Strategic planning involves identifying specific goals and defining the action steps necessary to realize those goals. The squishier the goals (a lofty business term, I know) the more difficult it is to map goal-oriented actions. This approach to planning a critical initiative had better come with a hefty dose of luck.
Yet, every year law firms double down on the pursuit of partner-level additions to their ranks by employing a strategy that struggles to realize goals on any level, let alone actually adding long term productive partners.
Based on data on partner moves between law firms, the conventional approach to lateral pursuits barely qualifies as squishy. Consider these points from research cited in a 2019 piece from American Lawyer.
- In the 5 year period 2014-2018, there were almost 9,000 lateral moves made within Am Law 200 firms.
- 97% of Am Law 200 firms reported some level of lateral activity.
- More than half of the firms averaged at least one lateral every two months — 6 per year — and twenty-five percent averaged at least one per month. This is the equivalent of a firm completing one sizable acquisition every year.
What’s the payoff?
- 24% of lateral partner hires leave within 3 years.
- Within 5 years, nearly 50% depart.
- Two-thirds of lateral partner hires fail to produce even 75% of the expected “book.”
The takeaway? Poor lateral hiring pursuits are costing law firms — especially when you consider that most laterals don’t reach a break-even point for 9 months following a change in firms. And this doesn’t begin to factor the real costs related to integration and long term impact on culture.
A More Complete Strategy
Solving the lateral acquisition puzzle in a way that delivers on the goal of profitable and lasting growth involves combining four related pieces. (See Figure 1).
- Market Intelligence — this includes an exploration of opportunities to expand service to existing clients, an understanding of the competitive landscape, market and practice trends, emerging industries, gaps in existing service and anticipated changes of consequence coming to the market.
- Strategic Alignment — a smart lateral pursuit includes a profile of the ideal target that aligns with (1) market intelligence and (2) the firm’s stated goals for growth.
- Cultural Compatibility — the inclusion, prioritization or elimination of possible lateral targets should hinge on the degree to which a candidate shares the firm’s core values and vision.
- Economics — this is about ensuring that all costs related to acquisition, as well as the projected profitability of a candidate are consistent with the firm’s economic model. (And for the record, push hard on claims of portable business.)
A Productive Pursuit Plan
The four pieces noted above provide the cornerstones for a pursuit. But when it comes to the action steps necessary for the identification of top tier candidates, every aspect of a search should be informed by the fabric of the current partnership. (See Figure 2.)
A robust strategic search has four parts:
- Direct relationships — recognizing the critical nature of a cultural fit, a conversation about adding partners should begin with a comprehensive inventory of connections who share the firm’s core values.
- A map of referral sources — this is about widening the net, and turning those who are connected to lateral candidates fitting your profile into pursuit allies.
- Key Client input — communication with clients — and especially client feedback programs — can help identify potential laterals.
- Recruiting professionals — equip recruiters with a strategic profile of the candidates you seek, rooted in core values and specifics related to growth objectives.
For firms ready to bring these pieces to the lateral pursuit puzzle, this will streamline the search, put you face-to-face with a higher number of candidates aligned with your goals, and dramatically reduce the high rate of turnover that costs in terms of dollars, time and cultural disruption.
Far from squishy, this approach is indicative of cultural maturity and will result in lateral additions that strengthen the fabric of a vibrant partnership.
(If you’d like a free copy of our Lateral Scorecard — a tool to help gauge how strategic a lateral candidate might be — use the contact tab above and simply put “Lateral Scorecard” in the message box. Or shoot me a request by email — email@example.com.)