The Lateral Partner Process: Three Perspectives

' Business: The first question that a firm asks is always: 'How much business does the candidate have?' In the post-Brobeck world, law firms have raised the bar as to the level of business that would interest them. For many firms, what used to be a threshold of $500,000 or $750,000, is now $1 million, $1.5 million or higher. A good recruiter will help to 'drill down' on the strength and depth of a partner's client relationships. Who originated the client relationship, what member of senior management is the relationship with, and is that company otherwise a firm client? The answers to these (and related) questions will help a firm evaluate the overall 'portability' of a practice and its true 'worth.'

' Conflicts: Potential client conflicts are also a major issue firms must address early in the process. Although partners are sometimes apprehensive about disclosing their major clients for fear of subjecting those clients to a raid from a potential competitor, firms want to evaluate potential conflicts as early in the process as possible. If a significant conflict exists, the recruitment process will usually come to a hasty end. The recruiter can get this information from a candidate early in the process and avoid wasting the firm's or the candidate's time.

' Billing Rates and Hours: The nuts and bolts economics of a partner's practice must fit into the economics of the potential new firm. Just as partners leave their firms because of billing rate and hours pressures, firms want to make sure that their prospective new partners will bill at an hourly rate that is commensurate with existing firm partners at the same level of seniority. Both parties must also be careful that billing rates, if adjusted upward, will not alienate a partner's client base due to sticker shock. The firm and the partner should have a clear understanding of this issue early in the process. A good recruiter will be able to provide the firm with a sense of the flexibility of the candidate's rates. Similarly, most firms now expect partners to meet minimum hourly requirements. While some firms will reduce or temper those expectations if a partner is a significant rainmaker or has additional management or administrative duties, the days of the 5:00 p.m. partner who plays golf every Wednesday are largely gone.

' Synergies: Synergy, much like 'Platform,' is another overused word, but one that properly summarizes an important issue for a firm in considering lateral partner candidates. Few firms simply 'buy business.' Firms are interested in adding laterals because the partners possess certain skills or expertise, or because attributes of their practices will mesh with the new firm. The hope is that the business, clients, expertise, experience or leadership will be added and grow, not just arithmetically, but exponentially: the proverbial 2+2=5, or $5 million.

The Candidate's View

Throughout the recruiting process, it can be helpful to keep in mind some of the more common reasons why successful partners entertain the possibility of a lateral move. Firms can maximize their chances of landing the candidates they most desire by focusing on the candidate's reasons for looking and addressing those concerns during every step of the interview process. Since there are so many variables in play, a good recruiter can be instrumental in moving the negotiations forward and keeping everyone focused on the most important issues.

So, what gives the modern law partner wanderlust?

' Platform: Everyone is tired of hearing this word, but it remains the key consideration for many partner candidates. Rainmakers see opportunity in globalization and the desire to grow an already robust practice 'to the next level' is a common refrain among stronger candidates. Some partners' clients have simply outgrown their lawyers' firms in terms of geography, or breadth and depth of expertise. Irreconcilable conflicts can also stifle a partner's marketing efforts. Candidates want a firm whose management team can articulate the reasons that the platform works for their specific practice area. If you take the time to educate your recruiter about the ins and outs of your firm, he or she will be able to explain the benefits of your platform to qualified candidates who may never have thought of your firm before.

' Voice: Rapid law firm growth can lead to feelings of disenfranchisement by a candidate at his or her present firm. In other cases, a highly entrepreneurial partner who suddenly finds him- or herself subject to a neo-Soviet bureaucracy may feel his or her chances of getting his or her concerns addressed are better elsewhere. The opportunity to build, lead and shape a group can spur a highly successful and otherwise happy individual to make a change.

' Values: Rainmakers ' the candidates every firm wants ' need to feel appreciated. Particularly in today's adverse economic climate, lawyers with high originations become very frustrated footing the bill for non-productive partners. In the heady dotcom days, share-and-share-alike worked fairly well, because there was enough wealth to go around. Things are different now. To attract the most productive laterals, a firm must convince the candidate that entrepreneurialism and collaboration will be rewarded, both in terms of compensation and recognition. This is another area where your recruiter can articulate your message to candidates, and even remove pre-existing misconceptions about your firm.

