Making a lateral move as a law firm partner is both exciting and frightening. Most law firms have formalized their diligence process of prospective candidates with the Lateral Partner Questionnaire, but what information should you be considering when doing your diligence of them?
Weighing the risk versus reward of moving firms should be done thoughtfully, and there are several factors to consider. Keep in mind what drove you to explore the new firm in the first place, as well as how your current firm compares on each of these factors.
Ideally, a new firm will have greater opportunity for you than your current firm. You want to think about how your current practice will translate over to a new firm.
Servicing current clients. Transitioning your current practice is a big part of making a successful lateral move. As you evaluate the new opportunity, determine if you think your clients would come with you if you were to make a move. Does the firm have the reputation and capabilities that your clients need? Will you have the additional support practices you need to do the work?
Lateral partners often face conflicts or rate issues for some or even all of their current clients. This does not necessarily mean this is the wrong firm for you, but you need to consider how this will ultimately affect your practice and success at your new firm.
Opportunities for new clients. Moving to a new firm is not just about keeping what you have; it is about the opportunity to expand your practice through new opportunities. As you navigate the interview process, consider who in the new firm you could introduce to your existing clients, whose client relationships you could help expand, and with whom you might be able to collaborate to successfully bring in new business.
Does the new firm have additional practice areas or strengths that would be attractive to your clients, allowing you to expand the relationship and increase your originations? Though a firm might not be interested in a prospective lateral who is only looking to service the firm's existing clients, there may be opportunities to be part of a team working with a particular client base or for you to cross-sell your expertise and expand the relationship.
You should also consider what it would be like to pitch for new work from the new firm. Will the reputation, team and capabilities of the new firm give you a greater chance of success than where you are now?
Support. What will the associate, marketing and administrative support of the new firm do for you?
Your practice group. Depending on your practice area and where you are in your career, you may have different visions of the ideal size of your practice group. For some, being a part of a very large group provides the greatest opportunity because you can utilize their resources and reputation to bolster credibility and get more premium work. Others may prefer to be a part of a smaller team that is less crowded and has less competition for opportunities. Think about what it would be like to work as part of this group, and how you would slot in.
Your office. Both big and small offices have advantages for prospective laterals, and you want to consider what this means for you. You should know the firm's long-term growth plan for the office and understand the commitment to the geographic region. You should also consider what other practice groups are in the office, what groups they are working to expand, and how this will work for you and your practice. Another consideration is the firm's position on remote work.
As you think about firm culture, don't just look at the national or practice group level. Firms strive to have consistent culture across offices, but regional differences, variations in office size and leadership as well as other factors usually result in slight differences from office to office.
Your fit. Ultimately, all of these factors add up to your fit with the firm. Is there unique opportunity for you because the firm needs a person with your specific skill set at your career level? If so, dig in on specifics and identify with whom you would work to capture these opportunities at the new firm.
Understanding the firm's financials before making a commitment will be crucial. Many firms will let you have a detailed look at the books if you sign an NDA, and someone should be able to answer any questions you have on the firm finances before you accept an offer.
A firm that is objectively more profitable may not be more profitable for you.
While it is important to look at financial metrics, realize that depending on your practice and the opportunity, you could still be better off at a firm that is lower in the AmLaw 200.
Of course, how much you will earn is an important factor in making a career change. However, the number should not be the only way you think about compensation.
Compensation in many ways drives culture, so listen closely when the new firm describes its compensation system. Is it an open or closed compensation system? Does it run on a formula? Is there a compensation committee? If so, who is on it? Understanding all of this will help you determine how your contribution to the firm will be valued.
It is rare for an offer letter to provide guarantees beyond a year and the remainder of the year when you start. Understand how your compensation will be calculated once you fall into the regular compensation cycle. Try to figure out what your compensation will look like five and 10 years down the road under the best, most likely and worst-case scenarios.
Many two-tier firms often bring in laterals as non-equity partners. If this is the case, understand what the metrics and criteria are for equity and when you would be eligible for this if this is your goal.
Equity offers often include a requirement that the new partner get a loan to cover their equity buy-in. Some firms instead have your equity payment subtracted from your pay. Either way, a firm normally only does it one way, and you will want to understand how this will affect your compensation.
While many of the factors in the decision are objective, the subjective factor should not be discounted.
Often partners are energized by the opportunity to work with new partners whom they like, and this leads to their success at a new firm.
You should be able to get the answers to many of these questions during the interview process. For those that are still outstanding once you get the offer, you can raise them post-offer before you accept. Ultimately, the weight you give each of these factors in your decision is up to you but consider ahead of time what matters most and could be deal makers and breakers for you.