Law Firms and Law Schools – How Much Are Law Firms Losing When They Hire “Top Talent”?By Gregg Wirth

Legal Executive Institute

2How Much Are Law Firms Losing When They Hire “Top Talent”?

The strategies around hiring and retaining lawyers are a complex and multi-dimensional endeavor for law firms. Curiously, many firms do not give it as much thought as they should or devote enough deep strategic planning to who will represent the firm across the table from clients in the future.The cost to a company of a bad hire has been estimated to be about $250,000. Take that number and multiply it by everyone who exited a firm before they delivered a return on that investment, and you will calculate a startling number. For example, 4,034 lateral associates were hired from the top 10 law schools in the years 2012 to 2015, according to data from Leopard Solutions, a competitive intelligence provider offering a subscription-based solution to the legal industry. Of that total, 2,045 of them — roughly half — left before the three-year mark, resulting in more than $500 million in lost recruitment investment. Calculating on a firm-wide level, the numbers can be just as devastating.

Between 2012 and 2015, the top 200 law firms hired more than 57,100 attorneys, consisting of entry-level associates, lateral associates, counsel, and partner hires, according to Leopard Solutions; not surprisingly, 78% of this group is associates, either newly hired or those coming from other firms (laterals).

What is surprising is that top-tier law schools, the main source of these hires, have a rather dismal success rate with placing lawyers who will really stick with the law firms that hired them, rather than jumping ship for a better offer within the first three years of employment.

While the top 200 law firms no doubt seek to take their new hires from the most prestigious law schools, those top 10 law schools have the lowest success rate with new associate hires and lateral associates, according to the data.

The numbers show that just under half of newly hired associates, 49.31%, coming from top 10 law schools stayed with the law firm that hired them for at least three years. Also, just 49.17% of lateral associates — those from other law firms but also coming from a top 10 law school — stayed with their new firm for at least three years.

New Hires26,169 (46%)

Lateral Associates18,650 (33%)

Partners7,750 (14%)

Counsel4,538 (8%)

All Hires2012-2015

3How Much Are Law Firms Losing When They Hire “Top Talent”?

Top 10 Law Schools Top 11-20 Law Schools

Berkeley Cornell

Chicago Duke

Columbia Georgetown

Harvard Minnesota

Michigan Northwestern

NYU Texas

Penn UCLA

Stanford USC

Virginia Vanderbilt

Yale Washington U.

*Based on US News & World Report’s “2019 Top Law Schools List”, ranked in 2018.

Indeed, even the success rate among the top 10 law schools can vary wildly. Among newly hired associates, the University of Chicago Law School has the best rate, with 53.45% of associates hired from there staying with their firms; conversely, Stanford University Law School has the worst rate among the top 10 — just 39.4% of new associate hires coming from Stanford stay with their first law firm for longer than three years. Of course, there are likely strong underlying reasons for this. For example, the competition for associate lawyers coming from top-tier law schools is so fierce that those individuals are likely deluged with enticing employment offers — and continue to be, even when they start at their new firm.

Still, this data shows that despite the high personnel and resource cost to a law firm for bringing on talent, training them, and fitting them into the firm’s operations, culture, and practice, too many law firms are relying on “traditional” models of hiring (seeking the top students from the top law firms) rather than more strategic models that would have them considering schools beyond the top 10, which have much better success rates, or other non-traditional measurements.

While return-on-investment considerations are the norm throughout much of what law firms do, hiring and retaining legal talent may be the exception. Or, more precisely, if the top law schools are not giving law firms the type of lawyer they can invest in and trust with the firm’s future, why are they continuing to hire from those schools?

The best cream of the best cropAs the numbers show, despite the almost single-minded focus from top law firms to only hire their new associate classes from top law schools, these associates have the lowest average success rate — meaning they are the least likely to stay with the firms that hire them.

Of course, there is a litany of possible reasons for this, but primarily the tight competition in the market for associates from top law schools leads to these associates being heavily recruited even after they begin their first job. To a large degree, some are just susceptible to the lures.

Beyond associates, partners, and laterals hired from top 10 law schools have the best retention. Indeed, at the partner level, it becomes apparent that the law school the partner attended isn’t as important for laterals because the competition in the partner-lateral strata at that point is likely more about a portable book of business and business generation.

