In this week’s American Bar Association’s ABA Journal, an article on the Dunning-Kruger effect and how it applies to lawyers. (Dunning-Kruger refers t...
How the Dunning-Kruger Effect Applies to Lawyers
October 17, 2014
Switching Firms to Advance Your Career
October 21, 2014
What accounts for so much lateral movement at the partner level? Quite simply, a lateral move can be good for a partner’s career—and income. In this article, Adam. Weiss, Principal at Charles River Recruiting, shares his insider’s perspective as a recruiter who specializes in placing partners at major national, international and regional firms. Specific reference is made to ethical obligations under Wisconsin law.
Lateral Recruiting at the Partner Level – Switching Firms to Advance Your Career
According to The American Lawyer, over 2,000 major law firm partners switch firms each year. This implies that approximately 5% of all big law partners move firms annually. While some portion of this number is accounted for by large group moves, such as take place when law firms merge or fold, the majority of lateral partner moves involves individual transactions in which just one, or a few, lawyers switch firms at a time.
What accounts for so much movement at the partner level? Quite simply, a lateral move can be very good for your career. This applies to partners with modest books of business as much as it does to those with a large client base.
It is sometimes said that partners with substantial books of business can “write their own ticket.” While this is something of an exaggeration, it is nevertheless true that if you have a good sized book—say, over $1.5 million in annual collections—you can often move to a platform that compensates you better. While a legal recruiter may occasionally call with an opening for a partner with a specific background, virtually all firms give recruiters marching orders to work “opportunistically.” This is firm-speak for “show us anyone with a meaningful book of business.” So, while partners with large books of business can’t always write their own tickets, they are the hot commodity in the legal recruiting industry. Accordingly, if you have around $1.5 million in business from a client base that will follow you to another firm, it makes sense to find out what your practice would be worth to those firms.
But what about partners who don’t have large books of business? A common scenario is that some partners are currently squeezed between their firms’ rate structures and their clients’ unwillingness to pay high fees. In these cases, partners may wish to move to firms with less aggressive billing expectations and often take home more money in the process. Contrary to popular misperception, a great many—perhaps the majority of—partner placements involve lawyers without unusually large books. Indeed, in my experience as a legal recruiter, some of the best candidates are those with books in the $1 – $1.5 million range.
Successful candidates have the following characteristics:
(1) Good strategic fit with the acquiring firm, such as having a practice that complements the firm’s current practices, or a client base with many cross-selling opportunities.
(2) Persuasive explanations of why their current firm is no longer the right platform.
(3) Reasonable compensation expectations.
If these characteristics seem familiar, you may want to explore your options. An astute recruiter will work closely with a partner to understand his or her practice and client base, identify firms that could provide a superior platform without obvious client conflicts, contact those firms with a compelling message about why they should talk to the candidate, and shepherd the candidacy through the recruiting process.
Of course, partners must be familiar with their legal and ethical obligations to their clients and to the firms they are departing. While a detailed assessment of these obligations is beyond the scope of this brief article, note that such obligations may arise under: (1) agreements between lawyers and their current firm, such as an operating or shareholders agreement; (2) the Wisconsin Rules of Professional Conduct for Attorneys, particularly Supreme Court Rules 20:1.4 (Communication) and 20:1.16 (Declining or terminating representation); and the law of fiduciary duty, partnership, agency and business torts. See e.g., Wisconsin Ethics Opinions E-97-2 (Obligations of a lawyer and a law firm when a lawyer terminates association with a law firm).
So, how does the lateral recruiting process really work at the partner level? Perhaps the best way to explain the process is to present a case of a typical lateral move.
Case Study: “Joe Lateral” The Situation
Joe Lateral (not his real name!) was a transactional partner at an AmLaw Top 10 firm, who served a mix of technology and energy clients in one of his firm’s Texas offices. Joe’s specialty was M&A transactions on behalf of middle-market companies acquiring smaller companies. However, his current firm was in the process of re-focusing to serve Fortune 500 companies, pruning partners and practices that did not fit its new model.
