Those of us with careers in lateral partner recruiting hear a constant bevy of opinions and perspectives about partner movement. It's safe to say that while demand ebbs and flows for legal services, there will never be a shortage of opinions about lateral partner hiring. This is positive for the industry, as anything with such vital importance to careers should attract significant attention. There is, however, a unique mythology that travels with the discussions, and below are six themes that are so often repeated they remind me of the common horror movie tropes. They used to scare me, especially when offered as wisdom, but much like the near-dead body that springs back up for one last attack on screen, they are more cliché than useful.
Myth 1: Lateral partners usually get a 15 to 20 percent raise in pay.
I wish this was true! Yes, there are increases, and everyone seemingly has a story, but let's pump the brakes a bit. For this to be the norm, it would mean firms consistently underpay their partners by double digit percentage points. This would wreak serious havoc with retention, and I would be way too busy to write this article. Fortunately for stability and retention — and unfortunately for recruiters — law firms put a lot of time into getting compensation mostly right. While data suggests that laterals are often compensated higher than legacy partners, incoming lateral partners are subject to a timeless principle: Beauty is in the eye of the beholder. Every situation is unique. Not all firms will equally value a given partner, and the only compensation that counts is from a firm that a partner is willing and invited to join, which involves weighing many factors beyond compensation.
Our "2016 Partner Compensation Survey" (done in association with ALM Legal Intelligence) suggests compensation improves more often than not, but not always. Our survey respondents indicated compensation change in their lateral move as follows: 56 percent increased their compensation by 10 percent or more, 36 percent reported about the same compensation and 8 percent reported a decrease. In the reporting group noting the 10 percent-plus increase, about half of that group noted a 20 percent or greater increase and a third of the group reported a 21 to 40 percent increase.
Myth 2: Partners must have a large and rock-solid portable practice to make a lateral move.
This oversimplifies the lateral market. Obviously, generating business from longer-held clients has value internally and externally and is a factor law firms consider carefully in looking at lateral partners. But it is one factor among many. What this broad assertion misses is the numerous strategic human solutions firms need to develop in order to thrive and grow. Firm brand and overall sustainability, as well as growth, are driven by numerous factors including diversity, succession planning, practice specialization and geography.
And how do we define "large" and "rock solid" Firms might make statements about what size book they are looking for — and it's wise to listen. But there are so many deals that don't fit their request that a "paint by the numbers" approach will both miss and overvalue a number of opportunities. There is a healthy demand for quality combined with strategic fit, and the fortune telling involved in predicting future events (i.e., client liquidation events/calamities creating protracted litigation/inability to resolve disputes), while important, sits equally alongside the person, their prior achievements, culture fit, reputation, etc. This is as it should be — top law firms hire people, not spreadsheets.
Myth 3: Lateral partners are taking a big career risk in switching firms.
This is perhaps the most pervasive element of a fear-based mythology that surrounds lateral partner movement. Risk is definitely worth analyzing, but only if done fairly. The risk that every partner should weigh is that associated with staying put versus seizing a new opportunity. It would indeed be risky to think in terms of a generic, faceless move. Every comparison has to be specific in terms of suitor firms and commensurate client opportunities, platform attributes, brand and culture — all seen through the lens of the given partner's practice, client needs and career ambitions.
Once relative risk is analyzed, the math favors movement. One need only examine the proverbial partner who has been a partner for 15 or more years at the same firm. More often than not the best brand and platform is not the firm they joined more than 15 years ago. We have all seen dramatic changes in this industry, and the lineup of global, national and regional firm offices in any market has been a moving target. Firms have opened; others have merged, left town or gone under; and many offices have morphed considerably. These changes can create dramatically different strategic goals and cultural sensibilities for an office. All of this has been happening relatively fast, at least relative to a partner's career arc.
The question a partner should ask, regardless of tenure, is if they were to join any law firm today, would they choose their current firm? Raising this question creates a dynamic that isn't always comfortable. Nevertheless, if there is a firm that is a significantly better practice fit, doesn't one take as much or more risk by not investigating? This risk, once identified, usually grows further over the years, and the loss of internal value will likely coincide with less market value (the double whammy to a career). This is the worst myth because it's not only wrong, but dangerously so. It relies on a quirk of basic human psychology: Doing nothing often feels safer, and doing something feels riskier, even when that is not true.
