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Many law firm leaders take justifiable pride in the progress they’ve made with integrating lateral partners. Yet, retention rates continue to disappoint, and we hear increasingly of laterals having malpractice issues. Our inaugural survey identifies the leading challenge encountered by lateral partners: They do not attract enough new business to their newly-joined firms. This is a business case problem in itself and could be contributing to malpractice risk as new laterals stretch the natural scope of their practice to secure work. Our survey also identifies the cause of this shortfall: Few firms routinely undertake the due diligence that would uncover such issues in advance. It appears that law firms are so adept at undertaking due diligence for their clients that they overlook doing it for themselves. It’s the proverbial “shoemaker’s children” story come to life.

Disappointing Retention Rates

Given that close to 60 percent of Am Law 200 lawyers have practiced with at least one other firm at some point in their careers, it’s no surprise that managing partners have focused attention on integration. Managing partners should be proud of what they’ve accomplished: 60 percent of firms are preparing business plans for lateral partners before they join, and a further 20 percent within a month of joining, according to our recent survey of senior leaders at 30 randomly-selected Am Law 200 firms (see Figure 1). Similarly, 75 percent of firms have formal check-ins with laterals at least quarterly after their joining.

However, when we look at the overall success of firms’ lateral hiring programs, the picture loses some of its cheer. The firms in our survey acknowledge a 30 percent departure rate at five years, a self-assessment that is kinder than the 38 percent that we know from objective market analysis. The departures comprise a combination of (1) partners who didn’t work out and thus were asked to leave, and (2) those who were working out (or moving that way) but, by leaving so soon, didn’t stay long enough to cover the cost of their hiring and initial down time. Add to these departed laterals those who are just “muddling along” and it’s easy to see that close to half of lateral partners fail to live up to expectations.

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