Within the past 48 hours:
- Managing Partner #1 (an AmLaw 50 firm) said to me, “I just don’t understand this lateral hiring frenzy. I just don’t get it. Do you?”
- Managing Partner #2 (an AmLaw 50, and one whose strategy has been so widely articulated and publicized, through word and deed, for a dozen years, that I’m surprised it hasn’t appeared on bumper stickers) said to me, “So we met this afternoon with [Major Big League Heavy Duty Recruiting Firm] and as soon as we sat down they said, ‘It would be very helpful if we understood your strategy.'”
- Office Managing Partner #3 (a Global 25 firm) said to me, “I get these calls from headhunters and I can’t help but envision them sitting in their dining room with their feet up on the table, wearing fuzzy socks.”
- Office Managing Partner #4 (an AmLaw 50) said, “In nine years as head of our office, I’ve recruited 48 laterals. One delivered the book he promised.”
Altman Weil’s annual survey of law firm leaders reports that 98% of managing partners rank “recruiting laterals” as high on their list of “strategic priorities.” When all but 2% of the population agree a certain activitiy is “strategic”—and the 2% must be Cravath and Wachtell, I assume—you are deluding yourself to think it has the remotest prayer of providing a systematic competitive advantage.
Finally, although hard data is tough to come by, I have heard consistently for years now that maybe one-third of lateral partner recruits work out.
Spoiler alert: If you’re a legal recruiter and you want to continue reading from here, proceed at your own peril. You may not find it an enjoyable experience.
And yet we continue to indulge in this dysfunctional pursuit. Indeed, we seem to be doubling down on it. From The American Lawyer‘s March 2013 “Lateral Report:”
[Dewey’s demise] helped drive the total number of Am Law 200 lateral partner moves to its highest point in three years. The American Lawyer‘s latest lateral survey found that 2,691 partners left or joined Am Law 200 firms during the 12-month period. That was a 9.7 percent increase from the previous year, when 2,454 partners switched firms, and a 33.6 percent increase from 2010 (emphasis mine).
Small consolation, but over on the other side of the pond, they don’t seem to be faring much better. Beware the drizzle makers, from The Lawyer, does, as they say, “the maths,” and makes a convincing case that the economics of laterals are even worse than they probably appear on the surface. And yes, that author as I, is baffled at why firms continue pursue this benighted tactic:
Some poker experts maintain the difference between a good player and a poor one is that the good player knows when to fold a hand the poor player thinks is a winner.
“Law firms don’t know when to fold when trying to hire lateral partners,” says one experienced hirer at a leading global firm. “So they hang on to partners in the recruitment process for far too long and end up going with a pair of sixes when they really need a full house or, at the very least, three of a kind.”
A managing partner at another Top 50 global firm calls the resulting hires “drizzlemakers”, lawyers whose client followings are enough to make the ground wet, but not sufficient to properly irrigate the crops. When the chief operating officer at one leading UK practice analysed his firm’s lateral hires he found that 80 per cent of them failed to meet the figures stated in their initial business plans. My experience suggests this is not uncommon. […]
Indeed, my research into nearly 3,000 lateral hires in the London market featured in the 18 March issue of The Lawyer shows that lateral hiring seems not to work out an awful lot of the time; in fact, UK and US law firms in London can expect around half their hires to leave within five years.
What do firms do wrong in recruiting laterals—and in accounting for their performance after they arrive?