In 2010 a fast-growing Am Law 50 firm wanted to find out how much value it was getting from its lateral hires. The firm compared the revenues and profits generated by new hires who joined in 2007, 2008, and 2009 with the compensation paid to them. The results were discouraging, according to the firm’s chief, who asked that the firm’s identity remain confidential. As a group, the laterals were just breaking even: "From a strictly financial point of view, we found that lateral hiring had been neither accretive nor dilutive" to profits, he says.
Over the next two years, the firm tweaked its lateral hiring process. Firmwide practice group leaders, instead of local offices, got more of a say in determining lateral hiring goals. Each new lateral partner was assigned a mentor in his or her practice group to help with the integration process. For a lateral’s first two years at the firm, senior management received monthly reports on the lateral’s hours and collections, and there were formalized check-ins with laterals at three-month, six-month, and one-year anniversaries.
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