April 18, 2002

Not all headhunters are the same. Partners need to be able to distinguish the differences among them. Here are some tips on how to distinguish experience and differences among recruiters and information on what recruiters do.

By: Larry Watanabe

A partner called the other day about the possibility of leaving his law firm. After discussing the specifics of his practice and important personal and professional information, I recommended he consider a law firm that unmistakably met his principle objectives. However, he stated, earlier that day he received a phone call from another recruiter asserting that he was “representing” that very law firm. Didn’t that mean, he asked, that that recruiter was the only recruiter who could represent him to that law firm?

Undoubtedly, the partner was left with the impression that the recruiter had a proprietary relationship with the law firm. Lawyers understand and make the distinction that the term “represent” is a commonly used expression when they work with their own clients. Unfortunately, some recruiters use this term inappropriately and often with the intent to mislead the partner into thinking a proprietary relationship exists when, in fact, they are one of perhaps 30 or so recruiters working on the same contingency search.

In this instance, my search firm had been retained under exclusive terms to represent this law firm in its statewide lateral partner recruiting efforts. By virtue of our exclusive and retained engagement, no other recruiters were authorized by that law firm to recruit partners on its behalf.

Having placed hundreds of partners with law firms throughout California, I am alarmed that many experienced attorneys allow untried recruiters to handle their career transactions. Often experienced partners with significant client portfolios and complex transition issues will not take the time to distinguish among recruiters – that is, until they are in the middle of negotiations with the potential new firm and find they are receiving little to no assistance from their recruiter.

A considerable percentage of law firm partners move to other firms with the involvement of a legal recruiter. Nevertheless, many partners are unaware of how recruiters truly operate and how to distinguish experience and differences among recruiters. How do they work? Are there categorical differences between them? How can they help or hinder the process? Here are a few things to keep in mind when a headhunter calls.

‘Blood in the Water’

There are a variety of reasons why partners are receiving more calls than ever from recruiters. Naturally, the timing of the year is a factor. Most law firms distribute a significant percentage of a partner’s earned income from the previous year in January and February. For that reason, the majority of partners move during the first quarter of any calendar year. In many cases, if a partner elects to leave his or her firm before receipt of such income, the partner loses entitlement to those moneys.

In addition, the crash of the technology market has affected many highflying and expanding law firms that posted enormous economic gains during the past three years. Those same firms now find themselves in a vulnerable position because their profits have fallen dramatically. Consequently, many partners are concerned, and recruiters can smell the potential of blood in the water.

That said, the central cause for the unusual mass flood of headhunting calls relates to the nature of the legal recruiting market and the economy. Pure and simple, the overwhelming population of legal recruiters earns its living placing associates – a market that does not exist. In an effort to keep the lights on, many are attempting to enter the partner-level market, experience or lack thereof notwithstanding.

Over the past six months, almost every search firm has advertised that it is a partner-level recruitment firm. While noble in effort, those recruiters can produce many hazards that partners should be aware of when considering the services of a legal recruiter.

‘Beauty Contests’

The majority of recruiters work with law firms on a contingency basis. Law firms openly describe to recruiters available positions within the firm – information that also is available through most law firm Web sites.

Because the legal recruiting industry is largely unregulated, virtually anyone can pick up the phone, place a cold call to an attorney and introduce that attorney to a law firm in the hopes of earning a placement and fee. While the preponderance of major law firms require signed agreements with legal search firms or recruiters, if a recruiter is representing an appealing candidate, some firms will work with that recruiter absent a signed agreement.

Contingency search work is simple and straightforward. Find the right candidate, and you may become entitled to earn a placement fee. There are no requirements by the law firm to bind the recruiter, save the law firm’s fee terms, and law firms generally do not interview all recruiters or search firms with which it has a contingency relationship. Accordingly, the level of scrutiny for recruiters who operate on a contingency level is virtually nonexistent.

While not always used, retained searches are far more commonplace with partner-level searches than in associate-search assignments. With a retained search, the legal recruiter and law firm enter into a contractual arrangement whereby the law firm pays a nonrefundable retainer fee to the legal recruiter to capture the recruiter’s time and attention in conducting a specific assignment on the law firm’s behalf.

Often, the retainer fee is netted from the subsequent placement fee earned by the recruiter when placing a candidate that fits the scope of the retained search. A retained search also may involve an exclusivity provision whereby other recruiters are not authorized to represent candidates to that law firm for the contracted search without the involvement of the retained search firm.

It is important to distinguish between recruiters who conduct contingency and those who do retained searches. While almost anyone, even the most inexperienced recruiter, can work on a contingency search, law firms are discerning and judicious when selecting a recruiter or search firm to conduct a retained or exclusive search assignment.

Most often, the law firm will conduct a beauty contest and interview search firms or recruiters for a retained assignment. There are but a handful of recruiters who consistently and successfully place partners and practice groups with law firms.

‘Unmistakable Differences’

While partners’ time is demanding and they often receive far too many recruiting calls to discern among Recruiter A, B and C on any given day, there are unmistakable differentiations between partner- and associate-experienced recruiters. Simply put, would you allow a real estate broker to represent the interests of the sale of your multimillion-dollar home, when that broker typically sells condominiums in tract developments? Legal recruiters, like lawyers, have different areas of specialty and experience.

