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Law Firms Struggle With Lateral Partner Due Diligence, Report Finds

Rebecca Cohen Law.com

Firms place a lot of weight on lateral hiring, but many of them aren't very good at it.

That's the conclusion of a report released Monday by ALM Intelligence. An ALI survey found that 96 percent of respondents consider hiring lateral lawyers with a client following "very important" or "moderately important" to their revenue growth strategies. But 30 percent of laterals deliver less than half their expected book of business in their first year at the new firm. Another 21 percent deliver only half to three-quarters.

"All firms will fail at lateral hiring at some point," said Steve Kovalan, the author of the ALI report. "Unfortunately, these are extremely costly failures, impacting firm finances, cultural stability, brand and client relationships."

Many firms have no formal vetting process at all for lateral candidates, Kovalan said. Those that do often aren't rigorous enough about collecting business development plans and other information.

Most firms don't fail at lateral hiring all the time, Kovalan added. They get inconsistent results because they put their trust in gut instinct or personal relationships instead of doing due diligence.

The report recommends a three-part process for lateral hiring: develop a candidate profile, collect candidate data and then use a scorecard.

"In terms of significance, determining cultural fit is the most important decision a hiring firm will make," Kovalan said. "A hire that fails to meet this standard can be doomed regardless of the candidate's legal skills or business acumen."

Bob Brigham, a partner in Major, Lindsey & Africa's San Francisco and Palo Alto offices and a member of the legal search firm's partner practice group, said that MLA has seen much higher success rates for the lateral candidates it works with than those reported by ALI, but he's not surprised by ALI's stats.

The firms that make lateral hiring pay are those that take time to understand a candidate's practice "at a granular level," Brigham said. They also make an effort to help the new hire connect with the firm's movers and shakers once he or she arrives.

"Laterals don't want to fail either, right?" Brigham said. "It's a two-way thing. Nobody wants to make a move and not do well."

Even when lateral hires are successful, it takes time for them to integrate into the new firm and start paying for themselves, usually six months to a year, and sometimes longer, Brigham said.


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