Hiring lateral partners can be an irresistible proposition for law firms seeking immediate growth.
According to a recent survey by Decipher Investigative Intelligence, 79 percent of law firms listed business generation as the first or second most important quality in a lateral candidate.
And yet, on this point, lateral hiring leaves much to be desired for many firms: Nearly half of our respondents – 47 percent – said the majority of their laterals have underperformed when it comes to bringing their book of promised business. Almost 70 percent said that in the past five years, they’ve had a lateral leave for failing to bring business over from their old firm.
Industry data bears this out.
Acritas surveyed more than 800 general counsel and chief legal officers, asking if they’d experienced a key partner leaving a firm they’d worked with in the prior year. One in five respondents said yes, and, of that group, 73 percent of clients said they’d continued to use the same firm rather than follow the partner to their new firm.
Acritas noted that clients are increasingly becoming entrenched in their law firms, developing institutional relationships beyond one particular attorney, making them more likely to stay put rather than move their business elsewhere. The Acritas report concluded that the odds are stacked against lateral partners’ new firms when it comes to luring away clients from their original firms.
The gap between a lateral candidate’s reported book of business and clients willing to make the move should give law firm leaders pause, as well as inspire them to do appropriate due diligence to get a clearer, more realistic picture of a candidate’s portable book of business.
This is especially important in the wake of the pandemic and the frenzy of the “war for talent.” Before the pandemic, the average claimed book of business for candidates vetted by Decipher was $1.2 million; during the pandemic, that average claimed book increased to $2.4 million. While it’s possible that the available candidates are rainmakers with dramatically growing books, it’s far more probable that candidates are inflating their numbers to maximize potential compensation.
Conducting due diligence is critical for firms to suss out the state of a candidate’s book of business. We’ve seen it firsthand in our work vetting candidates.
In one particularly egregious example, an international client enlisted Decipher to confirm an Australian candidate’s book of business. The candidate listed several Pacific Rim clients on their lateral partner questionnaire. Decipher’s source interviews in Australia and Singapore ultimately confirmed that these clients had no current relationship with the candidate.
The firm ultimately declined to proceed with the candidate after learning that the expected book of business was much lower than promised.
How can you determine whether your candidate has a book of business or a short story?
First, it’s critical to review your hiring process. Make sure that your Lateral Partner Questionnaire is thorough and insist on candidates fully completing their LPQ. Once the LPQ is completed, work to verify the information provided by the candidate.
Next, probe the circumstances surrounding each client. Is the client heavily entrenched in the prior firm, with work spanning practice areas and locations, over many years? Was the work for the client primarily completed by a team versus the individual attorney? Does the originating firm have a stronger reputation in the specific practice area engaged by the client?
If the answer to any of these questions is “yes,” it’s more likely the odds are against that client changing firms, according to Acritas.
Don’t be caught off guard post-hire by a lateral partner’s book of business that fails to materialize. Pre-hire due diligence can give you a more accurate sense of what business is truly portable – and improve your lateral hiring ROI.
Decipher reduces law firms’ lateral risks and costs by providing deep-dive intelligence about prospective laterals – before they are hired. We help our clients grow safely and more efficiently. To learn more, contact us today.
