I recognize the obvious here, namely, that skeptics assume that a recruiter will automatically skew an article like this toward all the ills associated with counter offers, as acceptances of such entreaties block placements and the fees that follow. It is a fair point, but I approach this topic from a much broader perspective, as I have been a candidate myself at various points in my career — and have received several counter offers — and have been significantly involved in recruiting as a member of senior management teams, a manager of my own departments, and as a law firm partner who was heavily involved with the hiring committee.
In those capacities, I not only extended offers to prospective hires, but also faced the vexing issues associated with counter offers, when we faced the loss of our own lawyers who announced their intentions to leave. Thus, although I may not be 100 percent “pure” on the topic, I have been intimately involved with the issue from every vantage point and will do my best to be balanced.
A definition is in order and is important. A counter offer is an inducement offered by your current employer to stay after you have received an offer from another company or firm and announced your intention to leave. It does not include situations in which someone is talking to another firm or company, is getting close to an offer and then tries to leverage that potential opportunity to get more money, a better title or some other benefit from his current employer.
Although many of the concerns with true counter offers are similarly in play in that scenario (and actually may be worse if management can see through the smokescreen), the four-alarm, full scale response to a counter offer is not likely to occur in that scenario, so we will not focus on it.
If you do an Internet search on “counter offers and statistics” you will find a plethora of articles that robotically refer to unnamed studies that proclaim that at least 80 percent of persons who accept counter offers will, nonetheless, leave their current company within one year and almost 95 percent will depart within 18 months. I have searched long and hard for those studies so that I could actually read and critically assess them before I, too, joined the chorus who blindly echo those numbers. Despite still not being able to find those studies, professional experience leads me to believe that it is highly likely that the numbers should be close to accurate.
As a recruiter, I have had three candidates (in 11 years) who have accepted counter offers and remained with their firms or companies. In each of those three cases, the lawyers ultimately left their employers in less than a year. The same has held true when I was on the management side in corporations and law firms, as I cannot recall one lawyer who accepted our counter offer who did not eventually leave, usually within a year or two. This has virtually been the same with the dozens of colleagues, friends and former classmates I know in nonlegal professions — they still call me even though I just focus on lawyers. The one exception, who has stayed with his company for three years, rues the decision and has seen his profile fade since he made the decision to stay.
I will review below 10 things to consider with counter offers. It is important, though, to preliminarily look at the issue from the perspective of the employer and lawyer-employee. Some employers who decide to not simply sit back and let a valued lawyer walk, approach the situation with the best of intentions. Personally, I think this is a minority, but, nevertheless, some are legitimately surprised to learn that someone wants to leave and will earnestly listen to the drivers for the move and will sincerely see if the situation can be improved.
More often, though, the key decision maker, whether it is a department head, general counsel, managing partner or management committee member, approaches the situation with one primary emotion in play: fear. This person may take considerable heat within the organization if the lawyer leaves, especially if he is popular or a hitter; if this is a high profile law firm group that is in play, the stakes are even higher. There also is likely to be worry about how others in the firm or company will react to the news, with fear that the departure may send a signal to some otherwise happy lawyers that something is amiss. We have seen, in recent years, the rather alarming and relatively quick unraveling of some venerable law firms that began with a few key departures, which spiraled into other moves, breaches of key financial covenants and ultimate dissolution.
Candidates who receive counter offers are dealing with a variety of emotions, which often pull them in different directions. On one hand, there is profound excitement and validation, as to their standing in the profession and market, after receiving an offer that they are prepared to accept. Hiring processes are quite rigorous today and good, solid offers make lawyers feel proud and, drum roll please, even happy for a moment in time.
On the other hand, when the lawyer’s firm or company comes back to him with a counter offer, it triggers conflicting emotions. Initially, it is flattering to receive the counter offer, as it confirms that the organization values you and wants you to remain. However, as the hours go by, the overriding emotion that most lawyers feel is guilt, and that is too often stoked by the leaders in their firm or company. The lawyer is typically told — either overtly or subtly (more likely the former) — that his departure: 1) ‘is really going to hurt the firm that he helped build,’ 2) is going ‘to place others in the organization that he has worked with (and even hired) in peril,’ and 3) is reminded that ‘we really need you.’ Those are rather powerful statements that will at least buckle the knees of the most resolute persons.
