Many of the practices that lead to successful lateral hiring are basic common sense. In many instances, however, BCG Attorney Search has found firms mistakenly adhering to a number of practices that seriously undermine the success of their lateral hires. These include:
Relying on the word of their firm's partners that a prospect is a "good catch." In such instances, firms also overlook crucial tasks—such as checking out the prospect's references, or even their credit status—out of a sense that doing so is a betrayal of the unwritten "legal honor system" and will unnecessarily embarrass both the firm and the lateral;
Bringing on laterals without precise, pre-defined economic reasons other than generalities, such as business potential or the firm's need to develop a certain specialty and expertise; and
Neglecting to evaluate the portability of the laterals' clients, identify projected work for both ongoing projects and potential matters, verify dollar amounts to the extent possible by examination of historical billings, and ascertain whether the laterals' existing clients were indeed satisfied with the level of service they were provided.
Whatever the reasoning, the standard result is a problem BCG Attorney Search has cautioned law firm leaders about for some time: Some prospects who look great initially don't produce as anticipated and the firm is left with depressed profits, unhappy partners, and concerns over how to confront their problem acquisition.
What some firms are doing
Successful law firms rely on highly sophisticated screening processes. Many, for instance, offer laterals only non-equity partnerships for at least a year, while others require all lateral prospects to complete extremely detailed questionnaires in which they must provide income tax returns, information on business transactions, personal finances, past ethics inquiries, suits in which candidates have been defendants, and any interest in the prospects' former firms' contingency agreements.
Although such an approach may seem excessive for more "collegial" law firms, the key here is a willingness to cover the tough issues with lateral candidates and search firms. Insights on key areas that all firms must stress are detailed below. Although some of the points made seem obvious, those who are responsible for screening or hiring laterals should—at the very least—consider the information with an eye on improving their current approach.
Key areas include:
Background information. All firms must assess whether candidates actually have the credentials and experience listed on their resumes. Find out why they're leaving their current firms with an eye on determining whether the reasons seem logical. Check their professional, client, and personal references as well as their credit histories. Look for previous work on matters that would adversely affect the firm's existing clients; complaints received, pending, or proceeding against the candidate; insurance claims filed against the candidate; and past investigations involving the candidate or his/her former partners.
Questions to ask about prospective laterals' clients. What types of work do you perform for each client? For which clients are you the primary contact? How much work have you performed for your clients, compared to work done by other attorneys with the firm? Are your clients willing to change their current firm when you move, and how much are their average annual billings? What, if any, conflicts of interest may be created when you join our firm? What percentage of your work is hourly? How will contingency matters be treated when you leave your current firm? How much business have you generated in the past three years? How much repeat business do you handle?
Questions on practice. What was your hourly billing rate for each of the past three years? How many hours were billed and collected for the past three years? What were your total and aged accounts receivable, and have these amounts increased or decreased in the past three years? How much time do you typically write down or write off? Are you able and willing to learn other practice areas?
Questions on candidates' expectations. Do you expect to bring in associates and paralegals? Do you anticipate a management position or a leadership role in a department or practice group? How do you see your workload responsibilities changing in the future? What type of personal office space do you expect? When do you anticipate retiring?
Information you need to know about candidates' personal finances. Is the candidate financially solvent and capable of making an immediate capital contribution? And, finally, would he or she be able to skip monthly draws should the need arise?
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