More than money: the true cost of legal sector recruitment
- November 8, 2018
A stable workforce means that your law firm runs smoothly and without interruption, so when a staff member leaves it can have a big impact on the rest of the firm. Valuable skills and job-specific knowledge that have built up over time disappear with a departing staff member, leaving you in a tricky position to bridge the gap. These practical implications of recruitment can have just as heavy a cost to your firm as the financial element.
That’s why we’ve put together this guide to help explain what the true cost of recruiting is to your firm. From finances to how attrition rates impact your recruitment, we’ve considered some of the things you may not have thought about when it comes to your recruitment costs.
Recruitment costs: facts and figures
To understand the true cost of recruiting, it’s useful to look at the facts and figures and what costs they refer to. When a staff member leaves, your firm could find itself paying for everything from agency fees to the wages of temporary and locum staff.
Research carried out by Oxford Economics suggests that it costs more than £30,000 to replace a staff member, with the legal profession bearing the highest costs at £39,887 per employee. Two main reasons for this cost are highlighted in the findings:
- Firstly, the logistics of recruiting a new staff member and the associated costs that go along with that. For example, HR activity and the cost to the firm of the interview process.
- Secondly, the reduction in productivity while the new staff member gets up to speed. According to the report, the average legal professional takes 32 weeks to reach optimum efficiency, which makes it one of the longest periods of reduced productivity. This makes the legal sector the most costly industry in which to replace a lost staff member.
The financial figures are striking of course, although it’s important not to overlook the bigger picture. Not only does a departing staff member result in a monetary cost to the business there is a range of knock-on effects:
- HR spends considerable time going through leaving and joining processes, completing all the relevant paperwork as well as sourcing a replacement.
- Management has to spend time arranging for the work to be covered, either by distributing it amongst existing staff or appointing temporary cover. There’s also the time spent away from everyday work conducting interviews to account for.
- The workload of colleagues increases and there is a general reduction in productivity as staff take time to readjust and the new person to settle in.
Not only is this expensive, it’s time-consuming: resources which could be used to retain staff are instead spent on finding a replacement. There’s the commercial element to consider also, as time and energy are put into recruitment which could be put to more effective use by serving clients.
Attrition rates and their impact on recruitment costs
Losing a well-established member of staff is undoubtedly a blow to your firm, although it’s equally important to consider how attrition rates play into your overall recruitment costs. If you find that you hire someone only for them to leave after a short while, or if staff aren’t sticking with you for the long term, it can greatly influence the cost of recruitment to your firm. What’s more, if staff churn is causing disruption, then it’s unlikely that the workforce at large is working at optimum productivity.
There’s a mixed picture on attrition rates across the board. PwC’s Annual Law Firms’ Survey 2018 shows a difference between the top 25 law firms and the firms in the rest of the top 50. The number of newly qualified solicitors in the top 25 firms has decreased, as did those with up to two years’ PQE. While PwC suggests that this is due to ‘underutilisation’ of legal professionals at this level, it does perhaps show that the top firms pose a problem to the rest of the sector in their ability to attract the kind of experienced, talented individuals that smaller firms would want to retain.
However, the NQ headcount was up by 33% amongst firms in the top 26-50. In our own research, firms felt more positive about attrition rates in 2018 which suggests that law firms are getting better at retaining staff, at the Newly Qualified level at least. Indeed, the PwC findings back this up suggesting there has been a greater desire to ‘nurture’ talent.
Showing staff that you are invested in their development is one of the most effective ways to retain them. Legal professionals that can see a future with your firm are less likely to leave and this reduces your costs associated with recruitment.
It’s important to point out, however, that attrition hasn’t disappeared entirely. Numerous respondents to our Salary Survey did say that high salaries offered by bigger firms can be problematic. This means firms either need to try and compete financially – for example, paying city-like salaries to tempt candidates to a rural location – which is a costly move. Or, they could try alternative tactics such as offering flexible working and a better work-life balance than the big firms can.
Why law firms benefit from using a recruitment agency
Knowing what will attract candidates, what will drive them away, and what will help to keep employees is invaluable. And especially when it comes to attracting candidates in the legal field, having a specialist recruitment agency on your side can make a big difference. As the Oxford Economics report suggests, the legal sector is more likely to use a specialist recruitment agency because of the need for quality over quantity; specific skills and knowledge are needed, therefore an agent that understands the sector is beneficial.
A legal recruitment agency will not only be familiar with all the quirks of the legal profession, they will be able to think outside of the box and help you to consider candidates that you might not otherwise have done, giving you more choice. Of course, using a recruitment agency rather than recruiting in-house incurs a cost. However, by making use of a partner with specialist skills, your staff are free to do what they do best, meaning that you save time and money in the long term. Placing the right candidate with your firm will also reduce attrition rates, meaning you spend less on recruitment than you would do if attrition rates remained high.
If recruiting, or even retaining staff, is something that your firm has been struggling with why not give us a call on 01772 259 121? We’ve over twenty years’ experience in the legal recruitment field and would be pleased to help.
You may also find out recent blog ‘Save time, money and resources: retain your best legal talent’, of interest if you’re looking for some new ideas on how to retain your staff.
And please feel free to register your vacancy online, if you’re looking to recruit at the moment.