Maximizing Growth Through Lateral Partner Moves
The legal market’s slow demand growth has intensified competition for top lateral talent. While lateral hiring offers significant opportunities for law firm growth, the risks associated with partner lateral move — such as high acquisition costs and unpredictable success rates — make lateral hiring a strategic challenge.
Explore our insights into lateral hiring risk and how firms can navigate the lateral markets effectively.
Why Lateral Partner Failure Rates Are High
Many law firms face challenges when it comes to lateral partner moves, with failure rates highlighting the complexity of this growth strategy. Some lateral hiring risks are evident immediately, while others emerge years later. The data suggests that law firms often struggle to see expected returns on their lateral hire investments.
RETENTION
48% of laterals leave their new firm within 5 years.
FINANCIAL
62% of laterals fail to bring their promised book of business.
CULTURE
35% of laterals fail to integrate with the firm’s culture.
The Cost of Replacing a Failed Lateral Partner
The cost of a failed lateral partner hire is significant, impacting law firm resources across the board. From recruitment and onboarding to compensation packages, every failed lateral increases the firm’s financial burden. As firms navigate the lateral markets, reducing these costs hinges on minimizing the risks associated with lateral hiring failure
How Lateral Partner Hires Drive Law Firm Growth
Despite the challenges, lateral partner hires remain the single largest source of revenue growth for many firms. Successful lateral hiring can unlock new revenue streams, expand client bases, and allow firms to enter new lateral markets. With the right strategy, law firms can leverage lateral moves to capitalize on new books of business and enhance their overall market presence.
By focusing on lateral hiring risk management and ensuring a strong cultural fit, law firms can improve their chances of achieving sustainable lateral growth.
*The listed partner compensation was calculated by taking the average Profits Per Equity Partner of each subset of AmLaw ranked firms.
This calculation does NOT take into account replacement and opportunity costs such as lost revenue, lost clients leaving with lateral, hours to recruit and evaluate replacement(s), etc. The cost of a lateral partner hire is likely much higher than is displayed. Direct replacement costs can reach as high as 50 to 60 percent of an employee’s annual salary, and total costs associated with turnover range from 90 to 200 percent of annual salary, SHRM reports.
