“We want to recruit partners with portable business”. This is the phrase that we have probably heard most when asking managing partners how they wish to grow their firm in certain markets or areas.
There is of course a clear logic behind that approach. Partners with portable business have demonstrated that they can develop and manage a nice client portfolio. In addition, bringing along business and clients is attractive from a financial perspective as the monetary investment will be limited. Good business logic, no ?
Yes and no.
We would never recommend a firm to recruit a lateral partner who has not developed a considerable book of business in his or her previous firm. Indeed, we are of the view that a “partner” level player needs in all circumstances have demonstrated his or her capacity to attract, retain and/or develop clients and client relationships. Ideally all three, but at least two of those. Someone with the partner title, but no substantial client relationships nor overseeing a reasonable book of business, simply does not meet the minimum partner level standard. In very exceptional circumstances there may still be reasons to recruit such a person, but these will need to be very convincing and well documented.
So the lateral candidate needs to have business, but should it be portable ?
That question depends on what kind of firm you are building. If you want to be a firm that houses stars and are very good at doing so, you will want to attract these stars with portable business. You will build a firm that is known for its stars and quality of them.
However, if you wish to build a firm with a strong brand name, recognized culture, embedded values and a coherent team approach across specializations and potentially geographic borders, you will want to think twice. Indeed, by rewarding people for bringing business that is portable, you are giving them the message that their most valuable asset is the portability of their business. In fact you are saying to that partner that there is one thing he or she should hold on more than anything else : his or her clients. With such an attitude, the star will integrate in his or her new firm, but the integration will be focused on making sure that he or she can leverage as much as possible on the new firm to strengthen his or her relationship with the client. That partner will not be keen to introduce other partners to the client on a strategic level, will not invest in broadening the client, will want to keep control of anything that is delivered to the client,… Behavior that is very much in conflict with some firms’ desire to build more business with existing clients and to promote more team behavior.
Stars that realize their portable business determines their value will also be more keen than others to learn and know how much they are really worth in the market. In our view they are more vulnerable to being hired away by headhunters.
Lateral hire partners with business, for sure, but portable ? Think twice and be sure about the kind of firm you wish to build. Ask your clients what they expect from your firm. Whatever the answer, you will always want to attract partners that have demonstrated their capacity to build, maintain and develop a substantial business, but you may be very happy to hear that they do not want to bring that business along to your firm….
Steven De Keyser