Staying Competitive in the Lateral Partner Market

As the head of Major, Lindsey & Africa's Washington, DC, office, I have the opportunity to work with a wide variety of firms, ranging from international mega-firms to small, regional players. Over the years, it has become clear to me that being successful in the lateral market has as much to do with a firm's recruiting process as with the firm's AmLaw ranking. Those who understand the game, regardless of their size, regularly outperform those who just don't “get it.” Below is an examination of some factors that separates the players from the also-rans.

The Numbers Matter ' A Lot

Surprisingly, many lateral partner candidates undertake very little “due diligence” in connection with a move. In many cases, a partner's main criterion for evaluating other firms is the “Profits Per Partner” (PPP) for the firms listed in the Am Law 100 and 200. Although a firm's PPP is important (and may, in some instances, actually bear some resemblance to reality), few partners seem to realize that no independent entity is verifying those numbers or that the PPP number is far from the best measure of a firm's health or long-term prospects. Partners would be vastly better served focusing on things such as: 1) whether the new firm will offer synergies that will allow the partner to further develop his or her practice; 2) whether the new firm's billing structure is consistent with the partner's current billing rate; 3) potential conflicts issues; and 4) the culture of the new firm.

For firms showing an upward trend in PPP, a lateral candidate's limited knowledge can be helpful in recruiting. However, for firms showing a negative trend, this myopic analysis can contribute to what is commonly referred to as the “death spiral.” Candidates, regardless of the size of their practices, are often reluctant to meet with firms that are trending downward or whose PPP is lower than that of their current firm. At the same time, some partners at negative trending firms see the PPP numbers of other firms and convince themselves that they need to jump ship because the end is likely near. Consequently, these firms end up with top producers leaving in droves, coupled with the inability to replace them with similar producers. Eventually, the momentum becomes too difficult to defeat and the firm ultimately dissolves or enters into a merger of non-equals.

Can the “death spiral” be stopped? In many cases, it can't ' we've all seen plenty of examples over the years. However, firms that recognize the symptoms need to take immediate action ' cutting expenses and unproductive lawyers, reexamining billing and realization rates, etc. A dose of hard medicine early may be painful, but at least the firm might survive. Putting one's head in the sand won't forestall the inevitable.

Dedicate Appropriate Resources

Numbers aside, the single most important requirement for successful lateral recruiting is having professional, dedicated administrative personnel to oversee the process, supervised by partners for whom this is a top priority. It's rather shocking to see a law firm that generates hundreds of millions of dollars in revenue each year (and seeking to add tens of millions from laterals) placing its entire lateral recruiting process in the hands of a $60,000-a-year recruiting coordinator. This should not be construed to mean that law firm partners should always be driving the process ' far from it. In fact, there are a number of non-lawyer professionals responsible for lateral recruiting at several large firms who are exceptional and, in some cases, much more effective than most hiring partners or managing partners Similarly, firms that tap a partner to handle all lateral recruiting while expecting that partner to also bill 2000 hours are doing themselves a disservice – when a client crisis arises, something will have to give and you can be assured that that something will be the partner's administrative responsibilities.

To put it bluntly, like most things in life, you get what you pay for, and firms unwilling to dedicate appropriate resources to lateral recruiting will suffer. It's simply too competitive a market not to recognize this fact and address it. In our experience, those firms who approach lateral recruiting with the same intensity they approach big cases or multi-billion dollar transactions simply outperform those that don't.

'Showing the Love'

The next most significant factor in successful recruiting is what recruiters call “showing the love.” Everyone likes to be liked, and candidates naturally will like your firm more if they feel you like them. I can't tell you how many times I've had candidates go on interviews, come back all charged up, and then hear nothing from the firm for weeks or months. What some firms seem to forget is that while they take their time in deciding whether to move forward, the candidate may be going on other interviews or simply falling out of love. Our experience shows that candidates will gravitate toward those firms that are not only excited about their candidacy, but are actively demonstrating that excitement to them.

Remember, the candidates that your firm desires most are typically the candidates that every other firm wants as well. It's up to your firm to demonstrate to the candidate why your firm is the best choice. Think of it like fraternity or sorority rush ' it's an active process that requires continual contact and the efforts of your best recruiters. Firms also need to make sure that they have someone “quarterbacking” each lateral candidate's candidacy. If no one at the firm is responsible for taking ownership of a lateral candidate, the candidate is likely to be lost to a firm who knows how to “show the love” and keep the process moving.

Firms should also remember to focus on more than just the candidate's numbers. It isn't just business ' it's also personal. No one likes to be treated like a piece of meat, so it's important to convey to candidates that your firm is interested in them as people. Find out early about the candidate's hobbies or outside interests and seek to make a connection with other partners at the firm. It can also be useful to get the candidate's spouse or significant other involved at a relatively early stage, by inviting them out to dinner or some other social event. Making a lateral move is often an extremely stressful time for the candidate, both personally and professionally. Taking active steps to ease the candidate's stress will increase your firm's ability to close the deal.