' Financial Health: After the spectacular demise of Brobeck, as well as many smaller firms, in 2002, partners want to know about a firm's finances before they interview. They are asking much more direct questions about debt and spending, sometimes very early in the process. Strong lateral candidates want to see that a firm is both growing and increasing its profitability each year. Do not be surprised if candidates are more direct and thorough with their own due diligence about your firm these days.

' Culture: Candidates want to know right away how the firm is managed and how partner compensation is allocated, because these systems can greatly affect firm culture. Many candidates may shy away from satellite offices of firms that are run too tightly from the mother ship. Most national firms have moved, or are moving, to a practice group management model that allows more collaboration among offices and departments. Many laterals believe that it will be easier to integrate into this type of framework. Other factors, such as whether a firm is known to be woman or family friendly, also get more weight lately than in years past.

' Money: Don't be surprised that money is so far down on our list of priorities. Profits per partner and related figures certainly factor heavily into which firms the candidate will consider. But once that cut is made, partners rarely choose among competitor firms based solely on minor differences in compensation packages. However, if a particular candidate is pivotal to your firm's strategic plan, and your system gives you some flexibility, significant economic incentive can tip the scales in your favor. Your recruiter can often assist you at this stage, by giving you a sense of what the competition is doing and of local market conditions.

The Recruiter's Perspective

It has been only since the 1980s that it has become acceptable for a partner to leave one law firm and join another. Since that time, it has also become clear that a great way for a firm to grow is through lateral partner acquisition. Most firms made their first forays into lateral hiring by encouraging their own partners to network. Although this method can produce good results, it tends to be haphazard and time consuming. It can also be embarrassing for all parties if a partner is approached directly.

This is where the legal recruiter steps in. Firms use their recruiters in different ways. Sometimes a law firm identifies a particular need. In other cases, the recruiter may know the firm to be opportunistic and present candidates who fit into the firm's general growth plan or realm of existing expertise.

' Adding Value: If your goal as a law firm is to be in the best possible position to be made aware of top partner talent, you should look to a professional for guidance. The right recruiter can add substantial value to the lateral hiring process, since he or she spends their time seeking out and developing relationships with partners. Although you are likely to have excellent relationships within the legal community and may even know partners whom you think would be great additions to your firm, approaching candidates directly can be problematic. Some partners may not necessarily feel comfortable revealing their openness to considering other options to you directly. They are often more receptive to doing so through a recruiter. In addition, a good recruiter acts as an informed advocate for your firm and can therefore present your firm in the best possible light. He can get your message out to more quality candidates, many of whom might never have considered the marketplace before the recruiter called.

The recruiter's job is to know the law firm community. He or she will be scrupulous about getting to know the firms and the individuals who run them. For an individual partner, a long term relationship with the right recruiter can be a great source of market information, even if he or she has no intention of 'jumping ship' in the near term.

' Evaluating the Recruiter: When a partner candidate or law firm is considering working with a particular recruiter, it is very important to focus on who the recruiter is. Track record, length of time in the legal search business, reputation, knowledge base, company affiliation and certainly, skill level are all important factors. You want to be working with a recruiter whose approach to the legal search business is based on honesty and integrity.

' Getting the Most from Your Recruiter: Making sure the recruiter is given key information is an important part of an effective search process. For example, if a law firm is trying to attract top partner talent, simply telling the recruiter that their firm is a 'nice place to work' or 'entrepreneurial,' without providing more specific information about the firm, is not enough. The recruiter will want to know (as will his or her partner candidates) how lateral partners are integrated into the firm, why this practice area is important, firm profitability, ranges of billing rates and compensation, how compensation is determined, firm governance and overall firm vision and strategy

Your firm can motivate the recruiter by communicating with the recruiter about news and events in the firm, introducing the recruiter to department heads and other key firm members. Taking the time to educate the recruiter about your firm will give you a capable advocate in the marketplace.

Always make sure the terms of the fee arrangement between the law firm and the search firm are spelled out before the recruiter begins to present candidates. Legal search firms almost always work on pure contingency. Therefore, it is extremely de-motivating for a recruiter to have a client demand a discounted rate.

Finally, be realistic about your expectations. An experienced local recruiter can advise you as to whether your ideal candidate is attainable in a specific market.

