To risk stating the obvious, a major downside of acquiring powerful
lateral partners or small groups thereof is that they will not
stay. Now The American Lawyer has a piece covering
the story of same over the past five years or so, complete with
a helpful and informative scorecard ranking
the acquiring firms with the greatest headcount of acquisitions.
What do we learn? In a nutshell, that strategy is one thing
and execution is another. Put differently, the smartest and
most obvious-seeming acquisition of laterals (we’re dealing primarily
with groups, not one-off’s) can run aground on the unforgiving
shoals of failure to integrate them into your firm’s culture, failure
to anticipate that they will actually need to evolve into a new
client base, and failure to appreciate that the portable book of
business they might bring with them is not their primary asset. Bruce
McLean, the always-astute head of Akin-Gump, puts it thus:
McLean says that the firm has become smarter about hiring
laterals that fit more clearly into the firm’s long-range plans.
Three or four years ago, he says, the firm was more focused
on breaking into new markets and hiring laterals with large
and portable books of business. “The very first question would be how big a book of portable business does a lateral candidate have . . . and, secondly, how do they fit into what we are doing,” says McLean.Akin Gump is more attuned to building the practices in which
the firm is already strong, and for which its clients are more
than willing to pay full freight, according to McLean. “Now,” McLean adds, “the
primary question [of a lateral prospect] is how do they fit into [the practices
in which] we are already doing well.”
Whether it’s as simple as sprinkling the new group around your
office so they’re not isolated in their Siberian homeland, or
flying them to headquarters on a regular schedule to cement relations,
you should spend as much time and attention (OK, if not as much
money—but that’s the good news) on their integration into
your firm as you did on selecting and acquiring them in the first
place.
You know that churn among your associate ranks is remarkably
costly, and while you may resent it and feel relatively powerless
to alleviate it, churn among high-priced new lateral partners
is an order of magnitude worse. The answer to associate
churn is a smart, heads-up, formal (meaning partners get billable-hourly
"waivers" for participating) professional development program. The
answer to new-lateral-partner churn is even simpler than that. And
the consequence of ignoring it is economically akin to buying
a half dozen new Mercedes, driving them out of the showroom,
and pushing them off a cliff.
