It wasn’t always this way. When I started practising back in the 1974, lateral partner moves were relatively rare. Firms were reluctant to share partnerships with lawyers they had not trained and inculcated into the firm’s culture over a period of years.
As firms’ strategies became more expansive, however, bringing in lateral partners became a necessity. The time and expense required to build practice areas or offices organically was simply too long and too costly to keep pace with the changes in the marketplace.
Unfortunately, survey data and my own conversations with law firm leaders over the years tell me that firms are disappointed with the contributions of at least half of the lateral partners they bring in. And while many lateral candidates are successful by any measure, the majority are not.
The unsuccessful cases range from modest contributors who simply are overpaid to unqualified disasters. This disappointing record is causing many firms to re-examine their lateral hiring policies and practices. As well they should. The cost of lateral hiring mistakes is substantial, both in quantifiable economic terms and in harder to measure cultural and morale terms.
Here are five suggestions for making lateral hiring more successful:
Implement effective proceduresThe entire process for considering, approving and integrating lateral partners should be clearly determined by the firm’s senior governing board and then followed in all cases. While the process must not be too cumbersome or bureaucratic, each firm should determine what it needs and ensure that its process will deliver it. Equally as important, it must not be one which powerful partners can readily circumvent.
My impression is that a high percentage of unsuccesful lateral hiring decisions could have been avoided had the process had more substance to it and been fully followed.
Restrict laterals to a firm’s strategic objectivesLateral partners should rarely be hired if they do not fit clearly into an important, pre-determined strategic plan of the firm. Of course it is important to be opportunistic and agile, but the prospects for success are dramatically better when the lateral fits into an objective the firm has already determined it wants to pursue.
Firms frequently lose their strategic discipline in the lateral hiring process. Their overarching zeal to grow revenues, the constant flow of candidates from headhunters, and the dynamics of firm decision-making conspire to produce new hires that the firm may come to regret. Stick to your plan.
Guide the selection processThe firm should actively lead the process of identifying candidates. It should do this in two ways:
• Maximize the role of current successful partners in identifying candidates; and
• Develop trust relationships with headhunters that allow the firm to be confident that the headhunters will present candidates who fit the firm, and that enables candid conversations with the headhunters about candidates’ strengths and weaknesses.
The chances of a successful outcome are much greater if the candidate is identified by a firm-directed process, than if the firm relies on the sample of candidates the market sends its way.
Derive success predictors from firm dataBy now, firms have significant experience with lateral partner hiring and their own ability to assess how they have done over the years. Firms should take the time and effort to do such an assessment.
Identifying “predictors” of success should be a key element of the assessment. What correlations are there in the firm’s experience between criteria and success? What factors in candidates’ backgrounds seem not to have been important and which ones seem to have strong association with a positive outcome? Each firm has its own make-up; examining what appears to predict a firm’s success with these hires can be very valuable.
Pursue due diligence fearlesslyFirms should be fearless in their diligence of candidates. I use “fearless” because my experience teaches me that often firms fail to do as much diligence as is warranted because they are concerned they will alienate the candidate or the partners supporting the candidate.
However, it is absolutely essential the firm have all the facts it needs to validate its hiring decision.
Most central is understanding why the candidate is willing to leave his/her current firm and join another. Most candidates’ true motivation would disqualify them, ranging from simple greed to a record of unsatisfactory performance at the prior firm or firms. Hiring firms should get as good a grip on these issues as they can.
Beyond that, firms need to verify all the objective facts on which it is relying, e.g., clients, matters, successes, relationships, etc., as well as the subjective considerations such as the candidate’s quality as a lawyer, skill at building client loyalty, and ability to work as a member of a team.
The lateral partner will only be successful at a new firm if he or she has the necessary experience and skills. The firm should be fearless in its insistence on concrete verification.
Lateral hiring, like most important decisions, is partly science and partly art. Following these five suggestions should help with both.
Ralph Baxter is a senior adviser and chairman of the Legal Executive Institute at Thomson Reuters Legal. This article originally appeared on the LEI blog.