring than last (46 compared to 54) yet the retention percentage has dropped from 80% to just 67%. This continues a downward trend from the 90% retention rate for spring 2015.

Trowers & Hamlins and White & Case will be pleased to announce high retention rates, both of which represent a small improvement on last spring. Trowers & Hamlins’ 93% compares to 88% last year and 82% the previous year, a positive upward trend. White & Case’s 88% is almost bang on their 87% retention rate for the previous year.

Far less impressive is the news from Berwin Leighton Paisner, which is keeping on just 11 out of their 20 trainee solicitors (55%). This is a decline from the firm’s already poor figure of 70% from last year. It also continues a run of five successive rounds of disappointing retention rates. The firm kept on only 65% of their trainees last autumn.

Mayer Brown is retaining all four of its trainees, vindicating the decision the firm took in July 2014 to dramatically reduce its intake in order to improve its retention rate. However, it would be wrong to draw any conclusions from such a small sample size.

A mixed bag then, and trainees would be forgiven for starting to feel anxious. It is still too early to draw any firm conclusions, but the figures support our impression from speaking to clients that there is Brexit-induced apprehension in the air.

That would certainly explain Clifford Chance’s numbers. Yes, the firm does an awful lot of banking work, so has a right to be more nervous of Brexit than many of its peers. But, if we look back at the global financial crisis we can see that Clifford Chance retained 79% of qualifiers in spring 2010 and 91% in spring 2011. What can we read into this?

It wouldn’t surprise us one bit if several other large firms take a cautious approach and reduce the number of trainee solicitors they retain this spring and, indeed, in the coming autumn. With profits per equity partner (PEP) becoming an increasingly important yardstick these days, law firms move quickly to cut overheads when things slow down and profits threaten to slide. Reducing the number of NQs is seen as a quick fix.

These firms will be confident that if the Brexit effect is not as bad as many fear, they can dip back into the recruitment market and find the junior solicitors they need.

We are in little doubt that the prevailing mood among leading law firms is one of uncertainty. This is one reason why NQsolicitors.com had more than 100 September 2017 qualifiers activate an account within days of commencing our marketing campaign.

NQSolicitors.com Managing Director Ian Roberts says: “While it is too early to make any hard and fast judgements, we would not be surprised if the majority of top 50 law firms report lower retention rates this spring. Certainly, our own numbers would indicate that there are more newly qualified solicitors on the market. Good news for firms looking to pick up new talent, not such great news for trainees.”

With many more announcements due in the days and weeks ahead, we will be keeping a close eye on the numbers. Watch this space for an update in the coming weeks.