What to know when considering a lateral partner move?

While each partner move is unique based on any number of factors, they share enough similarities that I’ve been able to discern common patterns.

In the first of a two-part column on what to expect in a partner move, I cover timelines, books of business, compensation, and conflicts. (In part two, look for some tips on things partners need not get overly concerned about).

What follows are common questions about making a partner move.

 How long is the partner move process?

Typically, the entire move process ranges from four weeks to four months. If both sides are extremely focused and motivated, it can be a month (or perhaps even less in uniquely time pressured situations).

Personal and professional circumstances can dictate longer periods. Think of closings, trials, personal events, timing/deferral of existing compensation.

Scheduling busy people is what it is. Zoom can speed up the process, but personal meetings can be important and are making a comeback.

How big of a book of business do I need to have?

All recruitment scenarios are unique and factors related to practice size vary considerably. Issues of relevance can include vintage, practice area, industry, and alignment with firm growth strategy. There may not be any portable book required if the lateral move is deemed a significant strategic imperative.

There may be a preference for a mobile practice of some size. To offer guidance, many firms indicate general thresholds, applied case by case. One common benchmark I see is a lateral partner keeping himself/herself busy along with one other junior lawyer in the first year of the transition. The general idea of incoming work is attractive as it helps buy some time for a firm (i.e. pays the bills) while management seriously engages in efforts to integrate the partner into the firm and with firm clients.

How does lateral partner comp work?

Firms work to be both fair internally and market reflective in determining lateral compensation, and try hard to get this right for a lateral partner. Lockstep partner compensation is largely gone, and it’s now an organic case by case analysis, many firms referring to their comp system as a “meritocracy.” It’s worth noting that the lateral partner comp market is not guided by “efficient” market mechanics (cf. Real estate, the stock market, sports salaries, other areas with significant public data). Because there is virtually no public information about particular lateral deals (i.e. they are private), and there is significant variability on how firms ascribe value, this high-end labor market lacks market efficiency (which means offers from firms can widely vary).

The American Lawyer’s PPP figures offer some guidance about average comp, but they don’t answer any specific questions one may have about their personal market value. Key Factors such as existing compensation, strategic fit, and economic analysis of practice metrics all play important roles. Someone with significant experience with lateral deals can be helpful in navigating this terrain.

Who’s interested in my practice? (aka “Who’s looking?”)

This question is loaded, so bear with me. The issue about who’s interested is often deemed critical to a partner considering an initial confidential meeting. This is understandable, as busy partners don’t want to waste their time (or the firms). And there are bona fide searches where this question is germane. This question however isn’t dispositive on what firm a partner might best consider, as virtually every top firm is opportunistic about adding quality partners, provided they fit within a firm’s practice offerings (and firms may even be interested in practices they don’t have, despite not having fully thought about it yet). This seriously distinguishes the partner labor market from the only relevant cohort, the executive talent market (including GC’s), where recruiting is driven to only fill very specific needs – companies need to be actively and aggressively “looking.”

In stark contrast law firms and law firm partners come together at any time the transition makes sense for both, usually without there being a “job opening” or “search.”

For friends, I sometimes causally answer the question of “who is looking out there?” with “everybody and nobody.” This flippant response requires explanation. While there are certainly firms looking for specific areas/partners, virtually every top firm tells me they are always interested in talking to talented partners that will benefit the enterprise. That said, those same firms also tell me they will be fine if nobody turns out to be a cultural and practice fit, and they can certainly go without (unlike the C-level executive need which is acute –i.e. a company needs a CFO and can’t go without).  Thus I say “everybody” is looking (or, if one applies a “glass half full” perception, perhaps “nobody” is looking). The point being law firms may be extremely interested in adding partners, but the recruiting market works differently than what many people expect (think staffing), and is unlike companies occasionally looking to fill commensurate (compensation wise) C-Level positions (one needs a neon flashing vacancy sign; You don’t submit a GC resume to a company that has a GC).

Nuanced as this is, the evolving legal industry provides partners with a consistently active market to explore change, and is reflective of increasing career mobility and flexibility (unlike partners from previous decades who faced myriad of movement obstacles, a topic I have written about previously- see here). An experienced headhunter with full market knowledge can assess brand/platform options from the partner’s perspective and serve as a “market maker” for entrepreneurial career minded partners.

How are client conflicts assessed?