The Recruiter As Guide and Dealmaker

Once the recruiter introduces a candidate to the client, his or her role becomes one of an intermediary between the candidate and the law firm. As the 'go between,' the recruiter is responsible for making sure the process flows as smoothly as possible. The role of the recruiter remains an active one throughout the process. This means the recruiter gets involved in eliciting questions and concerns ' from both sides ' and seeing that those questions are answered and concerns are addressed. The recruiter knows that it is important to keep the process moving in a forward direction, whether or not the parties ultimately decide to tie the knot. Deals that might otherwise have made a lot of sense in terms of enhancing a partner's career goals or adding to a law firm's growth sometimes get stuck for lack of momentum.

The recruiter can also be instrumental by seeing that the parties' expectations are matched. Everyone should be on the 'same page,' viewing a potential match with similar goals in mind. The recruiter can help both parties understand that they should be looking at each other not in an adversarial sense, but as though they were both sitting on the same side of the table. The interview process can be convoluted and exhausting. A talented recruiter can keep the sides focused on the major issues and keep discussions moving forward. Post-offer, a recruiter can help tie up any loose ends and lingering questions and bring the deal to a close.

Dana Mesh, Esq. is Director of Partners, Groups and Mergers at Mestel & Company in New York City. Howard Parris, Esq. is Director of Partners, Groups and Mergers in the Washington, DC office of Mestel & Company. Mari Passananti, Esq. is Managing Director of Mestel & Company's Boston office. To contact them, visit Mestel's Web site at http://www.mestel.com/.

According to The American Lawyer, fully 40% of partners in the AmLaw 200 firms will move laterally at least once as partners. This is an astonishing statistic, since lateral partner movement was virtually unheard of a generation ago. Freed from the stigma that once haunted a partner who abandoned his partnership, today's law partners tend to be pragmatists who no longer view their firms as homes for life. Instead, they see them as vehicles to drive their businesses to higher levels. These days, law firm lateral recruitment has become big business. An entire lateral partner recruiting industry ' one of the country's youngest professions ' has emerged to help guide candidates and law firms through the complicated, and often emotionally charged, business of moving partners. In this article, we take a brief look at lateral partner recruitment from the different perspectives of the law firms, the candidates and the recruiters.

Law Firm's Perspective

From the law firm's perspective, while the payoff can be significant, bringing in a lateral partner is a difficult process ' one which many firms are not properly equipped to handle. Like any merger or acquisition transaction, the firm must pay a significant amount of time and attention to the process. The forward momentum of the 'deal' must be maintained. This is where the value of working with a high quality recruiter will be most evident. A firm that has a good relationship with a recruiter can rely on that recruiter to help guide it through the process. Working with a recruiter and focusing on the right issues can result in a lateral acquisition which is a 'home run' for the firm, in which the lateral partner brings new expertise, new business, new clients and new energy to the firm. In working with their recruiter, firms can reduce the potential risks associated with adding lateral partners by focusing on the following issues.

' Business: The first question that a firm asks is always: 'How much business does the candidate have?' In the post-Brobeck world, law firms have raised the bar as to the level of business that would interest them. For many firms, what used to be a threshold of $500,000 or $750,000, is now $1 million, $1.5 million or higher. A good recruiter will help to 'drill down' on the strength and depth of a partner's client relationships. Who originated the client relationship, what member of senior management is the relationship with, and is that company otherwise a firm client? The answers to these (and related) questions will help a firm evaluate the overall 'portability' of a practice and its true 'worth.'

' Conflicts: Potential client conflicts are also a major issue firms must address early in the process. Although partners are sometimes apprehensive about disclosing their major clients for fear of subjecting those clients to a raid from a potential competitor, firms want to evaluate potential conflicts as early in the process as possible. If a significant conflict exists, the recruitment process will usually come to a hasty end. The recruiter can get this information from a candidate early in the process and avoid wasting the firm's or the candidate's time.

' Billing Rates and Hours: The nuts and bolts economics of a partner's practice must fit into the economics of the potential new firm. Just as partners leave their firms because of billing rate and hours pressures, firms want to make sure that their prospective new partners will bill at an hourly rate that is commensurate with existing firm partners at the same level of seniority. Both parties must also be careful that billing rates, if adjusted upward, will not alienate a partner's client base due to sticker shock. The firm and the partner should have a clear understanding of this issue early in the process. A good recruiter will be able to provide the firm with a sense of the flexibility of the candidate's rates. Similarly, most firms now expect partners to meet minimum hourly requirements. While some firms will reduce or temper those expectations if a partner is a significant rainmaker or has additional management or administrative duties, the days of the 5:00 p.m. partner who plays golf every Wednesday are largely gone.

