Law Firm Turnover: What the Data Really Says About Retention

While researching a project, I came across an older article with some striking statistics: for every 20 associates hired by law firms, 15 will eventually leave. Even more concerning, it claimed that nearly 50% of lateral partners depart within five years, according to a 2021 survey.

At first glance, these numbers paint a grim picture of law firm retention. However, two decades of tracking real-world lateral moves reveal a different story.

Beyond the Surveys: Real Retention Data from Firmscape

These dire statistics stem from surveys, not comprehensive data. And as anyone in the industry knows, survey results often reflect the perspectives of a self-selecting group, not the broader legal market. When you look at long-term, community-wide trends in lateral hiring and retention, a more nuanced and stable pattern emerges—one that calls into question the headlines.

Success Rates for Lateral Partner Hires

The data from Firmscape shows that in 2021, the success rate of partner lateral hires for the Top 200 firms was 66%. Some firms achieved outstanding results, with success rates between 90% and 100%, while others struggled with rates as low as 33% or 35%.

These success rates for partners are calculated over a five-year tenure. Interestingly, performance wasn’t tied to volume: the firm with the most hires (113) had a 64% success rate, while another with 88 hires managed only 45%.

There were clear winners and losers in this high-stakes numbers game because when lateral partners don’t work out, firms risk watching millions in potential revenue walk out with them.

Associate Retention Rates Reveal Firm-to-Firm Disparities

Associates are measured on a three-year success score, and their average success rate for associates hired was 50%, much better than the article and survey suggested. (Firms outside the Top 200 saw only a 40% success rate with associates hired in 2021.)

Within the Top 200, however, there were large differences. The firm that hired the most associates (461) in 2021 saw a success score of over 50%. A firm that hired 114 associates received a success score of 20% because 91 left. Another firm saw 230 associates leave and had a success score of just 19%.

The High Cost of Failed Hires in Law Firms

An average score only tells part of the story—hiring trends are far from uniform across the industry. It’s important to examine both ends of the spectrum. What’s driving high attrition in some firms? Is it a flawed integration process? And why are others consistently more successful in retaining talent? These questions deserve closer scrutiny—and, in some cases, a degree of introspection.

Ineffective recruitment and poor integration aren’t just HR issues; they have direct financial consequences. Consider how much new business a firm must generate each year just to offset the cost of failed hires. A failed integration program can have serious consequences for both the attorney and the firm, often leading to financial, cultural, and reputational damage. The stakes are even higher for lateral partners.

Here’s what it can cause:

1. Failed Lateral Moves

• Low ROI: Lateral partners often come with significant guarantees and expectations. Without proper integration, they may fail to transition their book, leaving the firm with sunk costs and no revenue lift.
• Early Departure: Poor integration is one of the top reasons laterals leave within 24–36 months. Partners generally reach their ROI point at five years; those that leave within two to three years carry a greater financial cost.

 2. Client Retention Risks

• Disjointed Client Transition: If clients don’t feel smooth onboarding or see value in the new firm, they may leave—or follow the partner only temporarily.
• Missed Cross-Selling: Integration failures often mean lost opportunities for firm-wide service expansion.

 3. Cultural Mismatch

• Lack of Alignment: Without clear cultural onboarding, the partner may feel out of sync with the firm’s values, politics, or decision-making style.
• Internal Friction: Legacy partners may feel threatened or resentful, especially if compensation or origination credit is unclear or perceived to be unfair.

 4. Reputational Damage

• If a firm becomes known for churn or for “burning through laterals,” it damages recruiting efforts and market perception.
• Potential candidates will see red flags and opt for firms with stronger track records of integrating talent.

 5. Missed Strategic Goals

• Lateral hiring is often part of a growth or market entry strategy. Failed integration can stall or reverse these goals, setting back expansion plans or damaging relationships in a new region or sector.

6. Morale and Internal Tension

• Existing lawyers may feel undervalued or overlooked if lateral partners are parachuted in without explanation or support.
• Integration gaps may foster silos, undercutting firm-wide cohesion.