Case study 10: Major, Lindsey & Africa What managing partners should know about lateral partners
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1 SEPTEMBER2008
2 Case study 10: Major, Lindsey & Africa What managing partners should know about lateral partners Legal search firm Major, Lindsey & Africa conducted a comprehensive study into why laterals leave. Melinda Wallman and Geoffrey Craig look at some of the main factors in successfully recruiting and retaining lateral hires. MOST FIRMS think they understand a partner s motivations for wanting to join them the firm s reputation, its management, the financials, the culture, the compensation. Major, Lindsey & Africa s Lateral Partner Satisfaction Survey (LPSS) shows otherwise. When choosing a new firm, laterals ranked its ability to support and expand the lateral s practice first amongst eight factors. Since most firms believe other factors are behind the move, it isn t hard to understand why so many laterals feel their desires are being ignored. How can you fulfil a need if you don t know it exists? And that is exactly what was revealed in the MLA survey. When asked the extent to which their expectations had been met at their new firm, the laterals ranked the ability to support and expand their practice as last. The root of this disappointment was also revealed in the survey. When asked to evaluate their new firms efforts on five different integration practices, the laterals gave their lowest marks to eliciting their expectations. Understand a lateral s expectations Exploring prospective laterals expectations and needs in greater detail can result in a big increase in the success of your lateral programme. Here are some of the questions you should add to your interview sheets: What, specifically, does the partner need to grow their practice is it marketing assistance, a bigger budget, more administrative support, better management, leveraging existing firm clients, sector know-how, a specific set of practices and/or geographic expertise, more collaboration with other practice groups? What does the partner mean by support? What kind of support was unavailable at their last firm that caused them to want to leave? What can the partner and the firm do to grow together? What concrete steps need to be taken to make all of this happen? Moira Gilmour, managing partner at Field Fisher Waterhouse, has learned to explore and discern what truly motivates potential hires. After hiring 29 laterals in the past three years, the firm has had just two departures in the past two years. Gilmour meets all lateral partner candidates and says she specifically asks them what they re looking for and why they re leaving their current firm. She says she wants to know exactly what it will take to make them happy. Just as important as asking the questions, is listening to the answers and to what the laterals ask you. When I interview candidates, I almost never talk about 67
3 Case study 10 Figure 1: Factors weighed in choosing a firm aggregate scores Source: Major Lindsey & Africa s Lateral Partners Satisfaction Survey 2007 financials, says Ralph Baxter, chairman and CEO at Orrick, Herrington & Sutcliffe. I listen to them and what they are asking about. Their questions tell me what is most important to them. In addition to ascertaining laterals expectations, you need to clearly communicate your firm s expectations of them. For instance, one law firm leader tells us that a critical aspect of their process is to determine whether the lateral s professional style will match that of their firm. They let all new hires know up-front that they will be working on teams sometimes very big teams and that they need to be comfortable with this structure. That can exclude some people right from the start. Try to obtain, and reveal, as much information as possible, so everyone is on the same page. Integration and support More effort also needs to be expended on the follow-through after a new partner joins the firm. A disciplined programme of support and integration will help avoid the expense, time, management focus, and reputational damage caused by lateral partners seeking greener pastures. Departures of rainmaking partners may make the headlines, but the market also notices when a firm appears to lose new talent almost routinely. How do you make sure your laterals know you care about their success and that you have programmes to help them? For each lateral partner at FFW, we have a sponsoring partner [usually the department head who initiated the hire], says Gilmour. We also have a laterals committee (chaired by a lateral partner). The job of the sponsor and the committee is to ensure that new laterals have the support they need. They also routinely invite laterals to lunch and introduce them to other partners in the firm. The new partner should also have a designated point of contact to ask for resources, introductions, advice, and anything else they may need. It is critical for firms to periodically evaluate their staffing needs and ancillary support to ensure laterals are receiving the necessary services and to carefully track each lateral s progress. Gilmour has established a procedure for doing just that. After four to six weeks in the firm, laterals make a 68
4 Strategic lateral hires for law firms Figure 2: Extent to which expectations were met aggregate scores Source: Major Lindsey & Africa s Lateral Partners Satisfaction Survey 2007 presentation to all the partners on their skills and practice. That helps existing partners get to know their areas of expertise and crosssell their services. At the end of the lateral s first six months, they meet with me for a formal review. At that time, we put together a report on their performance, and measure it against their initial business plan. At Ropes & Gray, the partner or team that requested a new partner must produce a business plan (or a sponsoring memo) that maps out what they hope the new hire will accomplish and includes a profile of the lawyer(s) needed. Once a candidate has moved past the firm s preliminary screening, the plan is shared with them, so they can learn exactly what is expected. We then customise our integration process to help each lateral deliver on the plan, explains Brad Malt, partner and chairman of the firm s management committee. Disciplined implementation During a panel discussion about law firm strategy at the Law Firm Leadership Conference in San Francisco in April, the chairman and managing partner of Goodwin