Client conflicts are an important issue but certainly navigable. Earlier in the recruitment process, once a partner is comfortable, there is a preliminary analysis of portable clients, with the heavier lifting of precise conflict clearance being done towards the end of the process. The sequencing of this diligence is unique to each recruitment. This internal analysis is always done confidentially.

Next up, I’ll share some tips on what not to seriously fret about when it comes to making a lateral move.

Want to discuss? Call me.

Defining Firm Risk: Demystifying Lateral Partner Moves

Who Still Believes Firms are Flipping a Coin When Hiring Lateral Partners?

Why do I ask this?  Because from time to time there’s a headline in the legal press exclaiming that lateral partner hiring is risky business. The perception offered is firms fail as often as they succeed; that these lateral hires are a 50/50 proposition.

This is a fiction.

There is significant evidence that successes far outweigh the failures for both firms and the partners making the transitions.

My former partner Jon Lindsey of Major Lindsey & Africa (MLA), made this point in an American Lawyer article published earlier this year. Lindsey offers a detailed and cogent analysis, with high-level interviews of firms and plenty of lateral partner data, all of which supports the premise that lateral partner hiring “succeeds” at a healthy percentage, certainly significantly better than a coin flip. The article further confirms that lateral partner hiring remains a top priority for law firms, commanding significant resources, people and time. Pursuing partner hires with a meager 50% success rate would not make economic sense for any well run law firm.

Besides merger, lateral partner hiring is the only real-time growth vehicle that exists for a law firm, and the exponential growth of the AmLaw 200 firms cannot be explained by internal growth and development of young lawyers alone. I made these points a while back in my Law360 article, “6 Common Lateral Partner Myths Debunked.”

Lindsey smartly identifies the need to define “success” for any reasonable take on the issue (i.e., one can use retention rates, meeting expectations, etc.). My summary of lateral partner success at the firms mentioned in his article is as follows (see article for more context):

  • Orrick: Essentially, the lateral partners hired over the last five years have met their quantifiable expectations in the aggregate.
  • Morgan Lewis: Looking at lateral partners’ performance for the first two years, results have exceeded expectations.
  • Mayer Brown: Sharing their retention rate reveals that 81% of lateral partners are still with the firm after five years (and 85% saw a compensation increase since joining the firm).
  • Perkins Coie reported a partner retention rate of 88% five years after hiring.
  • Proskauer reported an overwhelming majority of lateral partners hired in the last five years had met their highly strategic definition of “success.”
  • McDermott strives for 80% success, is not satisfied with a lower percentage, and continues to seek and hire lateral partners. I’d say it’s safe to assume they meet or come close to their 80% goal.
  • Goodwin reported an 83% success rate over the last 10-year period.

Just look at the impressive growth rates over the last 10 years in all the above firms, in profits per partner, revenue per lawyer, and other financial metrics reported by the American Lawyer. These are AmLaw 50 firms, and the financial growth of this particular sector has been extremely robust. If I had statistical training, unlimited time, and access to lots of data, I would try to connect firms’ financial success to the significant lateral partners they hired over the last 10 years. However, that kind of causal relationship would be difficult to prove out as there are numerous reasons law firms have performed so well. That said, I do believe lateral partner growth has played a significant role.

No doubt I am biased, considering my profession. I respect there are different perspectives and experiences (i.e., your mileage may vary). This is not relevant to any particular partner’s situation, and whether anyone can or should move now (or ever) is situational. I simply found the data and observations in Lindsey’s interviews with managing partners to coincide with my experiences in 17 years of recruiting partners.

It’s also worth noting that the amount of lateral partner movement is relatively new.  If one goes back a couple decades, there were serious questions raised about partners moving firms. But there has been a full sea change from the ’80s and early 90’s when big firm partners rarely left their firm for another peer firm. There are still many lawyers from that generation in the industry (many I count as close friends). I have found some do not like the cultural shifts that come with increased partner mobility, often carrying particular distaste for the decrease in loyalty from firms towards their legacy partners. While I always respect those who have seen more than me, I believe these changes are a net positive for the industry, for reasons that are hopefully obvious. I won’t ever buy that an industry is best for all by limiting an individual’s ability to get a new job.

Ultimately, the stats don’t lie.