Interestingly, lateral counsels who come from below the top 20 law schools have a poor success rate compared to their counterparts who come from top 20 schools.

4How Much Are Law Firms Losing When They Hire “Top Talent”?

2012-2015 Law Firm Hiring by Law School, 3-Year Success Rate

Top 1-10

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Top 11-20

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Lateral Assoc. 4034 2045 1989 49.31%

Lateral Assoc. 3006 1493 1513 50.33%

Lateral Assoc. 11610 5270 6340 54.61%

Partners 1575 279 1296 82.29% Partners 1187 272 915 77.09% Partners 4988 1230 3758 75.34%

Counsel 871 314 557 63.95% Counsel 621 217 404 65.06% Counsel 3046 1200 1846 60.60%

New Assoc. 8713 4429 4284 49.17%

New Assoc. 4908 2260 2648 53.95%

New Assoc. 12548 5345 7203 57.40%

TOTALS 15193 7067 8126 TOTALS 9722 4242 5480 TOTALS 32192 13045 19147

Lateral Assoc. Partners Counsel New

Entered 4034 1575 871 8713

Exited 2045 279 314 4429

Remained 1989 1296 557 4284 

Success 49.31% 82.29% 63.95% 49.17%

100008000600040002000

80%60%40%20%0%

Top 10 School Hiring Trend

Lateral Assoc. Partners Counsel New

Entered 3006 1187 621 4908

Exited 1493 272 217 2260

Remained 1513 915 404 2648 

Success 50.33% 77.09% 65.06% 53.95%

100008000600040002000

80%60%40%20%0%

Top 11-20 School Hiring Trend

Success in the chart above is based on the individuals staying for 3 years — a good measure for associates. However, for partners and counsels, the yardstick should be a bit longer; a 5-year view produces a more realistic breakdown. Of course, that measurement presents much lower success rates.

2012-2015 Law Firm Hiring by Law School, 5-Year Success Rate

Top 10

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11- 20

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Partners 1575 559 1016 64.48% Partners 1187 423 764 64.39% Partners 4988 1839 3149 63.14%

Counsel 871 424 447 51.37% Counsel 621 305 316 50.96% Counsel 3046 1586 1460 47.94%

TOTALS 2446 983 1463   TOTALS 1808 728 1080   TOTALS 8034 3425 4609  

For example, if measured by the standard 5-year success rate, retention drops significantly from the top 10 law school group, reflecting a success rate of 51.37% for counsel, and 68.48% for partners, down from 63.95% and 82.29%, respectively.

If measured by the standard 5-year success rate, retention rates also drop from the top 11-20 law schools for partners to 64.39% from 77.09%; however, counsels have a wider gap, at 50.96% at the 5-year measurement compared to 65.06%.

Finally, if measured by the standard 5-year success rate, retention rates also drop from the 21 & below law school group, to 47.94% for counsel, and 63.14% for partners, compared to 60.60% and 75.34% respectively.

Can law firms’ hiring strategies improve?

5How Much Are Law Firms Losing When They Hire “Top Talent”?

Looking at the charts above, if you look at a straight comparison between the success rate for law schools in the 1-10 strata, roughly 49%, and law schools in the 11-20 strata, about 54%, it could be argued that the 6-point percentage difference in success rate may not be large enough for any one firm to worry about this situation enough to actually change their behavior. Indeed, there also may be more subtle gains perceived with top 10 law school recruits by the partners who do the recruiting and hiring, beyond the question of “do they stay?” These subtle gains could include allegiance a hiring partner may owe the school, if he or she is an alum; or the perceived specialty a specific school might hold in certain practice areas, like tech-related fields, for example.

In order to erase these subtle gains and encourage top law firms to look at the higher success rate below top 10 law schools, there would probably have to be a larger gap in the respective success rates. Partners simply may not be thinking about who stays, but instead about social networks and gains to be made from hiring this specific recruit.

Overall, this may not fully explain why law firms aren’t looking for associates (either new or lateral) from the top 11-20 schools more than they are — except that it becomes apparent that it does not make that much of a difference in retention, at least until you get to schools beyond the top 20, as chart 4b has shown.

