As 2013 brings on a new year, things will very much remain the same in terms of law firms seeking lateral partner hires. The Wall Street Journal, American Bar Association and The American Lawyer, at the end of 2012, all reported that 96 percent of surveyed law firm leaders said they intend to expand their firms over the next two years by lateral hires. Nearly three out of four plan for lateral hiring over the next five years. Despite those who might be displeased with some lateral hires (only 28 of the surveyed lawyers said their firm's lateral efforts were effective, and 10 percent said they were neutral or negative), there are a number of reasons why law firms will not sway.
First, law firms are in the business of making money, and the quickest way to generate capital is by bringing in a lateral partner with a sizeable book of business. The more lateral partners with substantial books of business, the more the firm can grow. Such actions can equal immediate financial gain. Moreover, if a senior-level attorney leaves a firm, a quick fix could be made with the hiring of an experienced lateral who can cover client needs.
Second, as law firms are becoming more sensitive to their clients' concerns of budget spend for legal fees, they often find attractive, experienced attorneys who can do the work efficiently. An attorney who can hit the ground running is a valuable commodity. For example, clients are more conscious of receiving value for their legal spend and are not receptive to paying for a less-experienced attorney's learning on the job. Often, the client contact for large corporations is an experienced in-house attorney who has a good idea of what is required for various legal tasks and therefore can scrutinize and identify excessive fees for activities. More and more, in-house attorneys are also required to partner up with outside counsel on legal matters giving them visibility to the matters' progress and therefore expected costs of legal work.
As the former chief employment litigator and adviser to Microsoft Corp., I was charged, and even evaluated annually, on my ability to partner with outside counsel on matters and control costs. The more I operated, practically, as if I was the senior partner on matters, the more of a handle I had on costs and could appreciate law firms that submitted thoughtful invoices associated with the work. Currently, as a member of the firmwide management committee and managing shareholder of the Philadelphia office of an international law firm, I am especially sensitive to how much time, and therefore cost, is spent on legal work that is sent to our clients. Our clients are smart and sophisticated and they know the law. As our firm continues to grow, lateral attorneys offer the built-in know-how to help service clients in an effective and efficient way.
Despite success stories for lateral hires, law firms should be careful not to let their aspirations of financial prosperity blind them. The character and personality of a lateral candidate should not be taken lightly. Often, law firms are so anxious to grow financially that they may discount the importance of a candidate's character and personality. Whether you are a law firm or some other business, for organizations to prosper, persons have to be able to work together, trust one another and have mutual respect. The wrong lateral candidate, who has a book of business but is simply not a good fit, can cause a once harmonious and productive workplace to become disruptive and ultimately less profitable. Law firms should be cautious when considering lateral hires by doing their due diligence, getting a full picture of the candidate, and taking into consideration firm culture to determine whether the candidate makes sense.
Here are 10 things to consider when hiring laterals:
Focus on the person before considering the business needs of the firm.
Do a cultural analysis. Does the candidate's current law firm culture match your own?
Do the character and personality of the candidate mesh well with existing attorneys and staff?
Determine the candidate's experience and evaluate his or her work history.