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It is a truth universally acknowledged that a partner in possession of a good book of business is in need of a better firm. If you are a partner considering such a lateral move, then you are probably focused on the boost a new firm could offer your practice, and on cultural fit. These are certainly important factors in making a successful move. However, our review of the 2,353 partners who moved between Am Law 100 firms in 2010 through 2012 suggests that some more prosaic factors matter too.

","

When should you make the move? Well, fall seems to be the time of year to start exploring seriously so that you can move early in the new year. As the columns in Fig. 1 (below) show, the volume of lateral partner moves declines through the year — from 35% of a year's moves happening in the first quarter to 15% in the fourth quarter.

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This is perhaps not surprising. What is surprising, though, is that the success rate of laterals (as indicated by staying longer at the new firm) declines through the year, with an almost 15-percentage point difference in the five-year retention rate (i.e., percent of laterals still at their new firm five years after the move) for movers between the first half of the year and the fourth quarter (see the line in Fig. 1). A likely explanation for this falloff has to do with the nature of the move — voluntary vs. involuntary. Involuntary moves are very common — in a recent Altman Weil survey, over 70% of firms reported using involuntary departures to improve profitability. Our hypothesis is that voluntary moves are biased to earlier in the year — shortly after partners receive their profit share for the prior year.

","

For partners who move involuntarily, our hypothesis is that they are often informed of their separation early in the year as part of the compensation discussion, and that it takes some months for them to find a new position — hence, they are inclined to leave later in the year. Involuntary departs are generally substantively excellent lawyers who lack the full complement of business development and related soft skills required of a successful partner in an elite modern law firm. The need for such skills doesn't dissipate, nor is it more easily met, by moving firms. So it's not altogether surprising to see later-in-the-year movers, with a higher portion of involuntarily-departed partners, enjoy less success at their new firms.

","

At some level, leaders and partners at a lateral's new firm know the likely history of a late-in-the-year arrival, and set expectations accordingly. As expectations have a tendency to become self-fulfilling, it behooves a would-be mover to avoid a move in the second half of the year and instead to start thinking and searching for a new position around now, with the idea being to transition early in the next year.

","

A second aspect of timing is the stage of career at which a partner decides to move. Should you move now or wait? The data here suggest that the best time to move is in one's 50s; see the retention rate line in Fig. 2.

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Interestingly, this is counter to what partners do — as the columns in Fig. 2 show, nearly half of moves are partners in their 40s, for whom the success rate is only average, and less than a quarter of moves are partners in their 50s, for whom there is a significant bump in success rate. There is no obvious success rate penalty to moving before the age of 40; moves by partners over 60 are hard to assess; presumably, retiring within a five-year window was contemplated by some significant portion of such movers.

","

However, the most important factor affecting lateral success rate is neither when in the year or when in a career a partner chooses to move. Rather, it is whether the move is to a firm with higher or lower PPP. One can imagine a partner thinking that moving down in the PPP rankings would enhance his or her prospects of success. After all, they've been trained at a higher-performance firm, have served demanding clients, have maintained a higher billing rate than that they will have after a move, and the culture of the lower PPP firm may be less demanding of business development acumen and on personal time. Thus, a move down in PPP could be considered lower risk.

","

The data refute this thinking. As shown in Fig. 3(a), the success rate of moves does indeed vary with the change in firm PPP rank; however, the relationship is the obverse: moves with climbs of 40 or more places in PPP rankings have the highest retention rates, while drops of 20 or more places in PPP rankings have the lowest.

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One possible explanation: When a firm is hiring from a lower-PPP firm, it is more skeptical of the fit, assesses the move more closely and hence admit sfew laterals without strong prospects of success. When a firm is hiring from a higher-PPP firm, there may be a tendency not to push too hard on the rationale, or an overweighting of the prestige of the lateral's prior firm, and thus to admit more laterals with lower prospects of success. The implication for a would-be lateral is that while it may be harder to sell oneself to a higher PPP firm in the face of tighter scrutiny, a move to a higher PPP firm is actually lower risk than a perhaps easier-to-effectuate move to a lower PPP firm.