In other words, if law firms are going to change their recruitment practices in an attempt to raise their success rate of retention, just going down to law school #20 won’t help that much. Thus, the perceived advantages in staying with 1-10 stay the same, in this case. A firm would have to see bigger differences in retention for the recruits from the top 11-20 schools in order for firms to overcome the hidden cultural advantages that flow back to the firm and its recruiting partners. The big bump in retention is below that.

Looking at the schools themselves

SchoolNew Associate Hires 2012-2015

Entered Exit Stayed Success

Total 8713 4429 4284 49.17%

CHICAGO 608 283 325 53.45%

VIRGINIA 839 397 442 52.68%

COLUMBIA 1301 633 668 51.35%

BERKELEY 642 318 324 50.47%

MICHIGAN 805 399 406 50.43%

HARVARD 1543 774 769 49.84%

PENN 780 393 387 49.62%

NYU 1252 673 579 46.25%

YALE 463 268 195 42.12%

STANFORD 480 291 189 39.38%

SchoolLateral Associate Hires 2012-2015

Entered Exit Stayed Success

Total 4034 2045 1989 49.31%

VIRGINIA 434 206 228 52.53%

HARVARD 632 301 331 52.37%

NYU 589 284 305 51.78%

PENN 356 179 177 49.72%

COLUMBIA 654 339 315 48.17%

CHICAGO 275 143 132 48.00%

STANFORD 208 111 97 46.63%

MICHIGAN 444 237 207 46.62%

BERKELEY 279 151 128 45.88%

YALE 163 94 69 42.33%

6How Much Are Law Firms Losing When They Hire “Top Talent”?

If you look at the data based on the list of top 10 law schools themselves, in regard to hiring new associates (Chart 6) and compare it to the data from the top 10 schools’ hiring of laterals of all categories, several key findings emerge. In one finding, the data shows that at several of the top 10 law schools, new hires from those schools outperformed the associates hired laterally that had come from that same law school. (That means, the new hires had a higher successful retention rate at the initial law firm that hired them.)

For example, new hires coming from UC Berkeley School of Law outperformed — by nearly 4.5 percentage points — those associates hired laterally that had come from Berkeley. Of course, this development was underpinned by Berkeley’s success rate with lateral associates, which was the second-lowest of the top 10 schools with 45.88%. Similar to Berkeley, at the University of Chicago Law School, newly hired associates outperformed lateral associates by almost 5.5 percentage points, due in part to a lower-than-average success rate for lateral associates.

Of course, it wasn’t always the case that new hires coming from certain schools had a higher retention rate than associates hired laterally from those same schools. For instance, lateral associates who had graduated from Harvard Law School actually outperformed new hires from the school by more than 2.5 percentage points. Indeed, Harvard Law actually had the second-best success rate for laterals at 52.37%, just slightly below the University of Virginia School of Law, with 52.53%. (And these were well above the average for the top 10 law schools for successful retention of lateral associates of 49.31%.)

Interestingly, the law school with the lowest success for lateral associates was Yale Law School with 42.33%. Couple this with the school’s also-dismal success rate of newly hired associates of 42.12%, and that means that nearly 60% of associates from Yale Law ended up switching law firms within three years of hiring. This phenomenon may again point to the desirability on the part of top law firms for associates coming out of big-name law schools.

Partners and counselThe statistics for lateral hiring of partners and counsel also tell an interesting story when viewed through the lens of which law schools they originally come from. The success rate for lateral partners was quite high, 82.29% on average at the top 10 law schools, with Virginia at 86.24% and Yale Law at 84.88%, as the schools with the most successful retention rates. The lowest successful retention rate belonged to those partners from University of Michigan Law School, with 79.01%, which itself wasn’t too far below the average for the top 10 schools, pointing again to the “stickiness” of the partner class.