To illustrate this, one should evaluate the areas where management focuses their attention. We see significant emphasis on strategic growth, succession planning and profitability. When a lateral partner gets hired, management has a vested interest in their success since it reflects on management's report card (strategic growth). It’s thus common for management to take actions designed to increase laterals' ability to succeed, sometimes even creating a personal stake in a lateral partner's success (it can be in essence "their deal"). We similarly note that management's overall focus on profitability casts a wide lens and can land on long-tenured partners whose practices are showing signs of strain (or no longer offer strategic value). When a legacy partner suddenly garners the attention of management, it’s often not the attention they want.
Myth 4: The biggest reason partners move is money.
The Beatles were right: Money can't "buy me love," or make someone move law firms. And deep down partners know this. Of course, compensation is involved in assessing a move. However, other factors often weigh in on these decisions: lack of commitment to a practice area, brand decline, ineffective management, lack of loyalty, conflicts, etc. I recently completed a process that gave a partner a truly incredible monetary raise; a deal to certainly fuel this myth. But at the 11th hour, the partner declined. This confirmed what we already know: Money, while not unimportant, does not drive deals. What is more important varies, but the term "platform" remains paramount. I define it as follows: Where will one have the most success keeping, getting and executing for valued clients?
I'll go a step further. After 15 years of brokering these deals, I have anecdotally observed that the biggest reason partners do so well with moves relates more to the power of change than its particulars. This may appear overly simplistic, but for lawyers who are conservative by nature and have commensurate personality traits that are rarely confused with the business entrepreneurs they represent, this is a more significant event. To borrow a phrase, this act of "repotting the plant" unleashes a personal (and organizational) energy that is more than palpable. The factors are numerous: new environment, new people with which to engage, more focus on growth and a rich new dynamic interaction with a job.
We naturally seek comfort in life, and change is not comfortable. But once it happens in this partnership context, the power is undeniable. The motivation to prove oneself with new partners, new clients and the new situational context for current clients often overrides many external barriers to success.
To be clear about the role of money, partners do think about it, and many believe they deserve more. But money by itself rarely creates the requisite motivation to switch firms. Of course, the drivers for any particular move are personal, and more money can be a factor. I prefer looking backwards from results and believe the energy created by a lateral move drives our "2016 Partner Compensation Survey" stats showing a 72 percent satisfaction rate among lateral partners. It's significant that these respondents did not attribute that satisfaction to money.
Myth 5: More than one partner move is a red flag on a resume.
This is no longer true. There was once strong nobility to this profession that gravitated against moving firms as a partner, even if it wasn't optimal. It was like a bad marriage — you suffer until you die. Things have changed. Both parties to any marriage have to be vested in a "'til death do us part" theology for it to persevere. And firms moved away from that kind of commitment even prior to partners getting restless. Firms could not achieve revenue or other strategic growth without acquiring seasoned talent and shedding unproductive partners. So it's different today.
This evolving perception is best illustrated via example. About 10 years ago, I had a conversation with a chair of a highly prestigious firm who had a problem with the number of moves on a resume. There were three partner moves, all explainable. After some discussion, he reluctantly agreed to a meeting. In a more recent conversation with this same chair about a different resume, he asked me why the partner had been in the same firm for 20 years. Was anything wrong? I reminded him of the previous conversation, and he just wanted to be sure the partner "could have left" and had made a choice to stay since he didn't see many resumes like this anymore. It's no longer a sign of strength to be in the same firm too long.
Myth 6: Lateral partner hiring is a highly risky growth strategy.
This doesn't pass the smell test anymore. It's literally the only avenue for timely growth, other than a merger. Where would some of the top law firms be today without the benefit of growth from lateral partner hiring (consider if firms like Latham & Watkins LLP, Gibson Dunn & Crutcher LLP, Kirkland & Ellis LLP or Cooley LLP relied solely on organic growth, only promoting partners from within)? Take any successful large global firm that has depth in practice areas and geography and examine how it got there.
Notwithstanding this evidence, there are articles with warnings about the risks of lateral partner growth. Much of this material does not comport with the reality of the industry. Identifying risk is fine, and nothing that has real value is risk-free. Just keep in mind that lawyers assess risk for a living, and these stories fit a lawyer's preferred narrative on what could go wrong with a deal, as opposed to what could go right. Lawyers aside, there is a dark side to selling news, which is why an article about a firm that has gone belly up is more compelling than one about a firm doing well. That has little impact on witnessing a lateral partner market that has fueled the growth of an entire industry.
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This article was originally featured on Law360, August 25, 2017.
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Dan Hatch is a Managing Partner of Major, Lindsey & Africa and founded the Southern California Partner Practice. Dan has advised on some of the most significant lateral partner transactions of the past 11 years, gaining a reputation for professionalism and discretion.