' Synergies: Synergy, much like 'Platform,' is another overused word, but one that properly summarizes an important issue for a firm in considering lateral partner candidates. Few firms simply 'buy business.' Firms are interested in adding laterals because the partners possess certain skills or expertise, or because attributes of their practices will mesh with the new firm. The hope is that the business, clients, expertise, experience or leadership will be added and grow, not just arithmetically, but exponentially: the proverbial 2+2=5, or $5 million.

The Candidate's View

Throughout the recruiting process, it can be helpful to keep in mind some of the more common reasons why successful partners entertain the possibility of a lateral move. Firms can maximize their chances of landing the candidates they most desire by focusing on the candidate's reasons for looking and addressing those concerns during every step of the interview process. Since there are so many variables in play, a good recruiter can be instrumental in moving the negotiations forward and keeping everyone focused on the most important issues.

So, what gives the modern law partner wanderlust?

' Platform: Everyone is tired of hearing this word, but it remains the key consideration for many partner candidates. Rainmakers see opportunity in globalization and the desire to grow an already robust practice 'to the next level' is a common refrain among stronger candidates. Some partners' clients have simply outgrown their lawyers' firms in terms of geography, or breadth and depth of expertise. Irreconcilable conflicts can also stifle a partner's marketing efforts. Candidates want a firm whose management team can articulate the reasons that the platform works for their specific practice area. If you take the time to educate your recruiter about the ins and outs of your firm, he or she will be able to explain the benefits of your platform to qualified candidates who may never have thought of your firm before.

' Voice: Rapid law firm growth can lead to feelings of disenfranchisement by a candidate at his or her present firm. In other cases, a highly entrepreneurial partner who suddenly finds him- or herself subject to a neo-Soviet bureaucracy may feel his or her chances of getting his or her concerns addressed are better elsewhere. The opportunity to build, lead and shape a group can spur a highly successful and otherwise happy individual to make a change.

' Values: Rainmakers ' the candidates every firm wants ' need to feel appreciated. Particularly in today's adverse economic climate, lawyers with high originations become very frustrated footing the bill for non-productive partners. In the heady dotcom days, share-and-share-alike worked fairly well, because there was enough wealth to go around. Things are different now. To attract the most productive laterals, a firm must convince the candidate that entrepreneurialism and collaboration will be rewarded, both in terms of compensation and recognition. This is another area where your recruiter can articulate your message to candidates, and even remove pre-existing misconceptions about your firm.

' Financial Health: After the spectacular demise of Brobeck, as well as many smaller firms, in 2002, partners want to know about a firm's finances before they interview. They are asking much more direct questions about debt and spending, sometimes very early in the process. Strong lateral candidates want to see that a firm is both growing and increasing its profitability each year. Do not be surprised if candidates are more direct and thorough with their own due diligence about your firm these days.

' Culture: Candidates want to know right away how the firm is managed and how partner compensation is allocated, because these systems can greatly affect firm culture. Many candidates may shy away from satellite offices of firms that are run too tightly from the mother ship. Most national firms have moved, or are moving, to a practice group management model that allows more collaboration among offices and departments. Many laterals believe that it will be easier to integrate into this type of framework. Other factors, such as whether a firm is known to be woman or family friendly, also get more weight lately than in years past.

' Money: Don't be surprised that money is so far down on our list of priorities. Profits per partner and related figures certainly factor heavily into which firms the candidate will consider. But once that cut is made, partners rarely choose among competitor firms based solely on minor differences in compensation packages. However, if a particular candidate is pivotal to your firm's strategic plan, and your system gives you some flexibility, significant economic incentive can tip the scales in your favor. Your recruiter can often assist you at this stage, by giving you a sense of what the competition is doing and of local market conditions.

The Recruiter's Perspective

It has been only since the 1980s that it has become acceptable for a partner to leave one law firm and join another. Since that time, it has also become clear that a great way for a firm to grow is through lateral partner acquisition. Most firms made their first forays into lateral hiring by encouraging their own partners to network. Although this method can produce good results, it tends to be haphazard and time consuming. It can also be embarrassing for all parties if a partner is approached directly.

