Hokey cokey laterals

October 28, 2011

They’re in, then they’re out. Why do so many lateral hires fail?

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The lateral hiring spree of recent years suggests firms are as keen as ever to poach the odd lawyer or three from rivals.

The tricky bit seems to be convincing those lawyers to stick around.

Research conducted earlier in 2011 by Motive Legal Consulting showed that of 1,944 lateral partners, a third had moved on within three years of their recruitment. After five years, 44 per cent had left.

Estimates suggest it costs well in excess of £100,000 to recruit a lateral hire partner. If that partner then leaves relatively quickly… Well, let’s just say it’s a pretty expensive way to get one over a rival.

Five big mistakes

There are five common mistakes firms make in the integration of lateral hires. These are boiled down from numerous conversations and interviews with law firms and legal consultants conducted over the past ten years.

Mistake # 1: Failing to think beyond the financials

Go ahead and recruit a lawyer purely for their billing potential. The uncertain economy makes money the priority.

Just remember, though, that ‘rainmakers’ can bring with them their own management problems, particularly if your firm has been working hard on building a highly successful team culture.

No matter how acclaimed the lawyer, your hire will likely fail if you don’t also ensure he or she is the right cultural fit.

Mistake #2: Lack of clarity of expectation

Many lateral hires come a cropper because the lawyer and the firm have not properly agreed objectives.

Be clear about what you want from a lateral hire – whether it’s a portable practice, improvement of existing client relationships, making up a skills shortage, or daily singing and dancing.

It doesn’t really matter as long as you clearly communicate your long-term requirements. If you don’t, then everyone will likely end up disappointed.

Mistake #3: No formal induction/on-boarding programme

On the whole, firms have taken significant strides with this. Several firms have ‘buddy’ systems in place, in which an existing lawyer will take a key role in supporting the lateral’s first few critical weeks. With the growth of legal HR teams, training and development programmes are also widespread, and often include individual support mechanisms such as mentoring and coaching.

However, it is not unusual to find firms that still lack formal induction programmes, particularly at partner level. Here, lateral hires can all too easily be expected to pay their way from day one, with little support or guidance.

Just leaving lateral hires to get on with it may at best result in them becoming disgruntled. At worst incumbents could take issue with the interloper/s, and your firm will be little more than a battleground for internal warfare.

Mistake #4: Woolly appraisals and weak performance management 

With merit-based remuneration coming to the fore, firms have become better at providing lawyers with specific performance-related goals, combined with regular reviews. 

But the complexity (and insufficient explanation) of these new performance-management systems can lead to confusion, suspicion and overall dissatisfaction. This is little helped by the fact that senior management remain notoriously poor at dealing with instances of underperformance.

Clear objective-setting and fair and comprehensive appraisals are vital for successfully integrating lateral hires. This will not only maximise motivation all round but also present to new recruits a transparent and honest culture that fosters loyalty.

Such an environment is particularly important for a younger generation of lawyers who have been brought up to expect regular and constructive feedback on all areas of their behaviour and performance.

Mistake #5: No long-term employee engagement strategy

This is a particular area of weakness in many law firms. Internal communication and ‘employee engagement’ strategies are relatively little understood and rarely implemented formally – at least beyond the very largest firms.

With the on-going uncertainties of the economy, further investment is unlikely to find its way here any time soon. But as other industry sectors have already discovered, effective communication and employee engagement are key to retaining talent in the long term.

Even if a formal engagement strategy isn’t on the cards, some kind of leadership-led communication process can be useful (for example, quarterly firm updates from the managing partner). This can help win hearts and minds, and bind people to a firm’s long-term development.

The mobile landscape

In some instances, a firm will not be able to hold on to a lawyer. In today’s mobile world, even the most dyed-in-the-wool traditionalists move on at some point. This should not, however, diminish the importance of effectively integrating a lateral hire.

Glory may abound when a firm scoops a top lawyer – especially if it’s at the expense of a major competitor. But it’ll be short lived unless the hiring firm has a plan – one that ensures the lawyer wants to stay. CP

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  • Susan Gainen

    Ii agree with all of your points and I would like to add one.

    After observing the US law business for more than 25 years as a lawyer, a headhunter for lawyers, and a law school career services director, and now, as a consultant and speaker, I see that the hole in lateral hiring is often insufficient vetting of potential portable and develop-able business.

    A 5-year history of billables is not the same as an in depth evaluation of the relationships behind the billing.

    One of the best examples in my memory is of an antitrust lawyer who was supremely confident that he could bring the multi-million dollar antitrust portfolio from one international client whose work he had lead for a decade. He forgot — and no one inquired — that the client’s general counsel had grown up in his law firm, that the client had ties to half a dozen of his firm’s departments, and that the client used no other outside counsel.

    You can see where this was going. He left. The antitrust work did not follow.

  • Andy Keith

    I agree with all on this page. The selection process most firms put in place for laterals is frankly amateur (a couple of chats with senior partners) and there is often no follow up or support to deliver on any business plan the lateral may have submitted. I think an innovative headhunter could deliver a great deal of added value by providing on-boarding coaching to the new partner rather than take the bill and run. I would like to see a recruiment fee structure that reflected the first year’s profit from the lateral rather than the draw. If the headhunter is so confident that the partner will deliver the value to the firm that warrants such a high fee, let’s put that to the test.

    What is interesting is that once a partner does move, they seem to soon become serial movers. I am not sure if that is a reflection on the partner or the firms in general.