Next month, we discuss the importance of having a plan.

As the head of Major, Lindsey & Africa's Washington, DC, office, I have the opportunity to work with a wide variety of firms, ranging from international mega-firms to small, regional players. Over the years, it has become clear to me that being successful in the lateral market has as much to do with a firm's recruiting process as with the firm's AmLaw ranking. Those who understand the game, regardless of their size, regularly outperform those who just don't “get it.” Below is an examination of some factors that separates the players from the also-rans.

The Numbers Matter ' A Lot

Surprisingly, many lateral partner candidates undertake very little “due diligence” in connection with a move. In many cases, a partner's main criterion for evaluating other firms is the “Profits Per Partner” (PPP) for the firms listed in the Am Law 100 and 200. Although a firm's PPP is important (and may, in some instances, actually bear some resemblance to reality), few partners seem to realize that no independent entity is verifying those numbers or that the PPP number is far from the best measure of a firm's health or long-term prospects. Partners would be vastly better served focusing on things such as: 1) whether the new firm will offer synergies that will allow the partner to further develop his or her practice; 2) whether the new firm's billing structure is consistent with the partner's current billing rate; 3) potential conflicts issues; and 4) the culture of the new firm.

For firms showing an upward trend in PPP, a lateral candidate's limited knowledge can be helpful in recruiting. However, for firms showing a negative trend, this myopic analysis can contribute to what is commonly referred to as the “death spiral.” Candidates, regardless of the size of their practices, are often reluctant to meet with firms that are trending downward or whose PPP is lower than that of their current firm. At the same time, some partners at negative trending firms see the PPP numbers of other firms and convince themselves that they need to jump ship because the end is likely near. Consequently, these firms end up with top producers leaving in droves, coupled with the inability to replace them with similar producers. Eventually, the momentum becomes too difficult to defeat and the firm ultimately dissolves or enters into a merger of non-equals.

Can the “death spiral” be stopped? In many cases, it can't ' we've all seen plenty of examples over the years. However, firms that recognize the symptoms need to take immediate action ' cutting expenses and unproductive lawyers, reexamining billing and realization rates, etc. A dose of hard medicine early may be painful, but at least the firm might survive. Putting one's head in the sand won't forestall the inevitable.

Dedicate Appropriate Resources

Numbers aside, the single most important requirement for successful lateral recruiting is having professional, dedicated administrative personnel to oversee the process, supervised by partners for whom this is a top priority. It's rather shocking to see a law firm that generates hundreds of millions of dollars in revenue each year (and seeking to add tens of millions from laterals) placing its entire lateral recruiting process in the hands of a $60,000-a-year recruiting coordinator. This should not be construed to mean that law firm partners should always be driving the process ' far from it. In fact, there are a number of non-lawyer professionals responsible for lateral recruiting at several large firms who are exceptional and, in some cases, much more effective than most hiring partners or managing partners Similarly, firms that tap a partner to handle all lateral recruiting while expecting that partner to also bill 2000 hours are doing themselves a disservice – when a client crisis arises, something will have to give and you can be assured that that something will be the partner's administrative responsibilities.

To put it bluntly, like most things in life, you get what you pay for, and firms unwilling to dedicate appropriate resources to lateral recruiting will suffer. It's simply too competitive a market not to recognize this fact and address it. In our experience, those firms who approach lateral recruiting with the same intensity they approach big cases or multi-billion dollar transactions simply outperform those that don't.

'Showing the Love'

The next most significant factor in successful recruiting is what recruiters call “showing the love.” Everyone likes to be liked, and candidates naturally will like your firm more if they feel you like them. I can't tell you how many times I've had candidates go on interviews, come back all charged up, and then hear nothing from the firm for weeks or months. What some firms seem to forget is that while they take their time in deciding whether to move forward, the candidate may be going on other interviews or simply falling out of love. Our experience shows that candidates will gravitate toward those firms that are not only excited about their candidacy, but are actively demonstrating that excitement to them.

Remember, the candidates that your firm desires most are typically the candidates that every other firm wants as well. It's up to your firm to demonstrate to the candidate why your firm is the best choice. Think of it like fraternity or sorority rush ' it's an active process that requires continual contact and the efforts of your best recruiters. Firms also need to make sure that they have someone “quarterbacking” each lateral candidate's candidacy. If no one at the firm is responsible for taking ownership of a lateral candidate, the candidate is likely to be lost to a firm who knows how to “show the love” and keep the process moving.

Firms should also remember to focus on more than just the candidate's numbers. It isn't just business ' it's also personal. No one likes to be treated like a piece of meat, so it's important to convey to candidates that your firm is interested in them as people. Find out early about the candidate's hobbies or outside interests and seek to make a connection with other partners at the firm. It can also be useful to get the candidate's spouse or significant other involved at a relatively early stage, by inviting them out to dinner or some other social event. Making a lateral move is often an extremely stressful time for the candidate, both personally and professionally. Taking active steps to ease the candidate's stress will increase your firm's ability to close the deal.

Next month, we discuss the importance of having a plan.