This is where the legal recruiter steps in. Firms use their recruiters in different ways. Sometimes a law firm identifies a particular need. In other cases, the recruiter may know the firm to be opportunistic and present candidates who fit into the firm's general growth plan or realm of existing expertise.

' Adding Value: If your goal as a law firm is to be in the best possible position to be made aware of top partner talent, you should look to a professional for guidance. The right recruiter can add substantial value to the lateral hiring process, since he or she spends their time seeking out and developing relationships with partners. Although you are likely to have excellent relationships within the legal community and may even know partners whom you think would be great additions to your firm, approaching candidates directly can be problematic. Some partners may not necessarily feel comfortable revealing their openness to considering other options to you directly. They are often more receptive to doing so through a recruiter. In addition, a good recruiter acts as an informed advocate for your firm and can therefore present your firm in the best possible light. He can get your message out to more quality candidates, many of whom might never have considered the marketplace before the recruiter called.

The recruiter's job is to know the law firm community. He or she will be scrupulous about getting to know the firms and the individuals who run them. For an individual partner, a long term relationship with the right recruiter can be a great source of market information, even if he or she has no intention of 'jumping ship' in the near term.

' Evaluating the Recruiter: When a partner candidate or law firm is considering working with a particular recruiter, it is very important to focus on who the recruiter is. Track record, length of time in the legal search business, reputation, knowledge base, company affiliation and certainly, skill level are all important factors. You want to be working with a recruiter whose approach to the legal search business is based on honesty and integrity.

' Getting the Most from Your Recruiter: Making sure the recruiter is given key information is an important part of an effective search process. For example, if a law firm is trying to attract top partner talent, simply telling the recruiter that their firm is a 'nice place to work' or 'entrepreneurial,' without providing more specific information about the firm, is not enough. The recruiter will want to know (as will his or her partner candidates) how lateral partners are integrated into the firm, why this practice area is important, firm profitability, ranges of billing rates and compensation, how compensation is determined, firm governance and overall firm vision and strategy

Your firm can motivate the recruiter by communicating with the recruiter about news and events in the firm, introducing the recruiter to department heads and other key firm members. Taking the time to educate the recruiter about your firm will give you a capable advocate in the marketplace.

Always make sure the terms of the fee arrangement between the law firm and the search firm are spelled out before the recruiter begins to present candidates. Legal search firms almost always work on pure contingency. Therefore, it is extremely de-motivating for a recruiter to have a client demand a discounted rate.

Finally, be realistic about your expectations. An experienced local recruiter can advise you as to whether your ideal candidate is attainable in a specific market.

The Recruiter As Guide and Dealmaker

Once the recruiter introduces a candidate to the client, his or her role becomes one of an intermediary between the candidate and the law firm. As the 'go between,' the recruiter is responsible for making sure the process flows as smoothly as possible. The role of the recruiter remains an active one throughout the process. This means the recruiter gets involved in eliciting questions and concerns ' from both sides ' and seeing that those questions are answered and concerns are addressed. The recruiter knows that it is important to keep the process moving in a forward direction, whether or not the parties ultimately decide to tie the knot. Deals that might otherwise have made a lot of sense in terms of enhancing a partner's career goals or adding to a law firm's growth sometimes get stuck for lack of momentum.

The recruiter can also be instrumental by seeing that the parties' expectations are matched. Everyone should be on the 'same page,' viewing a potential match with similar goals in mind. The recruiter can help both parties understand that they should be looking at each other not in an adversarial sense, but as though they were both sitting on the same side of the table. The interview process can be convoluted and exhausting. A talented recruiter can keep the sides focused on the major issues and keep discussions moving forward. Post-offer, a recruiter can help tie up any loose ends and lingering questions and bring the deal to a close.

Dana Mesh, Esq. is Director of Partners, Groups and Mergers at Mestel & Company in New York City. Howard Parris, Esq. is Director of Partners, Groups and Mergers in the Washington, DC office of Mestel & Company. Mari Passananti, Esq. is Managing Director of Mestel & Company's Boston office. To contact them, visit Mestel's Web site at http://www.mestel.com/.