In light of these emotions and the rather highly charged atmosphere that follows, it can be difficult to keep a clear head. I offer 10 things to consider in these circumstances:
1. If a counter offer is accepted, things will never be the same for the candidate or the firm. Loyalty will forever be an issue, as others will not forget that the lawyer who stayed had one foot out the door. The employment relationship is much like others in our lives — if you have ever had a significant other who almost left you for another, you’re likely to never forget it and this inevitably alters the relationship going forward.
2. If someone accepts a counter offer, it automatically calls into question the lawyer’s decisiveness. As noted, the hiring process is normally a long one in which both sides conduct considerable due diligence and address many “what ifs” to help ensure that a fit will be a good one. If someone goes through such a process, makes a rational decision to accept an offer and then reverses that decision, normally within a day or two, this hardly portends well — even within his firm — as to the candidate’s ability to exercise reasoned judgment.
3. For some candidates, money is not the driver in making a move — the trigger may be dissatisfaction with some core ways in which the business is run. A counter offer that includes a commitment to change some of those practices may be well intentioned. However, history strongly suggests that once a few months go by, things tend to regress back to the norm and the promised changes end up being fleeting. For the lawyer who decided to stay, the primary rationale for doing so will have proven to be mistaken.
4. The changes that a firm makes to ensure that a lawyer stays in the fold — whether they be strictly monetary or organizational — can be disruptive to the overall business. When special deals are cut, it causes others — who have never threatened to leave — to wonder why they have not received the type of added benefits that someone who was about to leave did. As employers are also aware of the post-counter offer acceptance statistics cited above, the reality is that the lawyer is ultimately going to leave anyway, which only exacerbates any resentment that firm loyalists felt when the big push was made to keep their now former colleague.
5. The benefits that one receives when accepting a counter offer are most likely to be short-lived. When compensation season rolls around the following year, or when discussions ensue about promotions, or when leadership positions are filled or voted on, or plum assignments are given, the lawyer who almost left is at a disadvantage. If it’s a close call on any of those issues between the company loyalist and the almost-departed, who is more likely to win that battle?
6. A question that the lawyer who received the counter offer — and even others in the organization — should have, is: “Why did it take the potential move to make the firm offer extra dollars, a new title, or to put institutional changes into effect?” For example, if the lawyer merited that extra compensation, it likely should have been paid well before the potential move and should have been provided proactively — getting it after the fact, and only because of a potential move, is disheartening.
7. When a lawyer initiates a search or is recruited, fundamental reasons are laid out by him as to what is lacking in his firm or company. I have yet to work with a single candidate who progressed to the offer stage and, at that time, dropped out because his firm had made all the changes that rectified the deficiencies that were cited at the outset of the process. This includes promises made in the counter offer, as it is highly unlikely that they cover every issue. Consequently, when the hoopla dies down, key issues are highly likely to remain that inevitably will lead the lawyer to leave at a later date.
8. When a lawyer is given a bonus to stay or has his base compensation raised in the counter offer, it should make him wonder from where those dollars came. Compensation budgets, and specific dollars for each lawyer, are firmly established each year. When the organization magically throws new money at the lawyer who is about to leave, those dollars will have to be accounted for at some point. In many cases, they will come out of the lawyer’s next bonus or raise, which diminishes the true impact of what is bestowed in the counter offer.
9. The lawyer who accepts the counter offer better perform well, as the practical impact is that he will be held to a higher standard in the future (even if that is never enunciated, which is likely). When an organization reaches to provide extras to someone — especially when that was not planned (as it wasn’t in such situations) — the expectation is that the lawyer will have to perform at a higher level to justify that benevolence. The lawyer thus better hope that the economy does not impact his company or that his book does not dip, as the “payback” for what was received in that counter offer may hurt.
10. No matter how large the market is in which someone works, the reality is that we live and work in a small world. The firm or company that devoted considerable time, energy and resources in recruiting the lawyer who accepted a counter offer, along with the recruiter (if one is involved), will not forget what happened. This very well may shut off some opportunities going forward and can have other harmful effects on your future.
My advice is that a lawyer should thoroughly and carefully look at his situation before moving forward with a search (if it’s initiated) or in responding to a recruiting outreach. If there are fundamental issues, no matter the form, make note of them.
If you generally are happy, but would leave for a better opportunity, think long and hard about what the variables are that would make another company or firm better for you. If you ultimately receive an offer from an organization that has systems in place that rectify the deficiencies in your own firm or has those variables in existence that make it better for you, then the offer should be accepted.
Succumbing to a counter offer, while gratifying for your ego, is only a Pyrrhic victory for you and your firm, as the odds are exceedingly high that you’ll be disappointed in time, when the adulation abates, and you will eventually leave anyway on much worse terms. •