One of the biggest constraints to effective firm hiring is predicting associate utilization across practices given market trends and cycles even further exacerbated by unpredictable associate churn.
When associates play lateral chairs, firms need to adapt quickly given their current pipeline of work and associate hours required to service it.
Firms are adapting their staffing strategy to deal with both short term and long term needs. In the past, firms were more likely to consider long term staffing options (i.e., the partner track lateral associate) for possibly short term needs (i.e., short term uptick in work given short term reasons like maternity fills or one off litigation and transactional matters). Some firms seek the alternative of shifting hours to already fully utilized senior associates or junior partners, which oftentimes leads to attrition of their best talent.
Rushing the lateral process after attrition to seek a permanent replacement exacerbates ‘lateral recidivism,’ and leads to a surplus of associates after resource intensive matters and transactions conclude. We are seeing law firms use increasingly creative staffing models, such as project attorneys, for potential short-term replacements or at least, a stopgap measure.
Project attorney positions are popular among corporations. Services such as Axiom Legal have made a name for themselves in this space over the past decade. However, this model has yet to make a significant impact with law firms beyond document review and other lower-level work at law firms. Generally project attorneys are divided into two categories, attorneys who are struggling to find permanent work with law firms, and attorneys whose responsibilities or lifestyle precludes them from working full time. The time is ripe however, to start utilizing high-end, experienced project attorneys for short term staffing (as well as reducing blended costs for clients to make the firm’s partners more competitive in already competitive market). Instead of the partners reducing their rates and marginalizing their experience, brand, and reputation, we believe firms could offer clients discounted blended rates by introducing project attorneys to reduce their overall costs while at the same time maintaining their rate structure for partner track associates and billings partners. Some firms have attempted to introduce these kinds of models but without much success, not because the concept doesn’t work but rather lack of proper execution.
By way of example, lets say a project attorney at an Am Law 100 firm bills out at $200 an hour while an associate bills over $400 an hour for work that they might have even less experience handling than the project attorneys. Many clients push back on billings from first year associates, which presents a large opportunity cost for the firm if they keep the associates utilized on the case. By using project attorneys with great pedigrees–e.g. a former Biglaw associate who left to start a family–firms can offer clients lower blended rates and reposition their associates to billable cases, or even a more drastic change, have smaller associate classes with project attorneys filling the needs on a short term basis. One more step, may be to eliminate the summer programs, and hire more experienced laterals with substantive knowledge while utilizing project attorneys for junior associate staffing needs. If the reason for summer classes and junior associate training is to build from internal ranks, you may want to look at your firm’s attrition or promotion rates for homegrown associates seven years out. Chances are that they have moved on already.
Lateral attrition for associates moving from one Am Law 200 firm to another one generally hovers around 12% per year for junior associates, 13% for mid-levels and 7% for senior associates. In the case of immediate needs, firms reeling from lateral losses will oftentimes attempt to offset this loss by expediting the lateral process. Poor due diligence can lead to further lateral losses and the costs accrued through unserviced work, wasted time partners spend interviewing, lateral fees and other costs can add up quickly. Instead, in the case of an immediate need, project attorneys are excellent short-term, and possibly long-term, replacements and could ultimately cut attrition rates in half by allowing for flexibility in work shortages or immediate needs, extending the lateral search process to sufficient length to find an excellent fit, and potentially filling lateral openings after a trial period.
I am happy to discuss strategies with firms to better utilizing their staffing models. We assist firms and corporations with not only permanent placements, but short term project attorneys of attorneys with the same caliber of experience.