Our tracking of lateral partner moves in law firms in Europe since 2012, shows a clear increase of law firm partner mobility.
In Belgium alone, more than 5 lateral partner moves in business firms were announced in the last few weeks and at least two lateral partner moves will be made public shortly.
Lateral law firm partner mobility is an important instrument to make law firms evolve. It has become a key factor in law firm economics and performance and that is why we wish to share with you in this contribution a few reflections in connection with lateral law firm partner mobility.
What does law firm partner mobility really mean ?
The simple answer is that it is all about the hiring and/or leaving of partners in law firms. Of course that is true, but from a law firm management perspective, we suggest law firms consider it more broadly as an effective management tool.
When you consider law firm partner mobility as a management tool for your law firm, you will want to use it to your benefit. You will consider law firm partner mobility as a means to accelerate the realization of your firm’s vision and growth strategy. You will also see it as a potential threat with partner departures resulting in loss of clients, business, expertise, profitability,..
You will track the time and resource cost of dealing with law firm partner mobility. You will want to understand your firm’s performance in relation to law firm partner mobility as compared to your competition. In other words, you will approach it in professional way with the aim of creating value for your firm.
Research in the US however warns us for the risks of partner mobility.
According to some studies less than 50 % of partner lateral hires would perform in line with expectations. All lateral partner moves combined in the US would have a negative impact (- 3 %) on overall law firm profitability (*).
Another survey indicates that only 59 % of lateral partner moves were a success (**).
Of course financial performance in the short term is only one indicator of success. Certain lateral recruitments – while being a short term investment with an initial negative financial impact – will allow a firm to move up the ladder in terms of its positioning and/or allow it to reach new kinds of clients and/or types of work that will allow a firm to achieve a stronger performance over time.
Three investments to consider
We will in this contribution not elaborate on the basic rules of selecting good headhunters or other recruitment tactics for lateral partner hires.
We wish to highlight a selection of just three drivers of improved law firm partner mobility.
We would like to encourage you to reflect on what your firm is doing in connection with these and what the impact on your firm’s performance in connection with lateral partner mobility may be.
Invest in your partners’ performance
Ensure your current partners perform optimally. Identify weaker performance and/or lack of energy and motivation with partners. Law firm management will usually do this part of the work rather well. Where we see very often room for improvement is in what is done to actually address the situation. Often the weaker performing partner is told to improve the performance, gets a few warnings and is ultimately asked or encouraged to leave resulting in law firm partner mobility. To fill the gap, law firms will want to recruit another partner in the market and spend time and money on bringing that new person on board. While the success ratio of such moves is low, it is still a fairly common practice. However, we have noticed that those law firms that handled weaker partner performance differently – by pro-actively coaching and helping the partner to get over the weaker performance -, achieved better overall economic performance. These firms tend to make weaker partner performance a real discussion topic at their partners’ meetings, provide the partners with help and see the improved performance of those partners as a collective responsibility and challenge. Avoid the culpabilization around weaker partner performance and turn it into a normal business challenge that you collectively want to tackle as efficiently as possible. Of course that approach does not always succeed, but it does more often than not and creates a team strength that provides many additional benefits to the law firm in terms of partner loyalty.
Invest in partner retention
While firms are sometimes happy to see partners leave their firm, in many instances the departure of a partner causes nervousness in the firm and affects the firm’s capability in certain markets, industries or practices. More importantly, our data on law firm performance in Europe suggests a positive correlation between high partner retention and increased partner profitability. Firms that invest more in partner retention – or that are lucky enough to have a high partner retention – have better results. So how do you improve partner retention ? While it starts with having a clear direction for the firm that is understood by all and where partners can see the benefit for themselves of such strategy, there is more that you can do. We have seen that by creating in your firm the environment and space for partners to share and truly discuss their concerns with the firm, the leadership and the performance will positively influence retention. Ensuring the input of partners is captured, considered and followed up is thereby essential. It requires more than a regular partners’ meeting. It supposes real channels of communication where partners feel listened to and can see the impact of their contribution on the firm’s direction and what it means to them. Make sure to nourish the alignment of personal and firm culture and cultivate the belonging to one firm. This may sound like “soft” stuff, but it will have a major impact on the well-being of the partners and their desire to remain part of the firm.
Invest in a solid lateral partner hire process and integration plan
Probably the easiest of the three recommendations, and yet also often absent or weak is the existence of a solid lateral partner hire process and integration plan. We recommend you to make sure you know what lateral partners you are looking for, have it clearly documented in sufficient detail and build in the necessary checks and balances in the identification and recruitment process. Stay loyal to the requirements and do not consider lateral recruitments that do not fit them. Consider the necessary assessments by independent assessors (“how does this partner realize our strategic/business objective and does she/he have the competencies that we have identified for our firm ?”). Ensure true reference checks are carried out. Be sure to have discussed with a potential lateral hire all relevant issues about what makes a success at your firm as well as its vision. But also make sure the process is efficient avoiding any waste of time. Be prepared to say more often no to what looks at first sight as an attractive lateral hire, if – through the process – too many risks are identified.
Once hired make sure to have a well-oiled process in place to integrate the newly hired lateral partner as rapidly and successfully as possible. Such a process does not end with an induction program of a few days. It is to be tailored to the specifics of the lateral hire partner and aimed at capturing the full potential of the lateral hire.
We believe that the investment in the three abovementioned areas can substantially improve your lateral partner mobility performance. That will result in improved overall performance of your firm.
Steven De Keyser
+32 494 57 15 05
(*) 2015 ALM Legal Intelligence/Group Dewey Consulting Lateral Hiring Performance Survey
(**) Citi Private Bank Law Firm Group surveys