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In 2000, Schnader Harrison Segal & Lewis sought to reinvent itself. The 250-lawyer Philadelphia firm, known mainly for litigation, wanted to expand its corporate department and its geographical reach. Like so many firms, it wanted to be bigger and better. So in the first half of 2000, Schnader acquired about 100 lawyers, more than 50 of whom were partners. Suddenly, the firm was a player. At least for a few months. What the firm would learn is that it is one thing to hire a bunch of talent, quite another to retain it. By 2003, most of the lawyers Schnader hired in 2000 had fled for greener pastures. Schnader failed miserably in integrating its new lawyers into its particular work culture. Many firms have faced a similar plight. The new era of partner mobility has allowed firms to grow quickly and dramatically. But mobility is a double-edged sword: Partners often leave not long after they arrive. Over the last five years, among the Am Law 200, 10 of the 25 firms with the most lateral hires are also among the 25 firms with the most partner departures. Is there a revolving door in the lobby of these 10 firms? In short, yes, although it turns at different speeds at each firm. Each of these 10 firms has lost at least 18 percent of the partners that it hired between the fall of 1999 and fall of 2003. Some of the partners may have left for health reasons, and a few may have been pushed out. To some, partner churn is inevitable. “The more [lateral partners] you bring in, the more likely it is that a few may not work out,” says New York recruiter Alisa Levin. That’s true to a point, but some firms that hire aggressively, such as Hogan & Hartson and Jones Day, have done a particularly good job in recent years of retaining their hires. “Some firms [hire] more slowly and methodically and are more concerned about a good fit,” says Jeffrey Lowe, a former partner with Hogan & Hartson and now a recruiter in the D.C. office of Major, Hagen & Africa. And other firms, such as Akin Gump Strauss Hauer & Feld, have shown less hiring dexterity in recent years. Firms spend a fortune interviewing and vetting partner candidates and another fortune on recruiters’ fees, which average 30 percent of a new partner’s first-year compensation. Much of this investment is lost when a recent hire walks out the door. Firms’ reputations can also take a beating if they consistently disgorge their lateral hires. “At some point, the market sees turnover, and [partners] become wary of pursuing discussions with firms,” says Lowe. Schnader Harrison certainly has a few black marks on its record. In fact, 68 percent of the partners that the firm hired between 1999 and 2003 have since left. Most of the turnover derives from the acquisitions it made in 2000. In January of that year, Schnader brought on 30 partners from Boston’s Goldstein & Manello and, about six months later, it took on another 27 partners from Philadelphia’s Mesirov Gelman Jaffe Cramer & Jamieson. (Schnader’s total haul was about 100 lawyers.) In a word, the two deals were disastrous; all of the Goldstein partners have left Schnader, and 18 of the Mesirov partners (67 percent of those hired) have left. Schnader chairman Ralph Wellington says that the firm, which had 250 lawyers before the acquisitions, has learned the danger of taking on too much, too quickly. The Mesirov and Goldstein lawyers came from smaller firms with individualistic cultures, says Wellington. It took a lot of work to try to acclimate these lawyers to a larger, more bureaucratic environment, in which lawyers were expected to work more collaboratively, Wellington says. And Schnader’s management was spread too thin to successfully handle the job, he admits. “It is one thing [to integrate] five, six, or seven [new hires]. You can work with them to blend them in and give them personal attention. It is another thing when you have two [large] groups,” says Wellington. HARD LESSONS Akin Gump has also learned valuable lessons the hard way. The firm lost 41 percent of the partners it hired between 1999 and 2003. Like Schnader, the firm has been plagued by larger-scale acquisitions. In 2000, the firm hired 11 partners from Green, Stewart, Farber & Anderson, a health care boutique. In 2004, all 11 partners left for Gardner Carton & Douglas. Akin Gump whiffed again with its 2001 hiring of 15 partners from Los Angeles’ Troop Steuber Pasich Reddick & Tobey; only four remain at the firm. The Green, Stewart acquisition was the victim of a change in strategy. Akin Gump hired the partners to help build a health care practice. But that later conflicted with another of Akin Gump’s strategies: focusing only on high-margin work. The clients that Akin inherited from Green, Stewart weren’t amenable to paying Akin’s increasingly lofty rate structure, says R. Bruce McLean, the chairman of Akin Gump. “[The Green, Stewart lawyers] wanted to keep their clients and move to a firm where the demands for high-value practices were not as high,” McLean says, noting that both sides mutually agreed to part ways. (The senior partners from the departing group did not return requests for comment.) McLean says that the firm has become smarter about hiring laterals that fit more clearly into the firm’s long-range plans. Three or four years ago, he says, the firm was more focused on breaking into new markets and hiring laterals with large and portable books of business. “The very first question would be: How big a book of portable business does a lateral candidate have . . . and, secondly, how do they fit into what we are doing?” says McLean. Akin Gump is more attuned to building the practices in which the firm is already strong, and for which its clients are more than willing to pay full freight, according to McLean. “Now,” McLean adds, “the primary question [of a lateral prospect] is: How do they fit into [the practices in which] we are already doing well?” With its Troop Steuber haul, Akin Gump learned the dangers of cherry-picking. The firm absorbed about half of Troop Steuber’s 120 lawyers at a time when Troop Steuber was falling apart. Akin Gump was only interested in some of Troop Steuber’s assets, but it failed to realize that its selective hiring would destroy the cohesiveness of the group it inherited, says McLean. He adds, “You shouldn’t disassemble a firm without a clear eye as to what will happen to the internal synergies of