It makes no sense: Why law firms fail at retaining Millennials
Firms pour significant resources in attracting, selecting and recruiting the best talent to join the ranks of their associates. So why can't they capture returns on those assets?
For the prospective associate, being recruited by a large law firm is an overwhelming process. You are invited to lavish cocktail parties and dinners at hitherto unknown, yet five-star-Yelp-reviewed, restaurants. You interact with the firm’s best lawyers who, in your mind at least, could be billing your biweekly salary in the duration of the evening.
Firms pour significant resources – financial, human and temporal – in attracting, selecting and recruiting the best talent to join the ranks of their associates.
In some ways, this makes sense. Firms treat new millennial lawyers as though they are assets in which to invest. What’s perplexing, however, is that law firms frequently fail to take the necessary steps to retain, and capture returns on those assets.
Indeed, it takes time and resources to identify potential investments, perform due diligence, and ultimately acquire the targeted assets in which one should invest. Following behavioral economics, the investor should use these resources in the singular hope that these assets will provide some sort of return on investment (ROI), whether by increasing in value or paying out dividends. Otherwise, why bother investing in the asset at all?
The same reasoning applies to hiring associates. The resources spent on recruitment and, later, training, suggest that millennial associates offer some significant promise of ROI to the firm. They are an important financial resource, especially after their second or third year when they may bill autonomously and at higher rates. They also bring new perspectives and ideas to the management of the firm. In this sense, they are vital to legacy planning and the maintenance of the firm’s organizational capacity. Such returns are essential to a law firm’s continued future financial and organizational viability.
Logically then, one would think the law-firm-cum-investor would take the necessary steps to ensure the integrity of its newly, and expensively, acquired assets. However, law firms don’t seem to appreciate this critical aspect of asset management.
In fact, according to data I collected as part of my Law/MBA thesis on the exodus of millennials from private practice, law firms have fundamentally failed to adapt to their younger generation employees. Tellingly, both millennial lawyers at law firms and law firm leaders overwhelmingly disagreed or strongly disagreed with the following statements:
- A traditional law firm is the ideal work environment for millennials;
- The reward structure at traditional law firms motivates millennials and is enough to keep them motivated throughout their careers; and
- A millennial lawyer can find meaning, and remain happy, throughout a career at a large law firm.
In short, law firms mostly fail to cultivate those same millennial talents in whose acquisition they are so highly invested. This inevitably leads to a failure to capture returns on those investments, resulting in significant net losses. Indeed, millennial respondents indicated that their motivation to work at large law firms is twofold:
- Compensation: The high compensation provided by large law firms allows millennial lawyers to pay off their student debts quickly; and
- Experience: Working at a large law firm allows millennial lawyers to gain valuable practical experience and a “prestigious name” on their resume.
Having achieved these objectives, usually at the second- or third-year mark of their careers, millennial lawyers mostly leave their law firm jobs to find something more meaningful and/or that allows them to achieve the work-life balance they desire. Working in-house and for NGOs were two frequent examples cited. Making matters worse, this attrition of associates occurs just as the ROI is beginning to be realized; that is, the firm suffers a net loss by virtue of their leaving.
Respondents were nearly unanimous in indicating the root causes of this phenomenon. Just like an investor who fails to store a unique work of art properly, law firms have failed to adapt their organizational cultures and workplace models such that millennial lawyers are able to, in their words, “find meaning, and remain happy.” The organizational culture of the traditional large law firm results in millennial lawyers feeling commoditized by working in an environment in which they are assessed singularly based on the time they bill, and in which the quantity and meaning of their work are largely irrelevant. One millennial respondent to the study commented that she experienced extreme pressure to maximize billable hours and felt “dehumanized by being described as ‘profitable’.”
In this sense, the culture of the law firm needs to shift paradigmatically. However, change on this front is glacial, if not non-existent. When presented with strategies used by large consulting and accounting firms to adapt to millennial talent, respondents in leadership at large law firms showed hardly any awareness of them. Only one of these strategies had been discussed by law firm leadership and, even then, there was no consideration of whether it could be implemented.
It is possible to change the organizational culture at the large law firms and develop strategies to do so. Reverse mentoring and shifting to performance-based evaluation metrics offer real promise in that regard. But a necessary first step is developing the impetus to catalyze meaningful organizational change. A good start would be for leadership at large law firms to shift its perspective. Perhaps by viewing millennial lawyers as assets – human ones with aspirations and life goals – instead of billable commodities, leaders at law firms will be motivated to create conditions that will ensure that their significant investments in attracting, recruiting and training the best millennial talent generate positive returns.