By Deena Shanker
FORTUNE – In late 2012, top law firm Cravath, Swaine & Moore announced its year-end bonuses, setting the bar for law firms around the country. Ranging from $10,000 to $60,000, the bonuses took a significant leap from those of the last two years. A number of other firms quickly followed suit, including Skadden Arps Meagher & Flom, Simpson Thacher, and Sullivan & Cromwell. But while many leaders in the legal world insist that big bonuses are necessary to attract and retain top talent, lawyer turnover rates tell a different story.
Despite a history of paying high salaries and large bonuses to their attorneys, law firms suffer from notoriously busy revolving doors. According to the National Association for Legal Professionals Foundation, in 2010, firms with 251 to 500 attorneys lost 19% of their associates, with the top reason for departure listed vaguely by firms as "work quality standards were not met." (Those with 100 attorneys or fewer lost an average of 20% of their associates.) Compare that turnover rate to the 2-3% at Fortune's 100 Best Companies To Work For (granted, a few of those companies are law firms). What are law firms doing wrong?
Associates leave for many reasons. Poor management is one factor. As one mid-level associate at Schulte Roth & Zabel said, "The general sentiment when people leave is, 'thank god I don't have to deal with this abuse anymore.' Because at the end of the day, it's constant abuse or fear of abuse."
Blogs like The People's Therapist and Life In Big Law have become popular platforms for associates to vent their frustrations, commiserating over everything from forced last-minute vacation cancellations to the perceived inability to ever say no to a supervisor. A recent Michigan lawsuit may provide some cold comfort to these associates. According to Dean Altobelli, a former partner at Michigan firm Miller Canfield, partners feel the pain, too. In a suit filed last month, Altobelli claimed that he was forced out of the firm by managers who promoted "a culture of fear and intimidation."
Considering the money law firms invest in every newly hired attorney, it would make sense for partners to pay closer attention to lawyer satisfaction. But according to Gerry Riskin, founding partner of law firm consultancy Edge International, "most firms are oblivious" to attrition costs. "That expense is unacceptable, yet firms have been accepting it," Riskin says.
Aside from salaries and bonuses, law firms spend thousands of dollars recruiting and training each associate, often paying for bar exam preparation courses, moving expenses, and continuing legal education. So when a lawyer walks out the door, that investment walks out with him. The high turnover model may be a self-fulfilling prophecy, according to Peter Sherer, a professor at the Haskayne School of Business in Calgary, Canada. It's possible, he says, that partners don't want to devote the time to properly manage or develop any particular associate because they expect that associate to leave within the next couple of years, which in turn, may lead to those lawyers leaving faster. More
Using a combination of Toyota-inspired lean manufacturing principles and an open office atmosphere, Menlo Innovations' work environment is attracting attention.
By Katherine Reynolds Lewis, contributor
FORTUNE – At most white-collar job offices around the country, workers scurry from cubicle to cubicle, speaking in hushed tones. Take a step into software firm Menlo Innovation's offices in Ann Arbor, Mich., and it's clear that this firm is more cotton mill factory floor than monastery.
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