Avoid the Lateral Hiring Merry-Go-Round

Regular readers of this column know that we have discussed the interesting phenomenon of law firm lateral hiring surging during the Great Recession, even as other lawyers have been let go and hiring from law schools has plummeted.

The reason, of course, is that firms assume and/or hope they are bringing in ready books of business that will pay off immediately in higher revenues and profits per partner.

Previous columns have discussed that this is not a given — and now there is statistical proof.

High-profile legal marketer Larry Bodine recently quoted statistics in his Lawmarketing Listserve from Motive Legal Consulting showing that, through 2010, the corporate practices of U.S. law firms based in London lost 36 percent of all new lateral hires within three years of hiring, and an astonishing 45 percent within five years.

As the study noted, "The immense cost of hiring alone should be a warning as to the ¬importance of these figures."

There is no proven link, but it is highly likely that many of these departures reflect a perceived or actual trail of broken promises. In the U.S., this is increasingly becoming a cause of action by lawyers against the firms that hire them.

One of the most recent examples was a lawsuit filed on behalf of a partner hired by a major national firm to open a new Detroit office. The lawyer's complaint charged that the firm made "numerous promises and representations" to join, which he "later learned either were false or [the firm] had no intention of honoring."

How can lawyers and firms avoid these problems? I offered a proactive suggestion to a lawyer client of mine who thought she had negotiated a deal with another lawyer to come to work for her firm, then was blindsided by a change of mind, seemingly without explanation.

Upon further discussion, it appeared that there was never an actual meeting of the minds between the lateral hire candidate and the firm. I recommended that when my client meets future potential candidates in person, she bring with her a chart to make notes about the interview.

The first column in the chart would identify the issues of concern to the lawyer. Each succeeding column would identify the firm's offer, then the perceived understanding between the parties.

For example, the first column would display the candidate's compensation at his/her current firm; the second, what the lawyer wants. The third column would show what the hiring firm offers, while column four would note the reason for the changes between the figures. Column five, again for notes, would identify any differences in interpretation, with column six documenting the figures finally agreed on.

Such tools can be a great help, but the real issue is that every firm must design and implement a sensible program for insuring proper lateral integration, which requires a full understanding of the incoming lawyer's practice and clients in the context of where both fit with other members of the firm. That will facilitate planned introductions and events to build connections.

The lawyer who is satisfied with the collegial atmosphere and spirit of collaboration at a new firm, properly planned and implemented, will be a better hire — and will be much less likely to suffer "buyer's remorse" about the new firm-attorney relationship.