An associate recruiter’s primary contact at a law firm is the firm’s recruiting coordinator, one of whose responsibilities is to make recruiters aware of the firm’s associate hiring needs. The recruiter becomes entitled to a placement fee for a candidate if a firm hires that candidate and that recruiter was the first person to get the candidate’s resume to that firm.

The practical result of this system is that, to protect themselves from competing recruiters’ phone calls and solicitations, associate recruiters benefit by obtaining authority to send candidates’ resumes to as many law firms as possible. Because the associate recruiter is most often working on contingency assignments, the recruiter has no allegiance to Firm A, B or C and is concerned only that the candidate accepts a position that was introduced by the recruiter.

During the period that a candidate is interviewing, the associate recruiter may assist in scheduling interviews and obtain feedback from the recruiting coordinator about how the candidate is progressing. The associate recruiter rarely has access to the law firm partners, who look to the recruiting coordinator to manage the recruitment practice with the recruiters.

If the associate receives an offer, the recruiter’s role is restricted in compensation negotiation. This is because most firms employ a lock-step compensation system coupled with the fact that compensation at most major firms is posted on the Internet. The associate recruiter will notify the candidate of the terms of any offers, and if there are multiple offers, an experienced associate recruiter will help the candidate discern differences among offering firms.

‘Meaningful Details’

Experienced partner-level recruiters have spent many years developing and nurturing relationships with law firm management and possess insight beyond what may be gleaned from Martindale-Hubbell or other legal resources.

Their relationships (and it is entirely relationship-based) are tied to firm chairs, managing partners and practice group chairs. While pressed for time given their challenging schedules, these important law firm partners do not seek to keep partner recruiters at bay; rather, they look to them for counsel and information.

In turn, partner recruiters are able to apprise their candidates of meaningful and important details on how a deal is progressing from the firm’s perspective and provide insightful information about the process. Therefore, they are in a genuine position to facilitate communication, make sure there are no misunderstandings and help shepherd the deal along.

With regard to partner-level compensation, such data, unlike associate compensation, is not readily available and is largely subjective. Moreover, while media reports of profits per partner may be a reasonable gauge of a firm’s performance, there are many factors in determining partner compensation that almost invalidate these numbers.

An experienced partner recruiter will know, for example, how a law firm compensates its current partners and incoming laterals, the amount of equity required to enter the partnership, finance mechanisms provided by the firm for capital buy-in, lease obligations, firm debt (or hopefully, lack thereof), the overall strategy of the firm, the visions and business plans of firm practice groups, and every detail of the interview and due diligence process conducted by the firm.

Law firm management tends to disclose this detailed and confidential information to only those recruiters they know and trust. The ability to possess and convey this information is invaluable to the partner candidate and greatly assists in the compensation negotiation process.

Additionally, a partner recruiter will assist in developing a partner’s business plan, address potential conflict issues, assemble data and materials required by the law firms, and help manage the interview process – from start to finish. Typically, the lateral process for a partner move will range from three to 12 months.

‘Experience Counts’

When contemplating a lateral move, a partner has two fundamental choices. One, wait for the right call or opportunity, and allow the market to come to you; or two, seek out the market. While a combination of both is most commonly employed, few partners seek out recruiters who can help them in this process. Rather, they allow the process to unfold, often without their control.

In the search of a partner-level recruiter, experience counts. While some believe that the number of partner transactions a recruiter has handled is not important, would a Fortune 100 company allow a bet-the-company trial to be led by a lawyer who has little to modest trial experience? Better yet, would this same company allow a lawyer to try a case when, in truth, the lawyer specialized in transactional matters? Of course not.

Many recruiters are reticent to tell a partner about their experience because they lack the depth required to make their case. The number of partner-level transactions a recruiter has handled directly correlates to the strength of the relationships to law firms and management. Certainly, if a recruiter can evidence experience in handling hundreds of such transactions, he or she must be doing something right.

Ask a recruiter to provide you with his or her firm’s record of accomplishment in placing partners and practice groups. Find out how many partners the firm has placed in the last year and in the previous two years. Some recruiters will rest on their laurels and tell a partner they have placed more lawyers than anyone in this and every country combined. How relevant is that in the year 2002 when the market has been changing at an unprecedented pace and the majority of those recruiters’ placements occurred more than a decade ago?

In addition, ask for references. An experienced recruiter will gladly provide references of partners placed along with law firm management references.

Whenever possible, a partner should meet with the recruiter he or she intends to work with. Remember, the recruiter will act as a spokesman or spokeswoman and representative during the process, and credibility is an important factor to consider. Law firm management is comfortable working with those recruiters who are reputable and experienced and is hesitant or leery of those who are unproven. That may greatly affect the type of information and insight gained by the recruiter on the partner’s behalf.

‘It’s Your Career’

Making a lateral move can be one of the most important and pleasurable decisions of your professional life. When making a decision to work with a legal recruiter, do not rely on randomness or lack of information. When a headhunter calls, conduct due diligence, ask the right questions and make an informed decision. It may be the best and only career move you make.

Larry Watanabe is a founding partner of legal search firm Watanabe Nason & Seltzer. He has placed hundreds of partners throughout California.