How likely are you to be kept on as a qualified solicitor by a firm after completing a training contract there? This is the largest trainee retention survey of its kind and it attempts to answer that question.
Across the firms we surveyed in 2017, 79.1% of trainees were retained.
The total rate of retention has remained stable in spite of economic uncertainty.
City firms are the least stable in the country: a possible sign of Brexit jitters.
Trainee retention in 2017
Another year of our research has passed, with 120 firms providing their retention data, and once again the average retention rate has held steady. Our research revealed that of 2,342 qualifiers in 2017, 1,852 were retained by their firm – meaning an average figure of 79.1%.
We've grown very familiar with figures of around 80%: our research hasn't produced a figure more than 1% either side of 80% since 2013. Although 2017 showed the second dip in as many years (2016's average came in at 80.1%) the lack of variability we've described is a good thing for the legal market.
It can be read as a positive reinforcement of the recruiting and staffing models firms implement: firms are moderating their intakes effectively to ensure they aren't taking on more trainees than they need. It can also be read as a sign of health in the market: whatever fluctuations there may have been in the two years between this intake starting and qualifying (read Brexit etc.), firms are performing well enough to need fresh employees at the lower levels.
Cue the popping of champagne, and plenty of hearty backslapping in recruitment departments market-wide. However, and it's a big however, the story beneath the headline is one of differing fortunes. It's this that really matters for students choosing between firms, and trainees assessing their current situation. When roughly a quarter of the firms we researched produce retention rates of below 70%, some firms should probably be putting the bubbles on hold. There are even signs that Brexit's effects may be taking their toll. Some firms had vintage years, others had stinkers, and the trends that emerge are where things get interesting.
A fulfilling, successful career is governed principally by the culture of the firms you work at, and retention is tightly linked to much of how a firm operates. Retention rates offer a window on a firm’s culture.
Why does retention matter?
Before we take a deep dive into the stats, it's worth explaining the importance of all this conjecture. 'My issue is becoming a trainee,' we hear you cry. ‘As long as I'm a solicitor in a couple of years time, that's all I'm worried about right now.' We hear you, and we sympathise. But a fulfilling, successful career is governed principally by the culture of the firms you work at, and retention is tightly linked to much of how a firm operates.
Retention rates offer a window on a firm’s culture. First, you can tell whether a firm’s investing in you and recruiting future partners, or hiring for low-level grunt work. Second, high retention rates mean you're not spending two years competing with your fellow trainees like some job interview from hell, so the culture is more collaborative and less back-stabby.
Why NQs leave law firms
There are no NQ jobs in the trainee’s favoured area of practice. Rather than stay in a second-choice department, they look towards other firms.
The firm has more qualifying trainees than jobs available. This is especially likely to happen at a firm which has recently undergone a major merger or is in some financial difficulty.
The trainee wasn't good enough. A minor percentage of trainees end up being a disappointment to their employers.
Maintaining a pyramid-shaped workforce. Large firms need a lot of manpower at the junior end, but can't provide long-term careers and commensurate salaries to all their recruits.
Personal reasons. Trainees might fall out of love with the firm, with the law, or the city they work in.
Which firms came out on top in 2017?
So, to avoid a legal lord of the flies experience, how would you go about narrowing firms down? At first glance, this is a straightforward question. Picking out the firms with the highest possible retention rate will surely sort the wheat from the chaff. We'll call this the 100% club. It's a commendable achievement. You can see all of the firms we researched in 2017 with 100% retention below.
The 100% club
Firms with ten or more qualifiers: Birketts, Blake Morgan, Burges Salmon, Freeths, Latham & Watkins, Walker Morris, Watson Farley & Williams
Firms with fewer than ten qualifiers: Bates Wells Braithwaite, Cleary Gottlieb, Cooley, Curtis, Gibson Dunn, Hewitsons, Higgs & Sons, Lewis Silkin, Maples Teesdale, Morrison Foerster, Muckle, Orrick, Peters & Peters, Simkins, Stevens & Bolton, Sullivan & Cromwell, VWV, Wilkin Chapman
However, you'll notice that we've divided these hospitable folks between those with fewer than ten qualifiers, and those with more than ten. We've done this to make a significant point. It's immediately noticeable that far more firms with fewer than ten trainees reached this golden target. However, that alone doesn't merit a rush to the most petite outfits. Of the 15 worst performing firms – those which only managed to keep half or less of their qualifiers – 14 had an intake of ten or fewer.
One qualifier makes a huge amount of difference percentage-wise; scoring either 0% or 100% is not all that dramatic when you have only a few qualifiers. The retention rate of a larger firm is a far more bankable indicator.
In the table on the right hand side of this page you can see our rankings for the firms with the highest retention rates (all of which had more than ten qualifiers).
Burges Salmon was the firm with the largest intake to retain all of its qualifiers, keeping 28 out of 28.
As a general rule, the bigger the firm the higher its retention rate will be. The larger the business the more resources it has to play the long game and plan for future business needs; big firms can absorb market fluctuations more easily than small ones, where even minor financial blips can lead to lower retention.
Nevertheless, as you will see from our table below, medium sized firms managed to out-perform the swaggering intakes of the largest firms in 2017.
|Total retained||Total qualifiers||%|
|Firms with 1-10 qualifiers||279||365||76.4%|
|Firms with 11-25 qualifiers||405||499||81.2%|
|Firms with 26+ qualifiers||1,168||1,478||79.0%|
On the positive side, we saw a bevy of excellent performances from Blake Morgan (16 of 16), Freeths (18 of 18), Latham & Watkins (22 of 22), Walker Morris (14 of 14) and Watson Farley & Williams (15 of 15). Worthy of particular merit, Freeths has now achieved 100% retention two years on the trot.