Joe called me at the suggestion of a colleague whom I had placed years earlier. As Joe explained, pressure was building from his current partners to increase his billing rate from the merely stratospheric to the extra-atmospheric—at the same time his client base was already balking at current rates. There seemed little possibility of compromise: either Joe had to raise his rates and risk losing the client base he had built up over his career, or he faced pressure from his partners to leave the firm.
Joe and I had several conversations about his practice, client base and career goals. I then performed discreet (“no-names”) market research with prospective firms to assess their interest in a partner with a practice like Joe’s, and analyzed recent hires by major firms in Joe’s market. Based on my communications and research, several things became clear:
(1) Time was of the essence. Joe could see the proverbial writing on the wall at his current firm.
(2) While Joe’s $1.3 million book of business was below his current firm’s expectations, it was still well above the minimum required to get the attention of many other firms farther down on the AmLaw 100 list.
(3) Numerous other law firms in Joe’s market were keenly interested to acquire a partner with a practice like his.
Keeping these factors in mind, I proposed an action plan for Joe: we would work together to identify law firms that specialized in serving clients similar to his own—middle-market companies with modest, but real, needs for high-end transactional expertise.
I then set out to do for Joe what he couldn’t do for himself:
Contacted firms on a no-names basis to determine their interest in a partner with a practice like his.
Assessed recent placements and press releases to determine which firms were looking for partners like him.
Analyzed the partnership composition of firms in Joe’s market to identify opportunities that could be appealing both to him and to prospective firm.
On the basis of this analysis, I created a list of firms meeting Joe’s requirements: AmLaw 100 firms serving mid-sized companies, with offices in several major metropolitan areas, substantial transactional capabilities, and billing rates that would, ideally, represent a discount compared with what they were being charged at Joe’s current firm. I then discussed the list with Joe, sharing market intelligence I had on the firms on the list. In specific, we discussed these firms’ recent hiring trends, key personalities and reputations in the market. Joe and I agreed to approach 7 firms on the list as an initial burst, including firms with which he was previously not very familiar.
As expected, several of the firms were simply not interested. Some had recently taken on several new partners and were therefore not in a great position to absorb new partners immediately. Others determined that Joe’s practice did not provide them with sufficient cross-selling opportunities. However, three firms expressed interest to learn more about Joe. We scheduled interviews right away and began sharing information about his clients, billings and practice in general. As conversations with the three firms progressed, I worked with Joe to complete the numerous disclosure firms that each firm requested, and presented them with customized memoranda that described his practice, client base, and business development plans.
Two firms made Joe attractive offers to join. He chose the one that offered the best combination of compensation, benefits and support for his practice and business development efforts.
“Working with a recruiter was one of the smartest moves in my career,” Joe says. He’s right. Had he approached these firms on his own, or had we approached them one at a time instead of simultaneously, he would likely not have achieved the same excellent results. For example, had he contacted each firm directly, Joe would have undercut his own posture as a partner who, while not exactly “looking” for a new opportunity, was nevertheless amenable to having a discussion. From my position as a legal recruiter, I could convey the more compelling message: “I found this great partner at a top firm, and I can bring him to the table if you are interested.”
Likewise, when it came time to negotiate offers, I was able to explain to each firm that it had better lead with its best offer, because Joe was speaking with other firms as well. While Joe could have done the same, doing so would have put him in the uncomfortable position of antagonizing the very people whose firm he wanted to join. In such situations, a recruiter’s objectivity can go a long way toward bringing the parties together smoothly and dispassionately.
If you are a law firm partner, whether your book of business is large or modest, you probably have more options than you are aware of to move to other firms. Regardless of your initial motivation—be it improved compensation, expanded market opportunities, or more sophisticated staff—exploring your options can benefit both you and your clients. Such was the case with Joe—who is now his new firm’s office managing partner and a highly-respected member of its national corporate practice.