Lateral partner recruiting is not a new phenomenon. It is becoming more, not less popular, and nearly every major firm mentions it as a key component of its growth strategy, yet it is a practice that still receives much criticism and skepticism. Critics debate how successful the practice really is and whether lateral partners are worth the investment. Numbers are thrown around indicating the failure rate of lateral hiring and the reasons it doesn’t work. But despite the critics, almost every major firm continues to hire lateral partners in a big way. Why is this so? Are law firm leaders really so short-sighted, as some have argued, that they would continue a practice that has proven to be unsuccessful? We would answer this question with an emphatic “No.” For the most successful firms, our experience is that lateral partner hiring does work when approached thoughtfully and for the right reasons.
The Right Reasons
Overall demand for the services of Global 200 law firms has been relatively stagnant over the course of the last several years. This means that to grow, firms must take business from competitors, while at the same time defending their existing base of work. In this environment, it is more important than ever that firms take advantage of opportunities to grow in areas of competitive strength and react quickly to shifting client demands and potential new areas of practice, so as not to be left behind.
To do this, law firms need the right people with the particularized skills and experience to enable them to execute on their strategy, and as with any competitive business, time generally is of the essence. If a firm determines it needs a new or enhanced capability or skill set, or seeks to expand its client network in an area of strength, it has a limited range of options to accomplish that: identify and promote new partners from within the firm, make existing partners better at what they do, add new partner talent through a merger or consolidation, or hire new partners laterally.
Often the most expeditious way to add needed talent is by bringing in lateral partners who have the necessary credentials and relationships. Once a strategic need has been identified, lateral hiring often allows a firm to fill that need more quickly and with a higher degree of success than could be accomplished in another manner. Simply put, in today’s fast-changing and competitive law firm environment, lateral partner hiring often is a necessary and fundamental component for long-term success.
To keep clients happy, a firm needs to be constantly re-evaluating and offering the services that address what their client organizations demand. Many corporations are tightening their belts, working with fewer and fewer firms, and wanting more from each firm on their roster. Whether looking to gain new clients or keep current clients happy, it is important to have partners at your firm with the ability to support the needs of the clients the firm is—and wants to be—serving. If a firm can add a partner with a reputation and client relationships in an area of strategic need, then the firm will be well on its way to gaining an edge in the marketplace.
The Right Approach
In our experience, the firms that are most successful at lateral partner hiring, both in the short term and the long term, are the firms whose hiring is driven by a strategic vision, not opportunistically or strictly by the size of a potential lateral partner’s projected “book of business.”
Success in lateral partner hiring starts with a vision and a strategic plan—a vision and understanding of what your firm is and a strategic plan for where you want the firm to go and whom you need in your firm to get you there. What are your firm’s competitive strengths, and what are your firm’s best opportunities to exploit those strengths in the market? What opportunities do you have to build on your firm’s existing strengths to expand into other practice areas? What are the current trends in client demand? What practice areas are growing or likely to grow, and which are shrinking or likely to shrink in the near future?
A law firm needs to determine its best business case for growth and clearly identify the role each potential lateral partner will play in realizing the firm’s long-term vision. This sort of thinking allows a firm to tell a compelling story to potential lateral partner candidates and increase the likelihood of success in recruiting the candidates that are the best fit for the firm, as well as retaining them once on board. As many firms have discovered the hard way, in order to win at lateral partner recruiting in a competitive market, it is not enough to offer a compelling opportunity. Rather, a firm must offer a more compelling opportunity than its competitors.
Time spent thinking through in detail why an opportunity is unique and compelling, and can be differentiated from potential opportunities at competing firms, is time well spent. The more detailed and compelling the strategic opportunity that a firm can articulate, the better the chances are of landing the right lateral partner to execute on its plan.
Two other aspects are key to successful lateral partner hiring. First, firms need to be smart about how they evaluate potential laterals during the hiring process. Don’t be blinded by a big book of business, but relentlessly focus on the strategic considerations that are driving the need for that partner. Look at how a partner’s personality and work style will mesh with those at your firm. What were the cultural norms at the partner’s current firm, and how does that predict his or her behavior going forward? Check references and perform a background check, and check with partners at your firm who may have interacted with the potential lateral partner in the past.
Second, when a decision to hire is made, a firm’s integration efforts will ultimately secure the success of the hire. Firms that do a good job of integrating talent have extremely high success rates. Start before the new partner comes onboard and communicate to the entire firm and its clients the rationale for this new addition and the positive things the new lateral partner brings to the firm. Make the lateral feel welcomed and set up from day one, and be sure he or she is introduced to new colleagues that are key to realizing the strategic potential that are the reasons for the hire.
Provide an introduction and orientation to the firm as well as ongoing support that will bring the partner into the fold and culture of the firm. The more the partner feels like one of the family, the more likely he or she will become part of the family.
In our experience, firms that have frequent bad experiences with lateral partner hiring generally are firms that hire for the wrong reasons—growth for growth’s sake or to acquire a book of business—without a compelling strategic rationale for the hire. When done for the right strategic reasons and executed in the right way, lateral partner hiring can be an important and compelling part of a successful long-term strategy for growth and can help differentiate a firm from its competitors.
This article was originally featured in Of Counsel, March 2018.
