Are retention rates really that important?

If you read the legal press, you will know that stories about how many newly qualified (NQ) solicitors a given firm has kept on out of its trainee intake are a regular fixture. Firms are hauled over the journalistic coals as their ‘performance’ is assessed for adequacy or otherwise. You would certainly be forgiven for believing that NQ retention rates are an important – if not the most important – indicator of whether a firm is a good place to train. And firms seem to have been either persuaded or cowed into marching to the same drum.

But are retention rates really that important? I don’t think so. They are certainly an interesting part of the mix and worth brief consideration, but the apocalyptic gravity ascribed to their message is surely overblown. Here’s why.

Firstly, consider simple mathematics. Retention rates are just that, a rate. If you have an intake of 100 trainees, each individual accounts for 1%, while at a firm with only 10 trainees per year each person accounts for a whopping 10%! If the firm loses a couple of people, its retention rate drops to 80%, while the bigger firm only drops to 98%. “Well, that’s how percentages work,” I hear you say. Fair enough, but these are real people and there are actually a lot of reasons a trainee might not stay on as a qualified lawyer and possibly skew the numbers. They include:

• there were not enough qualified jobs to go round for all the trainees, so someone had to go;
• there were no/not enough jobs in the practice area the trainee fell in love with;
• the trainee decided being a solicitor was not for them;
• the trainee had to relocate to another location for personal reasons (eg, family or partner);
• the trainee prefers a qualified job elsewhere and is so good that they can choose from multiple options; or
• the trainee has started a relationship with someone else at the firm and both being there is incompatible with this.

These sorts of issues crop up everywhere, but remember that – particularly in the case of the first two reasons – the more people and jobs there are, the more likely it is that the majority can be accommodated. In other words, rates don’t tell the full story.

The other factor is that a lot of trainees – especially at the size of firm we look at retention rates for (ie, 10+ trainees each intake) – are recruited up to four years in advance of when they will qualify. Predicting business need across that length of time is inevitably inexact. This means that one is also at the mercy of the competence, ambition and dumb luck of those making that calculation. One firm might say, “We really believe in offering great training, so we’ll budget training numbers for our best possible scenario and if qualifying trainee numbers end up exceeding that, we are confident that we are sending anyone who is surplus off into the job market with a great training pedigree and that they should find a job quickly”. Meanwhile another firm says, “We don’t really know how many we will need so we’ll make a guess – if we are over so be it, out they go; if we are under we’ll just have to get 25 trainees do the work of 35 and recruit some laterals when they start to revolt”. I know which organisation I’d rather be with.

The message is not that retention rates are entirely useless, but a one-off figure for a particular year is not terribly helpful, I would say. It reflects the situation some time before you will be part of this calculation. Trends across a number of years may prove rather more helpful. A firm that ‘fails’ every year is far more of a worry!

Finally, don’t be afraid to ask why retention rates are seemingly poor. You may well pick up more from the explanations. Are people happy and up front or are they shifty? Remember the more general importance of speaking to people working at the firm. How they come across will speak louder than any media headlines.

Matthew Broadbent is the business development director of LawCareers.Net.