Conversely, some less impressive performances contributed to the lower than market score of firms with more than 25 qualifiers. Though nobody in this group sank to the embarrassing depths of the 50s, serial underperformer Berwin Leighton Paisner (61.36%) was joined in the 60s by DWF (66%), Dentons (67.86%) and Taylor Wessing (61.54%).
A referendum on recruitment?
Slicing the pie another way, we see that London firms performed marginally better than their regional or national counter parts, as shown in the table below:
|Total retained||Total qualifiers||%|
|All London firms||1,186||1,494||79.4%|
|London – magic circle||349||426||81.9%|
|London – other firms||837||1,068||78.4%|
As you can see from the table, the magic circle was responsible for this success, boosting the London firms' scores by the percentage point which took them clear. But the elite firms' strong result isn't down to luck. Having conducted this research for many years, we can clearly demonstrate how they've adapted their intake to the times. 2017 was the fourth year in a row that the total number of qualifiers within the magic circle fell. In 2013 it produced 532 qualifiers (434 were retained), whereas 2017 saw 426 qualifiers (349 were retained). A fall of 100 qualifiers in 4 years is quite dramatic, but it fits the trend of falling trainee numbers we've spoken about in the past. Importantly, it shows how firms can be proactive in protecting their trainees from disappointment.
Maybe Brexit has added a little conservatism into firms' recruiting models. We can't tell definitively.
But there is another, even more interesting development to be aware of. While the retention achieved by regional/national firms has actually gone up from last year (when firms achieved 75.4%) the results in London have headed in the opposite direction. In 2016 retention at London firms came in at 83.1%, but it stands at 79.38% for 2017. In pondering these varying fortunes, Brexit inevitably rears its ugly head. The City and its financial prowess rely upon international connectivity, and the ability to serve as a passport to Europe. The majority of London law firms feed off this to some degree; many depend upon multinational corporations for their business.
Has the uncertainty around Brexit meant a slowdown in business (or at least an anticipated slowdown), and a corresponding drop in demand for mid-level lawyers within the City's law firms? Maybe it has added a little conservatism into firms' recruiting models. We can't tell definitively, but having chatted with recruiters from some London firms, we know it's being accounted for as part of the wider economic picture. Time will tell, but this may be the start of a trend.
Money makes the world go round?
Finally, it's worth considering the incentives that qualifiers are presented with to hang around. Qualifiers are at liberty to seek employment elsewhere once they are finished with their training contract. They'd stick around for a good salary though, wouldn't they?
In years past we've been able to draw a direct link between the salaries law firms pay their NQs and the number of qualifiers they manage to retain. A firm pays, trainees stay: this seems common sense. However, this year's results muddy the waters, making it clear that an eye-watering salary is not a guarantee of strong retention. Our results are listed below. It's a graph which suggests that pay is but one (sometimes insignificant) factor and retention is strongly affected by a raft of other variables. Whether a firm wants to keep trainees is the single most important factor.
Our graph looks very different from the corresponding pattern in 2016, a positive correlation between pay and retention. The fact that the graph is so different this year, undulating all over the place, is partly down to what we've discussed: the falling retention in the City, and the rise in retention among regional firms. Below, we examine the graph's peaks and troughs in more detail.
The lowest retention rate came in the 90k-99k group. What can be said about this? It's difficult to know exactly, but the striking thing about the firms at the top end of the pay scale is that they are predominantly American. Of the firms paying over 100k, zero are UK founded. Of the firms paying between 90-99k, only one is UK founded: Herbert Smith Freehills. This isn't the beginning of some xenophobic rant, don't worry. Instead it's important to point out that Herbies is the only firm in the top two pay grades with an intake of more than 50. There is only one firm with an intake of more than 30: White & Case. The vast majority have an intake of ten or under; this is the predominant nature of prestigious American firms in the UK: small intake, high salary. As we've discussed, this makes firms vulnerable to the whims/personal situations/other career opportunities of each single trainee. It may explain the sea change since last year. Conversely, the 100k+ group achieved a retention rate above the overall average of 79.1%.
The key take-home point is that money isn't everything, at least not always. American law firms with small intakes don't shield their young'uns from the intensity of their high-stakes work. Many firms are up-front about the benefits, and sacrifices, this brings. If the balance is off for one or two of the chosen few – who, anecdotally, we know to be extremely aware of their alternative opportunities – the firm's results will suffer.
The second lowest result comes in the 50k-59k group. This group didn't perform so great last year too, so perhaps this was to be expected. It contains mid and upper-tier London firms, plus some big national firms. The three largest intakes in the group – DLA Piper, Pinsent Masons and CMS – produced below average results (CMS's tie up with Olswang and Nabarro will have contributed) and this had the largest impact, but retention percentages in the 60s from mega-firm Dentons and the Atlantic-spanning Squire Patton Boggs were far from helpful.
The peak retention rate came in the 40k-49k group. Despite the huge money, and strong results of those paying NQs 100k+, the group taking top place this year contains plenty of regional employers and pays between 40k and 49k. It was not a group devoid of poor results, but a remarkable amount of firms secured 100% retention: Burges Salmon's excellent result gave the group a bump, as did Walker Morris' and Freeths'. From our research, we know that these firms offer something more than just moolah – the enduring benefit of a healthy work/life balance plus a tighter, more familial culture than many of their hum-drum City counterparts. It's a winning formula, as is shown by our results.
This feature was first published in January 2018.