The expense of losing talented employees is an ongoing concern for all employers. Human resources professionals estimate the cost to be 1.5 to 2 times the employee’s compensation, and even more for highly specialized employees. The cost for law firms is particularly great because of the high expenses involved in recruiting, training, and replacing associates.
The Project for Attorney Retention says the cost of replacing a second- or third-year associate ranges from $250,000 to $500,000 per associate. This range is admittedly very broad, but that reflects the difficulty of quantifying all of the hard and soft costs involved, especially given the variations among law firms. This diagnostic lists the factors to include in your calculation. They include both direct, out-of-pocket expenses (e.g., travel, recruiting fees) and indirect, “soft” costs which are harder to calculate (e.g., lost productivity).