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5 Hidden Costs of Law Firm Recruitment You Need to Know

by Flo Recruit on


Dive into the world of hidden recruitment costs, from lost billable hours to revenue roadblocks. Discover how modern recruitment software like Flo Recruit reveals these elusive expenses and supercharges your hiring process for law firm success.


Skilled attorneys are the lifeblood of any successful practice, and finding the right fit can be complex and time-consuming, with law firms investing considerable time and resources in the process. While some costs are readily apparent—like search firm fees, job fair expenses, or background check costs—many are unaware of the hidden costs that can quietly erode the bottom line. 


This blog explores the often-overlooked expenses associated with recruiting new attorneys through university hiring and lateral recruitment. And crucially, how modern recruitment tools can help alleviate or mitigate some of these costs.


Lost billable hours


One of the highest hidden costs of the recruitment process is the lost billable hours inherent to hiring or replacing attorneys. A 2017 NALP study found that replacing an attorney can cost between $200,000 and $500,000. Adjusting for inflation, that’s as much as $630,000. That figure, however, doesn’t consider the time remaining attorneys spend interviewing candidates instead of billing clients, resulting in a “double loss” of billable hours.


Considering that in 2022, lawyers spent just 33% of an eight-hour day, or 2.6 hours, on billable work instead of non-billable or administrative work, attorneys devoting their valuable hours to screening, interviewing, and assessing potential hires incur an even greater opportunity cost. The billable hours lost during the recruitment process can add up quickly, impacting the firm's revenue stream.


Attorneys Interviewing


Solution: Implementing efficient recruitment software, like Flo Recruit Interviews, can help facilitate processes that optimize attorney time, automate administrative burdens, ensure attorneys are spending time interviewing the right candidates, and protect the ability of attorneys to perform billable work.


Reduced Capacity for New Work or Clients


The recruitment process doesn't only consume attorney time but also affects a law firm's capacity to take on new clients or cases. When key roles remain vacant, or attorneys are stretched thin covering for absent colleagues during the hiring process, the firm may have to turn away lucrative opportunities. This reduction in capacity can have long-term financial repercussions.


Empty Office


How? Let’s take a look at a hypothetical. Let’s assume the firm expects associates to bill 1,850 hours per year at an average rate of $750/hour, with a realization rate of 87%. That generates annualized incremental gross revenue of ~$1.2 million. Assuming the departed associate’s compensation and benefits cost the firm $400,00 annually, if none of the associate’s hours transferred to others and the position was vacant for a year, the firm would lose $800,000.


So what does all this mean? Filling vacant roles quickly is imperative to law firm profitability and competitiveness.


Solution: Software tools like Flo Recruit streamline and automate various aspects of the recruitment process, improving efficiency in the hiring process and getting roles filled sooner. By centralizing candidate data, automating workflows, and providing valuable insights, these tools significantly reduce administrative burdens and enable law firms to make faster, more informed hiring decisions.


Recruitment staff turnover costs


In 2022, law firms’ largest outlay for non-billable full-time employees was recruiting and talent staff. Yet these professionals are likely only to stay for 1-2 years, especially if technology or current processes impede the opportunity to grow their careers with outdated processes or an overabundance of administrative work. The cost of turnover is not limited to replacing the employee.


Average Associate Tenure Time

Data courtesy of Zippa


Turnover among recruiting teams can disrupt ongoing recruitment activities, affect the candidate experience, and result in a loss of institutional knowledge. Even if these factors are mitigated, when new employees join, there is often a ramp-up period during which they familiarize themselves with the firm's culture, policies, and procedures. During this phase, new employees may not be as productive as desired, potentially leading to delays in filling open positions.


Solution: Recruitment software like Flo Recruit provides a streamlined, efficient process that automates previously tedious and manual tasks that frustrate the ability of recruitment professionals to focus on their core tasks – identifying top-tier talent that aligns with the firm’s values and goals.


Finite IT and Marketing Resources


Recruitment isn't solely an HR function; it also requires significant support from IT and marketing teams. This includes designing and maintaining recruitment-related web pages, managing applicant tracking systems, and supporting events like career fairs and open houses. The allocation of these resources can strain these departments and impact their ability to meet other operational needs.


Solution: Modern recruitment software equipped with robust customer support and cloud-based infrastructure not only reduces resource demands on IT and marketing but also empowers recruitment teams with greater autonomy, streamlining processes for a more efficient hiring experience.


Delayed Revenue Generation


Another hidden cost of attorney recruitment is the delay in revenue generation. In 2017, 81% of law firms with 250 or more attorneys leveraged lateral hires to improve profitability, with that number rising in the last few years as competition in the lateral hiring market spiked. But, as new hires take time to onboard and become fully productive, their contributions to the firm's revenue may not match their salaries immediately. 


This delay in revenue generation can impact the firm's profitability and cash flow. There is an even greater impact when discussing lateral partners, with 90% of firms reporting challenges with business development related to laterals and 100% of firms reporting challenges in moving partners’ books of business.


Solution: Modern applicant tracking systems like Flo Recruit enable law firms to make better hiring decisions for lateral associates and partners by offering advanced candidate scoring and ranking features, facilitating a more efficient interview process, and providing real-time analytics to streamline decision-making. This comprehensive approach to hiring best-fit talent reduces the time it takes for new hires to achieve profitability within the firm. 


Flo Recruit ATS

Embrace technology to address hidden costs


Recruiting new attorneys is an essential but often underestimated investment for law firms. The hidden costs of recruitment can substantially impact a firm's bottom line. By recognizing and addressing these hidden costs, law firm managing committees and heads of recruitment can make informed decisions to enhance their recruitment efforts and drive the success of their practices.


Interested in learning how Flo Recruit’s recruitment technology can help mitigate these hidden costs? Reach out and schedule a time to chat with us today.


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