Hiring and retaining lateral partners is integral to the growth strategies of major law firms. Ensuring lateral partner engagement and satisfaction is essential for retention of these new additions. Partners exploring the market and law firms courting them can make better decisions by understanding the keys to why lateral partners change firms and how they define satisfaction with their new firms.
Major, Lindsey & Africa has been studying lateral partner satisfaction since 1996. In January 2020, we published our fourth Lateral Partner Satisfaction Survey, which examined a host of factors impacting lateral attorney moves and the likelihood of the attorneys’ success at their new firm. Below are some of the key findings.
Key reasons partners leave their firms. The top reason lateral partners cited for leaving their firms, particularly younger laterals, was a lack of confidence in firm management. Those who left for that reason were generally much happier at their new firm. Other top reasons partners reported for their departures were lack of support to build a practice, firm culture, concerns about the firm’s financial health and lack of leadership opportunities.
Factors most important in choosing their current firm. The ability of the new firm to support their practice and take it to the next level was the No. 1 reason lateral partners cited for choosing their current firm. Firm culture was a close second reason, followed by the personalities of the partners, the new firm’s firm management and its financial health. Interestingly, anticipated compensation was the sixth-most important factor for partners in choosing their current firm.
Impact of effective integration on lateral satisfaction. One of the most important findings of this survey is that effective integration is the greatest single predictor of lateral success. The most satisfied lateral partners largely viewed their firms as having been effective in cross-selling, communicating firm expectations, eliciting the lateral’s expectations and the firm’s efforts to integrate the lateral into the partnership. The firms with robust lateral integration plans are likely to have greater lateral partner retention.
Impact of firm candor on lateral satisfaction. More than 90% of lateral partners who were satisfied with their new firms reported the firms had been very or somewhat candid in the courtship process. Conversely, more than two-thirds of unsatisfied lateral partners reported their firms were not very candid or not candid at all. This suggests that firms should integrate candor about their finances and other key information as a standard part of their recruitment process.
Originations. Good news on originations for partners contemplating a move: Two-thirds of lateral partners reported their originations increased since they joined their current firm. Nearly 70% of those lawyers reported they were satisfied with their move. Only 23.7% of laterals reported their originations remained about the same, and 9.6% of laterals reported a decrease in originations.
Compensation. Most of the lateral partners surveyed (82.3%) were either very satisfied or somewhat satisfied with their compensation. Lawyers who enjoyed the greatest increases in compensation, including over a three-year period, had a strong positive correlation with satisfaction. On the other hand, those lawyers whose compensation decreased were more likely to report dissatisfaction. The survey also revealed that within three years after joining a new law firm, more than two-thirds of lateral partners continued to realize an increase in compensation.
Compensation guarantee. About 74% of the respondents received some form of compensation guarantee. Guarantees, or their absence, were not materially different for satisfied or unsatisfied lateral partners. Most lateral partners reported that their compensation was guaranteed either for the remainder of the year they joined the new firm or for the remainder of the year plus the following year.
Open vs. closed compensation systems. Those lawyers joining firms with open compensation systems were more likely to report they were very satisfied with their compensation than those lawyers who joined firms with closed compensation systems. Not surprising, partners who moved to firms with closed compensation systems were less positive about how well the firm communicated about expectations.
Would you do it again? An overwhelming number of lateral partners (79.8%) reported that, if they had to do it all over again, they would still move to their current firm. Very few lawyers regretted making a move, as only 3.4% of respondents reported that they wish they had remained at their former firm.