A lot has happened since we reported on Spring retention rates in early March. Back then, while Covid-19 was clearly on the radar, nobody could accurately predict how the next six months would pan out. So, how has lockdown and the ongoing economic turmoil affected our leading law firms’ ability to retain the next generation?
Yours truly, for one, was expecting an absolute car crash in the run up to the Autumn retention rate season, and I’m delighted to admit that my prediction was overly pessimistic as the results announced to date indicate only a very minor deterioration. This holds for both large ‘City’ practices and national law firms.
In fact, one has to look very closely at the figures, and certainly consult a calculator, to see any difference between this autumn’s retention rates (85%) and the preceding three rounds – Spring ’19 (86%), Autumn ’19 (87%) and Spring ’20 (87%).
Scratch a little deeper and you’ll find that even this minor decrease of 1 or 2% depends on whether you count the offer of a fixed-term contract (FTC) to a newly qualified solicitor as a ’retention’ or not. If we chose to count an FTC as a retention, then there has been no fall in retention rates at all.
Those performing particularly well include magic circle heavyweights, Allen & Overy and Slaughter and May, which both kept on 38 of 41 qualifiers (93%), Burges Salmon (29 of 30), Osborne Clarke (22 of 23) and Watson Farley & Williams (17 of 18).
Others British firms retaining at least 90% of their Autumn qualifiers include Ashurst (18 of 20), RPC (11 of 12) and Lewis Silkin (4 of 4).
US firms were well represented in the list of top performers with Covington & Burling (8 of 8) and Ropes & Gray (5 of 5) getting full marks and Latham & Watkins scoring an impressive 96% (23 of 24).
FTCs the order of the day?
In normal times law firms rarely offer fixed-term contracts to newly qualified solicitors; they have had two years to see their trainees in action and to work out whether they’re going to make the grade or not. But this year is far from normal, and while the number of qualifiers that have taken up offers of FTCs remain low, several firms have ‘retained’ at least one of their NQs on FTCs. Among them are magic circle firm Clifford Chance, City firm Stephenson Harwood, regional heavyweight Addleshaw Goddard and US firm Orrick, which offered FTCs to all 6 of its qualifying trainees.
What’s happening to NQ Salaries?
Should you be about to qualify at a large commercial law firm, the bad news is that several City firms have decided to cut NQ salaries with immediate effect.
Of the magic circle, only Freshfields have decided against cutting their NQ salary, while the others have all announced cuts of between 5 to 10%.
Other major players to announce a drop in NQ salaries include Norton Rose Fulbright, which has announced a cut of 5.5%, Reed Smith (12%) and Bryan Cave Leighton Paisner (12.5%).
While this will undoubtedly take a little gloss off for some NQs, we should remember that these law firms are simply reversing the significant hikes that they gave to their NQ salaries as recently last year, as we reported in our Autumn ’19 retention rate blog.
When you take a minute to consider everything that’s happened this year and the unprecedented economic impact of lockdown, this is a very positive set of results.
Now don’t get me wrong, tough times lie ahead, and those who have not been kept on are entering an extremely tough jobs market, but the fact that our largest law firms have chosen to retain NQs at essentially the same rate as the last two years is extremely encouraging.
It will be interesting to see what happens to those NQs who have accepted offers of fixed-term contracts and we will, of course, keep a close eye retention rates in the run up to March.