All Lateral Hires From Top 10 Law Schools 2012-2015

School chart 1 Associate     Partner       Counsel   Total      

  Entered Exit Stayed Success Entered Exit Stayed Success Entered Exit Stayed Success Entered Exit Stayed Success

VIRGINIA 434 206 228 52.53% 189 26 163 86.24% 99 36 63 63.64% 722 268 454 62.88%

HARVARD 632 301 331 52.37% 302 57 245 81.13% 152 51 101 66.45% 1086 409 677 62.34%

NYU 589 284 305 51.78% 204 39 165 80.88% 114 34 80 70.18% 907 357 550 60.64%

CHICAGO 275 143 132 48.00% 124 24 100 80.65% 59 16 43 72.88% 458 183 275 60.04%

Total 4034 2045 1989 49.31% 1575 279 1296 82.29% 871 314 557 63.95% 6480 2638 3842 59.29%

PENN 356 179 177 49.72% 124 20 104 83.87% 90 37 53 58.89% 570 236 334 58.60%

YALE 163 94 69 42.33% 86 13 73 84.88% 59 21 38 64.41% 308 128 180 58.44%

COLUMBIA 654 339 315 48.17% 209 34 175 83.73% 123 44 79 64.23% 986 417 569 57.71%

STANFORD 208 111 97 46.63% 88 16 72 81.82% 41 16 25 60.98% 337 143 194 57.57%

MICHIGAN 444 237 207 46.62% 162 34 128 79.01% 72 29 43 59.72% 678 300 378 55.75%

BERKELEY 279 151 128 45.88% 87 16 71 81.61% 62 30 32 51.61% 428 197 231 53.97%

7How Much Are Law Firms Losing When They Hire “Top Talent”?

For counsel laterals, the average success rate was 63.95%, with Chicago Law and NYU School of Law notching the best rates, with 72.88% and 70.18%, respectively.

Looking at the statistics for lateral hiring in all categories (associates, partners, and counsel), the overall winner is Virginia, with an average success rate of 63.03%, followed by Harvard with 62.26%. The lowest school success rate is Berkeley with 54.17%, followed by Michigan with 54.71%. And while averages don’t tell the whole story, schools with a very low success rate for associates have seen their total go higher with good success rates for partners. This demonstrates, anecdotally at least, that heavily recruited (and re-recruited) associates coming from these schools tend to stay in place once they reach the partner level. One could speculate as to why — but obviously, as a lawyer moves up in his or her career path, certain determinative factors (salary, status, position as a firm leader) will likely cement a partner into a prestigious firm for much of his or her career.

What firms are hiring?Retention rates within the top 200 firms vary wildly from firm to firm, for law students from the Top 10 and from all categories. The worst showing for lateral associates from a Top 10 school was 14.29% at one law firm while others saw a much higher rate of success. The worst showing for lateral partners from a Top 10 school was 16%. These wild swings reflect on individual firms, not the schools but as a group, although the overall percentage was indeed lower for the Top 10 schools.

Are firms aware of the failure and success rates of their hires? Are they identifying possible issues? Are they hiring by pattern… or habit? Are they considering what is actually working for them in a profit/loss measurement?

If a firm sees that hires from the University of Virginia School of Law stay and contribute, giving the firm a great ROI, do they hire more from that school or do they continue to hire attorneys who traditionally do not do well at their firm? You would think the answer would be obvious — if they know what doesn’t work, why continue?

If they don’t have the data, they should. And if they have it and continue to ignore it, that spells economic trouble.

Leopard Research’s data shows the STARS, Cash Cows, and questionable results from the ROI report.

• Female Partner• Berkeley, Chicago, NYU, Yale• Success: >90%

• Entry-Level Associates• Below Top 20 Schools• Success: 57.40%

• Male Partner• Top 10 Schools• Success: 82.29%

• Lateral Associates• Top 10 Law Schools• Success: 49.31%

Success Rate (Rate of Retention)

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Leopard Solutions’ Matrix

8How Much Are Law Firms Losing When They Hire “Top Talent”?

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Firms have moved toward a more traditional business structure over the last few years. Some have CEOs who are not attorneys, but who have a wealth of business experience. The next step in that vein could be identifying where the firm is weak in recruitment with the goal of ending churn and making the firm more profitable by changing their hiring patterns.

Identifying where competitors succeed and where they struggle could be helpful as well. Knowing which competitors are investing money in “churn” or the constant replacement of attorneys who leave, could give a firm an edge in the marketplace.

Hiring is big business, and it can create a big drain on finances when new hires don’t work out. Knowing where your firm stands on this issue could make a big difference in securing the future health and sustainability of your firm.