Law departments free-ride on law firms’ huge associate recruiting and training costs

An economic model developed by NERA for the ACC and adjusted by Balanomics for research described in the ACC Docket, Nov. 2009 at 102-3, uses an estimate of what law firms spend to find and attract new associates. That estimate puts talent acquisition costs of law firms for “1st year associate recruiting costs” at a staggering $400,000.

Similarly, whatever time and money law firms pour into newly graduated associates after they join, whether the training comes from organized CLE or on-the-job learning, benefits the legal department that eventually lures them away, but without any cost. Let’s pick some numbers out the air: one week of formal training each year at 40 hours times a billing rate of $200 ($8,000) plus $2,000 each to attend two CLE conferences ($4,000), plus 10 hours of partner time to train at $500 an hour ($5,000) plus some firm overhead to arrange and track all this training ($3,000). Each year on those assumptions, an associate costs the firm $20,000 for training.

Legal departments that pick off associates after they have practiced a few years avoid that initial huge investment.