I. Hire to fill capability gaps, not to bolt on revenue
As I’ve written, pursuing revenue for revenue’s sake is irrational. Pursuing laterals for revenue’s sake is, I believe, quadruply irrational, because:
- You’re sure to pay handsomely for the revenue you’re attempting to bring in, making its true net present value far less than meets the eye;
- The odds are as dead certain as “the house always wins in the long run” that laterals will deliver less revenue than projected during the flirting, seduction, and capitulation phase of the dance;
- The track record (facts can be disagreeable little things; sorry about that) is that the half-life of laterals in their new firm is far shorter than that of home-grown talent, so projections of revenue into the indefinite future are likely to disappoint;
- And finally and most importantly, remember that revenue is not the name of the game; profit is the name of the game.
So if the single-minded pursuit of revenue is worshiping at the feet of a false god, what should you be looking for?
Consistently, across firms all up and down and across the various spectra of size, prestige, geographic dispersion and practice area focus, the answer you get is: Pursue capability. Fill gaps in your firm’s repertoire that clients are eager to have you fill.
But in doing so, don’t delude yourself. Filling gaps in capability is not by any means to be confused with building capability where none really exists. To think you can add on an entirely—or essentially—new practice area through force of will and an ample checkbook will assure you untold expense, no lasting benefit, much agita and stress, and ample distraction from other things that would be far more productive and beneficial for you to pursue.