Procter, Regina Pisa, explained that while many firms growth strategies appear similar, the difference between success and failure is the disciplined implementation of those strategies. We believe this need for disciplined implementation also applies to the integration of a lateral partner and the growth of their practice. A successful integration programme may include a raft of processes, such as a mentor programme, quarterly reviews, a lateral partners committee, lateral partner presentations, partner lunches, joint visits to clients, internal and external networking, post-work social events, firm retreats, even satisfaction surveys but in the end someone must own the process and be responsible for the successful integration of the new partner. To give your policy some teeth, the firm s compensation system should reward partners who help integrate new laterals for example, assisting them on a pitch, referring matters, inviting them onto a team, or introducing them to clients. The cause and effect needs to be clear. As Gilmour explains, Helping to integrate new partners 69
5 Case study 10 Figure 3: Integration scores Source: Major Lindsey & Africa s Lateral Partners Satisfaction Survey 2007 is part of the review process for existing partners. We look at partner contributions, team building and cross-selling. We use financial metrics, including the referral of work between business units and partners, as a key to partner appraisals, compensation and rewards. Sheppard Mullin also tracks cross-selling. Partner and chairman of the executive committee Guy Halgren says the firm publishes a cross-selling report every month, and that cross-selling efforts are taken into account when compensation points are tallied at the end of the year. Take your time Time has a very important role to play in the recruitment and retention of laterals. The executive director of a leading Wall Street law firm tells us that one of the keys to successful lateral integration is the amount of time spent making sure the right hire is made. She says they are more concerned about getting it right than making it happen quickly. Sometimes they take two to three years to identify and bring on the right people. This firm makes sure everyone with a possible interest in, or connection to, the hire participates in the screening process. Everyone, which could mean as many as 50 partners, has the opportunity to meet the potential hire. This can take a significant amount of time, but it helps ensure that all participants have a say and end up with a vested interest in the lateral s success. The rules change after the hire. Then you owe it to the new partner to move as quickly as possible to secure their successful integration. There shouldn t be any downtime. They should be immediately drawn into the mix which is another good reason to have as many partners as possible involved in the interviews. That way they will know, from day one, what the new partner can help with and is capable of working on. New partners should start contributing as soon as possible to all firm matters that might benefit from their expertise. It is not primarily about the money Compensation is undoubtedly important but perhaps not as important as you may believe. Laterals surveyed by the LPSS ranked 70
6 Strategic lateral hires for law firms level of anticipated compensation and/ or compensation structure as one of the least-significant factors (sixth out of eight) in choosing their new firms. Law firms are also beginning to shift their focus. While the sine qua non for laterals has typically been their book of business, many law firm leaders tell us that they have learned to look more closely at the lawyer and person behind the portables. Many firms look for books of business, confirms Orin Snyder, litigation partner at the New York office of Gibson, Dunn & Crutcher. What we want is people who can introduce us to new clients, lawyers whose client base can be cross-sold, lawyers with skill sets that can be plugged into our client base. Sheppard Mullin s Halgren echoes that sentiment and adds that personality is extremely important: We are picky about who we hire. We do not hire books of business. We have learned that lesson. We focus on hiring good people. We hire people we want to be friends with. We have a no jerks rule. This kind of screening can only come from spending a significant amount of time with the lateral and getting to know them outside the interview room. You need to ask them about their personal lives and talk to people who know them. You need to determine whether you and others in the firm would be comfortable with this person working shoulder-to-shoulder during 14-hour workdays; sitting next to them on cross-country flights; going head-to-head with them when your case strategies differ. Ongoing communication is key Managing partners must ensure that their interview process is designed to learn as much as possible about what a potential new partner needs to be successful and what was lacking at their last firm. Armed with this knowledge, the firm has a template for what kind of support is needed. The firm must then follow through and provide that support so the lateral becomes a happy and productive member of the team. There must also be frequent communication. Malt says he regularly checks in with new partners to see how they are doing. I ask how things were done at their old firm and how we are doing in comparison. More often than not, I learn something new from them about our firm. As FFW s Gilmour puts it, If you don t ask, you don t find out whether a partner is happy until you receive their resignation letter. So ask, listen and implement programmes that will deliver the exact services your laterals need (not what you think they need). That will help ensure that your new laterals evolve into long-term partners. Note: Major, Lindsey & Africa s Lateral Partner Satisfaction Survey was released in The survey received over 1,000 responses from lateral partners at 244 firms across the US and six other countries. (A copy of the survey can be obtained by ing lateralsurvey@mlaglobal.com. Please specify PDF or hard copy.) Geoffrey Craig is a managing director in the partner practice group of Major, Lindsey & Africa s London office. He can be contacted at gcraig@mlaglobal.com. Melinda Wallman is a partner and global practice leader for MLA s international operations. She can be contacted at mwallman@mlaglobal.com 71
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