Robin Hensley, Raising the Barv Robin Hensley, Raising the Bar (Photo: John Disney / ALM)

Nelson Mullins Atlanta office managing partner Michael Hollingsworth has seen the lateral hiring process from both sides. He joined Nelson Mullins as a lateral recruit to the firm’s mergers and acquisitions practice in 2006, and since then he has seen the firm expand from 380 lawyers to more than 500 across 17 offices. A robust lateral recruiting strategy accounts for much of this expanded roster, and Hollingsworth expects the firm to continue to go to the lateral market quite often. “We are very experienced in lateral recruiting, and we’ve learned a lot of lessons over the years,” Hollingsworth says.

Across the nation, just about every firm regards lateral recruiting as part of its strategy. A recent Altman Weil report found that more than 95 percent of firms expect to pursue laterals. Still, despite the fervent courtship, the romance doesn’t necessarily last. About half of all lateral hires end in a parting of the ways within five years. Besides upending lawyers’ professional lives, these partings also can be expensive for firms. By one estimate, a failed lateral recruit can cost the firm up to 400 percent of the lawyer’s compensation, counting the expense of finding a replacement.

Nelson Mullins bucks the national trend: The firm’s lateral recruiting has led to minimal collateral damage. Hollingsworth says that about 80 percent of the firm’s lateral recruits have stayed longer than five years, and of those who do leave, most have left to go in-house with clients, creating an alumni network that has obvious benefits for the firm.

Hollingsworth will tell you that Nelson Mullins’ culture is a big part of retention, but he adds that hiring the right people for the right reason also counts. “We’re probably better at lateral hiring because we do it quite often,” he says. “We’ve learned quite a bit about appropriate due diligence and cultural fit.”

Start With Strategy, But Keep an Open Mind

Hollingsworth cautions against impulsively going after laterals or practice groups that aren’t a good fit but seemingly present a good buying opportunity. The firm’s lateral strategy is a byproduct of its overall strategic plan, a brick-by-brick building plan for the firm that is specific for all of its 17 offices. That means that, any given time, “we have a pretty good idea of what we would like to add to our practices in every city and every core practice group,” Hollingsworth says.

On the other hand, keep an open mind. Hollingsworth says that one of the firm’s best lateral hires in recent years was an education law team led by Glenn Brock. Hollingsworth remembers sitting in a restaurant in New Orleans on a Tulane homecoming weekend when he received a call from a recruiter who wanted him to meet Brock. “I told her she was out of her mind; it obviously wasn’t a fit for us,” he recalls. “She asked me to have lunch with him when I got back to Atlanta and promised she’d never mention it again,” he says. Given that it was a recruiter he trusts, he reluctantly agreed.

Following the lunch, Hollingsworth says he suddenly was very interested in bringing Brock and his group on board. “I mentioned it to my partners, and they said I was out of my mind. But after they met Glenn, they were all on board, too.”

As a result, today Nelson Mullins has a thriving niche practice that represents school districts and that is complementary to the practice of an affiliated public policy arm in Washington, D.C., EducationCounsel.

Due Diligence Is Key

When a lateral doesn’t work out, it’s usually because the book of business the hiring firm expected to be part of the deal doesn’t port over. If an anticipated $2 million book turns out to be $1.5 million, that’s not a huge problem. But if it is only $800,000, that is a problem. “In a lot of instances, someone thought they had control of certain clients, and they misjudged that situation,” Hollingsworth says.

Sometimes, the firm can help the new lawyer recover clients or plug into new clients, Hollingsworth says, but “if we priced someone too high, then we’ll have to make adjustments over time.”

Since compensation is the carrot in every move, Hollingsworth says “adjustments” aren’t pleasant for the firm or the lateral. Hollingsworth says firms have to treat even high-flying laterals with the same scrutiny they would any other professional. While the firm (and the lateral recruit) can’t contact clients, the firm should ask the candidate probing questions about client relationships. Who are his or her key contacts? What is the duration of the relationship? Who else at the firm is involved? What additional resources does the client need? Hollingsworth says the firm looks hard at the portability of business litigators’ books, since their work often comes from internal referrals of institutional clients at their existing firms.

Red Flags

The No. 1 red flag for Hollingsworth is too many moves. “You see someone moving every three years or five years, that’s the first indication they may not be with you very long. There may be an explanation, but you have to assess and develop a gut feeling,” he says.

Client concentration is another concern. If one client accounts for 80 percent of a lateral’s book, that spells high risk.

Hollingsworth also likes to call a few of the lateral’s current and former colleagues. He does this only with permission of the lateral, and, “if a candidate isn’t comfortable with us making those calls, that may tell us something.”

Hollingsworth also is wary if a candidate wants all compensation up front. “If lawyers are confident in their practices, they don’t mind back-end incentives,” he says.

Finally, Hollingsworth says to start the recruitment process with metrics and complete it with a gut check. “We look at the overall fit. Just because someone has a nice practice doesn’t mean they’ll do well here. We’re a very collegial firm, and if a candidate is at a firm known for throwing elbows, we will take a pass.”

Robin Hensley’s column is based on her work as president of Raising the Bar and coaching lawyers in business development for more than 25 years. She is the author of “Raising the Bar: Legendary Rainmakers Share Their Business Development Secrets.”