Lateral partner hiring is currently the fundamental growth strategy employed by major law firms, even if the amount of risk in this undertaking can be debated. I’ll note here that law firms, as a rule, are extremely financially conservative. Most I talk to are fiercely proud to boast that they “out careful” their peers in running their firms. I have yet to meet a law firm that employs high-risk strategies of any kind, so will never believe they throw that mentality away when it comes to adding partners. And investing millions year after year in a coin flip strategy would be exactly that. In a mythical betting market on the amount of risk law firms will take in lateral partner hiring, I would always bet the under.

Want to discuss? Call me.

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The No. 1 Lateral Partner Move Myth I Hear

Lateral partner movement was once uncommon, and even though that has changed, a certain mythology has developed in the wake of change. The most pervasive myth I hear as a legal recruiter is that switching firms is a big career risk. That might have held some truth 20 years ago, but it certainly doesn’t pass the smell test today.

I get where the misperception originates. Lateral partners certainly didn’t used to be the most celebrated and supported partners in a firm. For years, legacy and existing partners rooted against them, sometimes even facilitating their failure.

Now things are completely different for lateral partners. Law firm management is acutely focused on (and accountable for) the success of laterals. If dept leaders and managing partners learn people are preventing their integration and success, they are not forgiving. Why?

Lateral hires are the engine of law firm strategic growth 

The success of lateral partners is inextricably linked to law firm growth (and ultimately success).

Consider if firms like Latham, Gibson, Kirkland, Cooley, etc., relied solely on organic growth, only promoting partners from within. Take any successful large global firm, for that matter, with depth in practice areas and geography and examine how it got there.

Despite this evidence, pundits continue to warn of the risks of lateral partner growth for law firms. Identifying risk is fine. Nothing of value is ever risk-free. Just keep in mind that lawyers, by nature or nurture, look hard for what could go wrong. Negativity also draws media attention. Drama sells.

No one can honestly argue with the fact that lateral hires are the engine of growth for law firms. Being that driver of strategic growth is likely to land laterals in the center of the action for the firm, which equates to more value and security.

Thus, nobody will ever convince me that staying in the same firm for a long period or even one’s whole career is the default career lane with the least amount of risk.

Thinking that leaving is riskier than staying is a trick of the mind

Doing nothing often feels safe. Doing something feels riskier, even when that is not true. The chance the firm you joined 10-15 years ago is the absolute best fit for you now is unlikely. The risky decision is to stay at a firm too long after it’s clear you are not “tip of the spear,” as the saying goes. It usually has less to do with your book of business, and more to do with some aspect of the firm’s strategic focus (i.e. geography, diversity, practice area, industry verticals, etc.).

I once heard a very prominent partner (comfortable in the same firm for decades) say this after a hard-fought decision to move: “You can stay where you are tolerated or move to a place where you will be celebrated.”  Maybe a smidge too dramatic, but anecdotally it rings true for me.  In 17 years the vast majority of the partners I placed say it was the best decision they ever made. I was a bit surprised at first, but the tales kept pouring in over the years.

I realize my bias as an agent of change. And of course this is personal and situational. There are many instances where people should stay put. There is nothing inherently wrong with a career that lasts a long time at one law firm. But while not always comfortable in thought, there’s no denying the raw career power of lateral movement today (which more often reduces rather than augments the risks one faces over a long career).

Want to discuss? Call me.

Subscribe below to follow the blog. To connect on social media, you can find me @DanHatchHGB on Twitter and LinkedIn here.

Welcome to The Long Game Blog

When I started thinking about writing a blog, I really struggled to think of topics to write about. I felt it would be similar to the old Steve Martin stand-up routine where he tells a packed SF Amphitheater a joke only for plumbers (an old but funny bit; just trust me or listen here).

Head-hunting (aka recruiting) at the law firm partner level is a niche area of business.

There are only so many partners that move each year, it being a monumental career decision that needs to fit at the right time with a law firm’s growth/hiring strategy. But I have realized there are many topics that come up in my day-to-day conversations with lawyers and firms that have broad appeal.

I want to start by describing the business I am in, even though I am not always sure what that is. Because I help lawyers and firms, I’ll first take a broad swipe at what they do. I see the lawyers and law firms I work with all growing their businesses in ways that require highly skilled relationship management. So, to me, they are in the people business.

I like to think that I’m in the happiness business.

Continue reading “Welcome to The Long Game Blog”