By Jon Howard
Retention bonuses have become a familiar feature of the legal market as firms look to reduce associate turnover and protect key teams. Experienced associates are expensive to replace and departures rarely happen in isolation. When a lawyer leaves, work must be redistributed, colleagues take on additional responsibilities and firms are forced back into the market to find replacements. In busy practice areas, that process can be both costly and disruptive.
Offering a retention payment has appeared to be a practical solution. Associates receive a financial incentive to remain, teams remain intact and firms avoid the immediate challenges that accompany unexpected departures.
The approach has often achieved its short-term objective. Associates have accepted retention payments and remained with their firms for the agreed period. Yet recruiters, like me, continue to encounter lawyers who, having taken the payment, enter the market once the commitment period comes to an end. This suggests that retention bonuses may be more effective at delaying departures than preventing them.
The reason is that compensation is rarely the only factor behind a move. While pay remains an important consideration, associates are often weighing a broader set of career decisions. Access to clients, quality of work, partnership prospects, leadership, culture and long-term opportunities all influence how lawyers assess their future.
A retention payment may alter the timing of a move. It is less clear that it alters the decision itself. This is reflected in the phrase ‘golden handcuffs’, which has become associated with retention arrangements across professional services. Financial incentives can create a reason to stay in the short term without necessarily creating a reason to remain over the longer term.
A lawyer who sees a future within the partnership is different from a lawyer who is simply waiting for a retention agreement to expire. Both may remain with the firm for a period of time, but only one represents a genuine retention success.
None of this suggests that retention bonuses are ineffective. In many cases, they have provided stability during periods of high demand and allowed firms to maintain continuity for clients and colleagues. Viewed in that context, the investment can be justified.
The challenge comes when retention payments are expected to solve issues that extend beyond compensation. Career progression, development opportunities and confidence in a firm’s direction are harder problems to address, but they are often the factors that determine whether an associate stays for the next five years rather than the next twelve months.
The legal market is unlikely to move away from retention bonuses. As competition for talent continues, firms will continue to use financial incentives to protect key lawyers. The more difficult question is whether those payments are retaining talent or simply buying time.
Contact Us
For a confidential discussion about hiring, retention strategies or opportunities within the legal market, please contact Jon Howard at jon.howard@wearebuchanan.com
Can Money Stop Associates Leaving?