the firm. We are now more sensitive to that.” A former Troop Steuber partner, who had a stopover at Akin Gump before moving to another firm, says that Akin Gump also failed in assessing whether its local Los Angeles lawyers would welcome and work amicably with the new Troop Steuber lawyers. In fact, many of Akin Gump’s L.A. lawyers felt perpetually threatened by the prospect that Troop Steuber’s culture would come to dominate the L.A. office, says this lawyer, who spoke on the condition of anonymity. “[Akin Gump's management] forced this down the throat of the local guys and then assumed that everything would be ok after that.” McLean makes no bones about it: The Troop Steuber deal, he concedes, “was a mistake.” HIRING MISTAKES HAPPEN Duane Morris, in contrast with Schnader and Akin Gump, has been hurt more by smaller-scale acquisitions than by large ones. Led by ambitious chairman Sheldon Bonovitz, Duane Morris has hired relentlessly in recent years, bringing on 138 partners between 1999 and 2003. Unfortunately for the firm, 38 percent of these partners are gone. Partner James Kutz, for example, left Duane Morris last year, just three years after he was hired from Eckert Seamans Cherin & Mellott to bolster Duane Morris’ Harrisburg, Pa., office. In a 2001 press release announcing the hire, Bonovitz said, “The expansion of the Harrisburg office is essential to our national growth.” Now Bonovitz says that Harrisburg is a drag on the firm’s national aspirations. “We have become a more national firm, with a different rate structure and different client base,” says Bonovitz. “Our Harrisburg practice doesn’t fit into that.” (Kutz did not return a call for comment.) With such zigs and zags, it’s no wonder that Duane Morris has parted company with many recent hires. Bonovitz concedes that the firm has made some hiring mistakes; he even admits to having a higher tolerance for mistakes than other firm managers. It’s part of the entrepreneurial spirit that has allowed Duane Morris to double its head count and almost quadruple its gross revenue since 1997, Bonovitz proudly explains. “We take more risks in hiring. . . . We have some partners who will come out of industry without a big book of business. . . . We have partners who come in on a contract basis, year to year, to see if they work out.” Edward Dembitz is one of the lateral hires who didn’t work out. He left Dembitz & Associates in 2003 to help Duane Morris solidify its tax consulting practice. “I had thought Duane Morris would give me a broader base of clients,” says Dembitz. But he discovered, he says, that many corporate counsel did not perceive Duane Morris to be a tax power. So, last year, Dembitz moved to Burt, Maner, Miller & Staples, a D.C. tax boutique. From his new perch, Dembitz asserts that Duane Morris could have done a better job of bringing him into the firm fold. He likens his old firm to a “flea market where people rent tables,” adding, “There was not a lot of collegiality going on.” THE BENEFITS OF SCREENING Hogan & Hartson is the anti-Duane Morris. The firm added 139 partners between 1999 and 2003, and only 22 of the partners have moved on. The firm’s churn rate is less than half of Duane Morris’ rate. So what is Hogan doing right? For starters, the firm rigorously screens partner prospects. Each candidate is interviewed by 30 to 40 partners. (Bonovitz says that Duane Morris averages about 20 interviews.) Hogan prospects interview with practice group leaders, firm chairman J. Warren Gorrell Jr., members of the firm’s executive committee, and Howard Flack, a corporate partner who spends most of his time overseeing lateral hiring. Says Flack: “Partner candidates . . . can’t believe that we can get so many people, day in and day out, to come to these interviews.” Prior to hiring a partner, the firm also develops a “pre-integration” plan, which sets out a strategy as to how the firm and partner prospect can “cross-pollinate” their client lists, Flack notes. After a new hire comes on board, the real work begins. Hogan composes a team of practice group partners, senior management, and marketing staff to work with every hire on certain key objectives, such as adapting to a new culture and integrating clients. “To effectively integrate you need . . . to get [new hires] around to your offices,” says Flack. He notes, for example, that the firm recently flew one of its new German partners to its D.C. office for a week of meeting partners and firm clients. “Most lateral integration takes a year,” says Flack. And at the end of a year, Flack prepares a detailed report discussing whether the firm and its new partner are meeting each other’s expectations. “The firm devotes a lot of resources to this,” says Flack. Each law firm screens and integrates its lateral hires in a unique fashion. But the low-churn firms all seem to share a determination to hold on to their recent hires. Janice Hartman, who oversees lateral hiring at Kirkpatrick & Lockhart Nicholson Graham, says that some firms will hire a large practice group with the expectation that many partners in the group will eventually matriculate. “It appears to me that [some firms] don’t care that much whether people drop off,” says Hartman. “That seems crazy to me. Each person and each group is looked at extremely carefully . . . to make sure we don’t lose people.” Kirkpatrick lost 17 of the 90 partners it hired between 1999 and 2003, for a relatively low 18.8 percent churn rate. Partner attrition is not always a bad thing. Firms are sometimes only too happy to lose people. As Cesar Alvarez, the chief executive of Greenberg Traurig, explains, the tough-minded manager must encourage underperforming partners to leave. Presumably, though, no firm wants to lose a partner that the firm has just bent over backward to recruit. It is far better to be tough-minded before hiring a partner in the first place. Churn is not only costly, it is disruptive to staff relations. It becomes hard to cross-sell when you are not sure if your new partner will remain at the firm long-term, says Hartman. “What is the purpose of being a firm with a national platform,” she asks, “if you see people leaving as quickly as they are coming in?” Nathan Koppel is a senior reporter for The American Lawyer , the ALM publication where this article first appeared in the March issue. He can be contacted at [email protected].

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