Michael Ellenhorn, co-founder and general counsel of corporate intelligence provider Decipher Global, says too many law firms and in-house legal departments are making costly mistakes by hiring lawyers for high-level jobs without proper vetting.

Ellenhorn is a lawyer and an English solicitor who has worked over 20 years in businesses throughout Europe, the Middle East, North America and Asia. Prior to his career in executive search, Ellenhorn was a trial lawyer and legislative analyst for the U.S. Senate.

In a recent interview with Corporate Counsel, Ellenhorn talked about his role at St. Louis-based Decipher Global.

This interview has been edited for clarity and length.

Corporate Counsel: What is the size of your legal department, and what type of legal issues do you deal with?

Michael Ellenhorn: The legal department is just me, but I also rely on outside counsel. The legal issues are always a challenge, because we are in a heavily regulated industry. On a daily basis, I deal with contracts with clients, the Fair Credit Reporting Act regulations—both federal and state—as well as global data privacy regulations. For example, we specialize in investigative consumer reports. The U.S. and Canada have regulatory structures that govern the way credit agencies do their work. Outside the U.S. and Canada, there is a much more principled regulatory environment dealing with data privacy issues.

Is your company a legal recruiting firm?

No, we do not recruit, and we have nothing to do with recruiters. They are more interested in closing a deal and not in the long-term fit of the candidate. We make sure a legal job candidate is thoroughly vetted, much as companies in other industries do at the senior executive level.

We are only 3½ years old. Our team has about 50 years' experience in big law firms or in-house or other legal services. We all saw firsthand the effects of the lack of transparency in the lateral hiring of lawyers: Bad hires, requiring expensive resolutions, and negatively affecting your best people, the ones you want to invest in.

Traditionally law firms took on a crazy amount of risk with lateral hires. They acted from the gut, or based on personal relationships. The failure rate of a lateral hire was about 50 percent, meaning the hire was not there three to five years later. In contrast, our success rate is 97 percent.

Do you work with in-house legal departments as much as with law firms?

Not yet. First, we had to get the compliance piece down. Then we had to focus our resources, so we initially chose to work primarily with large law firms and had very little work in the in-house space. Now, we have grown to the point that we are starting to pivot into more involved discussions with in-house legal departments. We want to do more.

Can you explain exactly what it is that you do, and how do you do it?

There are two categories of relevant intelligence. One is open source, such as all the objective information from social media and public records, ranging from financial to criminal to personal legal history. Then there is human intelligence, which means interviewing individuals who know the candidate, such as former colleagues, opposing counsel, clients and peers. We obtain feedback on work practices, cultural fit and the fundamentals of their performance.

Doesn't a job candidate object to that kind of scrutiny?

All of our work is done with the candidate's consent. And on a fully confidential basis. We have a protocol that protects the identity of the candidate as well as the hiring entity. I can't go into detail about how we do that, because that is proprietary information.

But our job is to help people, not to harm people. So we really scrupulously guard the confidentiality and security of the person being vetted and the hiring firm. We take security very seriously. We even designed our offices so they are hard to find.

Is there anything else you'd like to add?

Our clients recognize that they have a responsibility to their staff and their stakeholders to avoid conflict, to make the working environment safe and to avoid bringing in lawyers who may have committed bad acts such as sexual harassment or criminal or financial malfeasance.