The market is ripe for lateral acquisitions—firms just need to be listening for where the opportunities may lie...
The recession’s impact on recruiting has left law firms needing to rethink their strategy. For many, this includes moving away from investing capital and resources in a summer recruiting program that has a low yield return on profitability and shifting towards a potentially more lucrative position of attracting high performance laterals (HPL) with established books of business. Seems logical, right?
According to Altman Weil’s recent “Flash Survey,” the trend for lateral growth has reached an all-time high of nearly 94% of reporting firms acknowledging this strategy as their preferred direction for growth. Above the Law recently reported that in 2016, there were a record 8,500 lateral moves in the top Am Law 200 firms. That’s a lot of musical chairs.
The market is ripe for lateral acquisitions—firms just need to be listening for where the opportunities may lie. Conversely, firms need to be discerning with the stories candidates tell during the interview phase. Many firms that I’ve worked with have been burned by laterals promising a transferable book of business, only to learn two years’ post transition they have been unsuccessful at securing the work. The in-house lawyers we polled have pretty strong opinions about what this means to them, and their firm. Sadly, it is often forgotten that clients have a choice as to where to send their work. When a lawyer with whom they are working leaves the firm, that doesn’t mean the work is going with him/her to a new firm.
One general counsel with whom I have spoken said one of his pet peeves is when work is promised to a new firm as a condition of the attorney being hired. “It puts me in an uncomfortable position. I need to be doing what’s best for my company, not what’s best for the attorney who is working on my case.”
Attracting the Right HPLs
How do you attract HPLs to your firm? It is crucial that a law firm does extensive research and due diligence on the prospective lateral, in addition to asking questions that are both poignant and thoughtful. When evaluating whether you have a HPL candidate, consider the following:
What’s the candidate’s value proposition? What can he/she offer the firm?
Why is the person leaving his/her current position? Dig deep and beware of serial laterals.
Full financial disclosures, including tax information.
Past sales performance and new business development potential.
Solid business plan denoting target companies (with a plan for each), outlining the opportunities, their approach, and key relationships.
What have they done to be innovative in past role(s)?
Achievable and aspirational goals that are measureable.
Do their values align with the firm’s vision?
During the interview process, it is crucial that the candidate share these ideals.
Jeanne Hammerstrom, CMO for Benesch, Friedlander, Copland & Arnoff, is a pioneer in lateral integration strategies. In her role at Benesch, she has been instrumental in developing a program of selection, integration and retention that is one of the best in the industry. I asked Jeanne what one thing she asks all potential laterals. She responded “What type of support are they getting from their firm now in all the operational areas and how can we make their transition easier?” This question can be very telling to help align priorities and manage expectations.
“It’s important to make sure there is an integration plan." - Jeanne Hammerstrom
Hiring the right candidate not only needs to make practical and financial sense, but it also needs to fit culturally. “Culture” is a word that many firms boast about, but most don’t understand what their culture is, or how that actually fits into a lateral acquisition strategy. If the firm doesn’t have a clear vision and brand that aligns with the firm’s culture, the hire could be a disruptor, creating undue stress and chaos. Having the right cultural fit is crucial to both the firm and the lateral’s success at the firm. Asking the candidate why they are looking to join your firm is a good way to uncover their idea of your culture and whether or not they will be a good fit.
So, you’ve done your research and found the perfect lateral hire. Now what? The next step is where most firms fail: Integration.
In many firms, laterals end up on their own private island. Don’t just invite them to the holiday party and think that is enough. Many of the attorneys that I coach are lateral partners who have shared with me that on-boarding is almost non-existent. While they were trained on the administrative functions of the firm (e.g., technology, billing, marketing, etc.), there was no plan in place for the “other important stuff” (internal networking, cross-servicing, or general education about fellow colleague’s practices.) This causes an immediate divide, which can drastically impede the process for integration.
"...the firms that will be successful are those that act like businesses and hold each other accountable."
Benesch places high importance on integration. “At Benesch, we have an integration administrative team and a lateral integration committee headed by our Practice Group Chair,” Jeanne says. “It’s important to make sure there is an integration plan. Getting him/her around to meet attorneys across practices and offices. And, make sure from the beginning you introduce them to the Marketing & Business Development team. It's important to get the team in a room with the lateral to let him/her know that the team is there for support."
"This is a real differentiator in recruiting because a lot of firms keep those resources in the background. From experience of having a large number of laterals join the firm over the last year, the in-take and IT folks are really key from day one. Take the uncertainty and fear of starting at a new firm away from them.”
So, what else can firms do to ensure successful integration of HPLs?
Be proactive. It’s important to start the on-boarding process during the interview.
Communicate. Be transparent, and make sure your firm is setting expectations and providing the tools and resources for a smooth transition.
Be consistent. Make sure all practice areas abide by the same transition plan.
Solicit continuous feedback. Provide the lateral with a mentor or other outlet where he/she can ask questions, provide recommendations, and voice concerns.
Set up introductory meetings between the lateral and other attorneys at your firm and allow the lateral to explain their practice and learn more about the firm through targeted meetings.
Help the lateral hone their business plan to compliment firm culture, uncover available resources, as well as potential opportunities.
Set expectations and hold the lateral accountable.
I can’t stress enough the last point, as accountability in law firms is not often practiced. However, the firms that will be successful are those that act like businesses and hold each other accountable.
Want to get started but not sure how? I recommend getting together a focus group of lateral attorneys who have joined your firm over the past few years and soliciting feedback on the process. This will provide a baseline and quickly highlight areas of potential for improvement.
Is your firm desperately seeking HPLs? If so, make sure you are thinking about how targetged integration and realized opportunity can be used within your firm to achieve lateral bliss that results in successful integration, and ultimately increased profitability.
[Society 54 Co-Founder Jill Huse is renowned as a trusted professional services advisor. A certified Worldwide Association of Business Coaches Coach, Jill is highly regarded for her progressive ingenuity, research-based strategy and, most importantly, her ability to deliver results for clients.]