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.

Highly skilled legal professionals set your firm apart and finding individuals with the right talent takes time and resources. This is why firms need to consider the importance of retention, rather than just focusing on recruitment.

Yet it’s something that firms can struggle with – even the big players aren’t immune. The most recognisable names in London saw retention rates of newly qualified solicitors as low as 74%. Retaining talent isn’t a cost-cutting exercise, it makes your firm much more competitive in the long term.

Cost of recruitment

Recruiting new talent is a cost to your firm. According to research published by Glassdoor, the average time it takes to hire a new recruit in the U.K. is 27.5 days. This means one-twelfth of a year is spent on reviewing CVs, carrying out preliminary interviews, secondary interviews, communicating with recruiters and checking references. Factor in multiple hires, and that figure increases significantly. Considering the amount of resource, time, money and effort hiring takes, it’s evident that concentrating efforts on retention becomes far more beneficial.

Onboarding is the first step towards retaining talent. Yes, of course, it’s more effective to retain existing talent than recruit new talent, but sometimes a new hire is what your firm needs. Your firm needs to start looking after them even before they start. A welcome pack that explains benefits and expectations makes the perks of working with you clear to solicitors. Prompt, clear communications are professional and ensure candidates remain happy to work for you.

Brexit might be a source of uncertainty for many industries, but it seems to have sharpened the mind on one thing – ensuring your staff feel valued. CIPD found that 26% of organisations ‘report a greater emphasis on developing existing staff’. The report also highlighted that more organisations are involving employees with their business strategies and encouraging them to contribute their own ideas.

Management is your best defence

When your employees feel secure and supported at work they are less likely to look elsewhere. Management must demonstrate excellent leadership skills, this isn’t just managing a caseload or a team of solicitors with exacting standards, it means having good soft skills too.

If you want to keep hold of staff, then you must also encourage them to manage themselves and be invested in their careers. Maintain regular contact with them through formal appraisals, informal and open discussions and put the ball in their court. If they feel that they have a say in their own work and career they’ll be more engaged and more likely to remain with your firm.

Training and development

These two words are the most important words in your vocabulary if you’re going to successfully retain staff. If your legal talent doesn’t have what they need to do the job, then their focus and energy will be put towards finding a new position elsewhere.
The SRA has a whole section of its website dedicated to how solicitors can plan their development. Investing in your people shows that you’re committed to them and will increase commitment from them.

Remember that legal skills, especially in disciplines such as conveyancing, are in short supply. So not only will developing your staff make them more likely to stick around, it will mean that your firm doesn’t feel the effect of the skills shortage. And employing highly skilled legal professionals with subject expertise will make your firm more competitive in the long run, as they’ll be better equipped to handle client demands.

Your recruitment agent and retention

Using a recruitment agency can be very beneficial to retaining talent. There are many advantages to working with a partner when it comes to retention, and perhaps the two most important factors to consider are the personal touch and a recruiter that specialises in your market. A recruiter that takes the time to build relationships with you, the client, as well as candidates makes retaining that talent easier later on. A positive working relationship that starts on the right note will ensure that the candidate feels happy to stay with your firm for the foreseeable future. A recruiter that specialises in the legal market understands the sector and is better able to represent the role to candidates. Candidates that feel the job matches up to their expectations are much more likely to stick around than those who feel the reality is different.

Recruitment costs vs. benefits

Recruitment takes time, effort and resources. There’s no denying that the right hire at the right time can make a huge difference to a firm, yet a revolving door of talent increases the cost of recruitment exponentially. Retention starts to look a lot more appealing if you weigh the cost of recruitment against the benefits of retaining staff. Time spent training and looking after your best talent will pay you back dividends, with happier staff you’ll have happier clients, and your firm will be all the more competitive.

If you enjoyed reading this blog, you might like our other post: Legal talent drought: How to attract the best talent against the odds.

And if you’re recruiting now, you can talk to one of the team on 01772 259 121, or you can register your vacancy online.