In law firm lateral recruitment, one question dominates both risk management and ROI: How portable is a candidate’s book of business?
While every lateral candidate—just like every matter, client and firm—is different, analyzing the portability of clients can provide some predictive insight for the 97 percent of law firms who look to grow through lateral hiring in 2024.
In short: On average, lateral partner candidates claim to port about 57 percent of the clients they list on their lateral partner questionnaires. The actual portability rate is well below that percentage; based on cursory verification, the real number is closer to 35 percent.
Behind these numbers are two trends worth noting:
- Claimed client portability rates for lateral partners are plummeting. In 2018, partners claimed they could bring over 75 percent of their clients when switching firms. Now, that number has dropped to 57 percent—a 25 percent decrease in just six years. We attribute this decline to increased competition for lateral partners and law firms’ increased skill in detecting suspicious behavior and exaggerated claims.
- Client portability rates are influenced by a variety of factors such as region, practice, experience level, client type, and more.
The second point merits discussion, as it can and should affect both recruitment and negotiation efforts. Let’s dive in.
Client Portability by City
Among major markets, the purported client portability is highest in:
- Boston: 86 percent
- Los Angeles: 81 percent
- San Francisco: 77 percent
Meanwhile, it is below average in:
- New York: 60 percent
- Dallas: 53 percent
- Washington DC: 50 percent
Key takeaway: It’s not surprising that claimed client portability would be lowest in our nation’s capital, where so much work relies on political connections, entrenched client relationships, and shifting power dynamics. Law firm leaders in D.C. should take extra caution to verify portable business in this market.
Client Portability by Practice Area
What are the practice areas where laterals claim the “stickiest” relationships?
- Trusts & Estates: 100 percent
- Environmental: 100 percent
- Real Estate: 79 percent
And what are the practice areas with the least client loyalty?
- Banking & Finance: 54 percent
- Bankruptcy & Restructuring: 45 percent
- Antitrust & Competition: 18 percent
Key takeaway: Laterals in Trusts & Estates are often entrusted with family legacies and fortunes spanning generations; it stands to reason these clients will stay with their primary lawyers. Conversely, Bankruptcy and Antitrust attorneys advise companies on what are (hopefully) one-time events; they are not frequently positioned for repeat business. Meanwhile, given the high level of lateral activity into and out of financial institutions (both big and small), it stands to reason that Banking & Finance firms are constantly modifying their outside counsel mix based on these relationships.
Client Portability by Lawyer Experience
Does seniority matter? According to the LPQs screened by Decipher, lawyers with more than 40 years of experience claimed a client portability rate of 80 percent, which is 16 percent higher than the six-year average, and 11 percent than the next-highest experience level demographic.
Interestingly, the second-highest client portability was claimed at the opposite end of the experience spectrum: Lawyers with one to 10 years of experience self-reported client portability rates of 69 percent. Closely behind them were lawyers with 31 to 40 years of experience, who collectively claimed client portability of 67 percent.
Key takeaway: The most senior lateral candidates reported client portability rates above the six-year average, meaning that often, these candidates are best positioned for bringing long-term client relationships to a new firm (and might have moved these clients before).
What This Means for Your Firm
If you are looking to increase market share through lateral recruitment in 2024, these numbers demand your attention. While every situation is different, benchmarking client portability against similar historical ranges is a critical first step toward identifying candidates that deviate from the norm and verifying important client relationships:
- Is your candidate from Washington DC claiming higher than average portability?
- Why is your candidate from otherwise steady Trusts & Estates claiming lower than expected client portability?
- And why is a lawyer with only five years of experience so confident they can bring an above-average book?
In 2024 and beyond, law firms must go beyond the LPQ to:
- Verify books through due diligence. Lateral candidates can misstate books of business through optimism, narcissism, and very occasionally, chicanery. And even the best-meaning candidate can lose what they believed was a loyal client through counterattacks from the firm they are leaving (discounted rates, perks and promises). To protect their investments, law firms must engage in real due diligence to obtain reliable forecasts and reasonable expectations.
- Know and understand the numbers. Through data-driven talent strategies, law firms can create accurate benchmarks for the candidates in their pipeline for apples-to-apples comparisons. These metrics can be applied to qualify (or disqualify) potential candidates; assess the quality of the overall pipeline; provide realistic guidance for compensation negotiations; and more.
Are you curious about your candidates’ portable business? Decipher helps law firms conduct pre-hire due diligence, benchmark candidates, verify relationship partners, and more. Contact us today.