","

The data show that, in addition to change in firm PPP, the absolute level of the new firm's PPP affects retention. Fig.3 (b) shows the retention rate of firms in the Am Law 100 broken by quartiles of PPP, (i.e., PPP 1-25 refers to the 25 firms with the highest PPPs, etc.). The PPP 1-25 firms have a retention rate that is some 30 percentage points higher than the PPP 51-75 firms. This adds to the allure of such high PPP firms as landing points for lateral movers the mover is likely not just to be compensated more highly, but also more likely to be successful and stay.

","

Moreover, this demonstration of high lateral retention by very strong PPP firms is another example of the increasing-returns phenomenon that governs competition within the elite legal marketplace: those who are ahead (e.g., higher PPP) tend to get further ahead (e.g., more successful lateral recruiting) while those who are behind fall further behind. Hence, these higher PPP firms should be more attractive too to laterals for their stronger competitive position and thus their higher likelihood of thriving as the broader legal market goes through the turmoil of disruption.

","

The change in PPP ranking has a much stronger effect on the likely success of a move than does the stage in a partner's career at which the move is made. For example: While there is a 30-percentage point difference in the five-year retention rate between moves to firms that are in the first and third quartile of PPP, see Fig. 3(b), there is a relatively modest 15-percentage point difference between moves by partners in their 50s and those below 40, see Fig. 2. The implication is that rather than ask, “What's the right career stage to move firms?” a partner should ask, “How and when can I make a move to a higher PPP firm?”

","

Of course, such moves to higher PPP firms don't just happen: moves to lower PPP firms outnumber those to higher PPP firms by 2:1, as seen in Fig. 4.

","

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","

It is noteworthy that the prospects of a move being to a higher PPP firm decline for partners over 50.

","

$\"\"$

","

A final point of note: It is probably not wise to move to a lower PPP firm in the expectation of making a subsequent move to a higher PPP firm. We looked at those partners who moved down in firm PPP and then moved again within five years. What we found was that 35% of these second moves were to firms higher in the PPP rankings than the firm to which they had first moved. This is the same percent of partners whose first move was to higher PPP firms, Fig. 5(a). That said, there are some differences by stage of career. For younger partners, there is a slightly higher probability of a second move being to a higher PPP firm; for older partners, the probability of a second move being to a higher PPP firm is lower than for a first move, Fig. 5(b).

","

In a similar vein, it's probably not wise to move up in terms of firm PPP expecting to move up again on a subsequent move — the probability of following a first move to a higher PPP firm with a second move to a yet higher PPP firm is only about 15%; there's an 85% chance that a second move would be back down in the PPP rankings, again, see Fig. 5(a).

","

Of course, just as there are lessons here for individual partners contemplating a move, there are lessons too for firms that are active in lateral hiring. In brief:

Hire more from lower PPP firms, rather than from putatively stronger, higher PPP firms.
Look more closely at laterals in their 50s — they stay longer.
Hire early in the year.

Conclusion

","

That said, the key takeaway for law firm leaders is more fundamental than the dynamics of lateral partner moves. Rather, it is to observe that PPP is not just a reflection of performance; it is also, and more importantly, a critical determinant of competitive strength. Ultimately, as the best lawyers go, the best clients follow — competition for the strongest partners is competition for the great clients that underlie a firm's long-term strength and vitality. The data here show unequivocally that higher PPP firms have a significant advantage in the competition for top partners. Leaders need to look skeptically at the clarion call for growth and a global footprint; strong PPP has a much more profound effect on long-term success.

","

Note: PowerPoint copies of charts available upon request — Hugh@SimonsAdvisors.org.

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*****
Hugh A. Simons Ph.D., is an ALM Intelligence Fellow. He is a forâ€' mer senior partner, executive committee member and CFO at The Boston Consulting Group and the former COO at Ropes & Gray. Paola Cecchi-Dimeglio, J.D., LL.M., Ph.D., is a behavioral economist and chair of the Executive Leadership Research Initiative for Women and Minority Attorneys at the Center on the Legal Profession at Harvard Law School and a senior research fellow at HLS and Harvard Kennedy School. She can be reached at pcecchidimeglio@law.harvard.edu or @HLSPaola. This article also appeared in The American Lawyer, an ALM sibling publication of this newsletter.

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