"’The issue isn’t ‘integration,’ ‘ [Barton Winokur of Dechert] says. ‘I think that’s a garbage word people use."
He’s talking about integration of laterals, a key issue on which The American Lawyer has just given us a helpful scorecard, in the form of a report detailing moves over the past year, tracking 2,423 lateral partner moves and ranking firms by biggest winners and biggest losers, in terms of partners lateraling in and partners lateraling out. Not surprisingly, some firms rank high on both scales, notably:
- Greenberg Traurig, with 60 in (first place) and 24 out;
- Hunton & Williams, +58, -24;
- Reed Smith, +51, -51;*
- K&L/Gates, +24, -40;*
- Bingham, +48, -24.
These are only representative, and you should look at the whole chart; assuming their methodology is sound, TAL has done a nice piece.
But here’s the interesting question. Let’s assume we can all go after lateral partners with a vengeance if we are so inclined (and have the headhunters’ budget line to afford it): But can we keep them?
[Pop quiz, which regular readers of "Adam Smith, Esq." will know the answer to: What percentage of new equity partners at large law firms (>250 lawyers) last year were home-grown vs. lateral? Answer: 52%/48%.]More than ever, the answer to that question matters. Some firms have institutionalized, programmatic approaches to bringing laterals onboard. For example, Orrick has "the fishbowl," wherein laterals meet as many as 100 Orrick partners in the span of a few days. Here’s the protocol:
"The fishbowl takes place near the end of recruitment. According to partner Peter Bicks, who heads recruiting efforts in New York, what comes before it is exhaustive. After initial interviews with a lateral candidate, several partners prepare a memo of at least five single-spaced pages, which is shown to both the candidate and to all Orrick partners. The memo covers the candidate’s personal background, client relationships, compensation and billings history, and time spent on nonclient matters. It also includes proposed compensation at Orrick and two to three years of economic projections. (If the move is consummated, the memo serves as a business plan.)
"With memos in hand, Orrick partners on both coasts attend fishbowl meetings with the candidate. In person and by videoconference, they can discuss their practices and potential cross-marketing possibilities with the new prospect. And the candidate sees, through the sheer number of partners taking part, how seriously Orrick takes lateral hiring. ‘Making a lateral move is a big deal,’ Bicks says. ‘People want to feel comfortable and know you’re paying attention to them.’"
Excessive? Not if you’re serious about making lateral acquisitions–and having them stick.
But back to Bart Winokur’s condemnation of the "garbage word" "integration." What’s he talking about?
I view what he’s driving at, and how lateral recruitment works (or fails) as akin to introducing a new species into an ecosystem. If it’s a condign, fitting, and salubrious ecosystem for the species (which means a two-way fit), we have a win. Or not.
Firms that are consistently successful in lateral recruiting talk about things like "the platform," "the runway," and "becoming part of what we’re doing." These words suggest the right concept, which is whether the portfolio of capabilities and skills the lateral brings can complement the network of clients and contacts and practice specialties the new firm can offer.
I’ve had two recent conversations that illustrate this.
The first, with the managing partner of an AmLaw 10 firm, recapped how they pursue laterals: First, last, and only, for capability. Never for clients, and never for a book of business. In fact, this firm doesn’t even ask about portable business when laterals are being recruited. What they hope, instead, is that the lateral will immediately become absorbed in matters at the new firm, engaging them in understanding the way the firm collaborates and truly getting to know their new partners in the only way possible, through dealing with them on cases. Imagine never even asking about a lateral’s book of business: This is "think different" land.
The second was with a senior manager with a high level of responsibility for lateral recruitment at a large-ish boutique that specializes in a couple of closely related industries, into which the firm has deep, deep Rolodexes. He reported that if they spot a potential recruit with a complementary practice that they might be interested in, a mere whiff of the firm’s contact database almost immediately suggests ways for the new lateral to jump-start their practice.
These are why, I suggest, the word "integration" is, indeed, garbage.
It’s not about anything as wimpy and flex-wristed as integration. It’s about powerful business combinations, about building capability to serve core clients, about matching individuals to platforms, about building out your key practice areas and deciding which are peripheral.
And did I mention culture? Laterals need to be a fit, or their half-life will be nasty, expensive, and short. Invest your own time and that of your most senior colleagues, and indeed, invest the time of everyone who will "touch or concern" the new arrivals. Take this "sweating the details" story to heart:
"Richard Welch, the managing partner of Bingham’s Los Angeles office who came to the firm through the merger with Riordan & McKenzie in July 2003, marvels at Bingham’s attention to detail. ‘If there is a pile of papers at a 60-degree angle in front of your desk [at the old firm], it will be there in the new office,’ Welch says. ‘That means you come in and are able think about how to serve clients, not ‘How do I get an e-mail out today?’ ‘"
If they’re half your equity partner pipeline, you can afford no less.
