Lateral partner hiring is an important component of firm growth. According to ALM Intelligence analysis, lateral hiring increased 36% from 2010-2015 and is poised to continue to rise. Last year alone lateral hiring reached 2,890 moves, a 5.6% increase from the prior year.
Moreover, lateral partner hiring has an impact that transcends the recruitment itself: The majority of firm leadership comes from lateral hires rather than organic growth within the firm.
That means that as lateral hiring becomes an increasingly integral piece of firm growth post-recession, firm leaders must confront the reality that the process perpetuates the gender diversity problem.
The stats on gender diversity in the legal industry remain consistently bleak: Female attorneys only comprise a small percentage of law firm senior leadership. Women comprise approximately 16% of equity partnerships and 25% of non-equity partners — numbers that have remained level for the past five years. Women also constitute a distinct minority on top governing committees: 4% of executive management overall, 23% of top governing committees, 28% of promotion committees, and 28% of compensation committees.
The data on female lateral partner hiring mirrors these numbers. Women comprise just over 20% of the lateral partner hiring market.
Am Law Percentage of Female Lateral Partner Moves by Year (2014-2016 third quarter)
Source: ALM Intelligence
The issue is circular and, in fact, partially stems from the lateral hiring process itself.
As much as firms have tried to quantify the success rates from lateral hiring through different metrics, most notably portability of book of business, the process in and of itself has a strong subjective component. It relies upon senior firm leaders to make a judgment call as to the potential lateral partner’s fit in firm culture.
Female partner underrepresentation in senior leadership, particularly on hiring and executive committees, deepens the gender diversity problem. There are fewer women on average on hiring committees to argue in favor of female lateral hires.
When considering portability of book of business, firm leaders should remember that women are often less comfortable in a business-generating role. This issue is part-and parcel of the struggle that women face in attaining origination credit. Strikingly, a study by ALM Intelligence and Major, Lindsey & Africa found that between 2012 and 2014, origination credit to female partners dropped 12 percentage points in the same time span that origination credit to male partners increased 8 percentage points.
While men may collaborate with women in generating new business, the evidence suggests that men are far more comfortable taking an assertive role in client development and arguing for greater origination credit than their female counterparts. Similarly, female underrepresentation on bodies such as promotion committees increases the chances of unconscious bias in the bestowing of origination credit by a predominantly male committee.
The influence of gender on rainmaking and origination credit ultimately affects a partner’s portability of book of business and success as a lateral hire candidate. Women are given less credit, and as a result they frequently have smaller books of business attributable to their efforts.
When asked if firms make a point of considering gender diversity in the lateral hiring process, one top lateral recruiter noted that law firms often pay mere lip service to hiring more female lateral partners. In her experience, firms woo female laterals with promises of better pay and increased flexibility. When push comes to shove, however, firms often change their minds midstream and revert back to a focus on cultural fit and portability of book of business, perpetuating the cycle.
Further, she said, firms often give female lateral candidates’ books of business increased scrutiny, and feedback from a single partner on the hiring committee on the robustness of the candidate’s book of business can “poison the well” for that candidate.
Ironically, ALM Intelligence analysis indicates that focusing on portability of book of business has been unsuccessful for most firms. In last year’s ALM Intelligence report on lateral partner hiring, 30% of firms reported that lateral hires brought in less than 50% of the anticipated book of business after one year.
So the status quo fails on both practical and aspirational grounds. Law firms remain focused on lateral hiring processes that do not work — in fact, last year’s lateral hiring report noted that more than 50% of lateral hires do not even reach the break-even point — and the lateral hiring process as it is currently implemented contributes to the lack of gender parity in Big Law.
Firms that continue to prize book of business and cultural fit will only add to this vicious cycle of under-recruiting female laterals. That, in turn, will worsen the underrepresentation of women in Big Law partnership, which ultimately makes it tougher for female associates to climb the ladder.
ALM Intelligence Notes
- Predicting Case Outcomes in Litigation Finance: Interesting new litigation finance startup, Legalist, uses AI to evaluate litigation claim value. The algorithm draws on data from more than 15 million cases in 10 states to come up with the value.
- Can’t Handle It: A new study confirms that lawyers are less able to handle ambiguity and risk than non-lawyers.
- All the Case Law You Could Ever Need: A peek behind Harvard Law’s digitization process of its immense legal library.