October 12, 2010
LOS ANGELES DAILY JOURNAL
In reference to the article “Law Firms Wary of Lateral Hires,” (Oct. 1) I have the following observations. I think it would be in the interest of prospective laterals to accurately understand the market and if any, such changes in process.
Since the recession, firms have not demanded increased books of business from laterals. To clarify, for at least the past five years, Am Law 200 firms have not commonly been receptive to $1 million practices. Typical business guidelines for top tier Am Law 100 firms have been in the $3 million range. For Am Law 200 firms, the bar begins at approximately $1.5 million to $2 million.
The fact the bar is at these levels has nothing to do with “most managing partners not expecting to get the exact amount of business a candidate estimates.” Firms have not “doubled” the amount of required business to ensure “raising the bar ensures a higher quality candidate will walk through the door.”
Law firms have been constantly refining how best to determine the nature and viability of a laterals practice and potential portability of said practice. That practice involves many factors including; analyzing historical practice metrics, understanding partners’ relationships with clients and identifying risk factors of portability versus income expectations among others. Through time and experience firms have become better versed at this analysis.
Since the recession, firms have become more strategic in their lateral hiring. Firms have determined strategic practice fit, client synergy and expertise to be stronger indicators to long term success and integration of a lateral partners practice. As a result, most firms have become less interested in “field of vision” opportunities.
As stated in the article, one cannot “take a book of business.” All clients are those of the firm, not any one partner. If a partner leaves a firm, the clients are able to select counsel. In many cases, works in progress may travel with a partner or be co-counseled with a departed partner and their former firm if so expressed and desired by the client. While lawsuits can arise, it generally involves inappropriate solicitation and not “a former employer accusing one of taking a book of business which is not theirs to take.”
Last, a firm’s request for three years of tax returns is not remotely in determining whether a lateral partner may overstate their book of business. Diligence gained in assessing tax returns is to verify historical income. While income can correlate to levels of productivity and book of business, verification of income is not in and of itself explanatory of the portability of one’s practice.
The art of lateral partner hiring is exactly that – an art, not a science. Lateral partner hiring continues to advance as firms become more experienced. While the recession has certainly served as a wake-up call to many firms in terms of due diligence and internal strategic fit, much of the quotes within the article are inaccurate and do not accurately reflect the current state of the lateral market and how law firms analyze their process.
Despite the downturn in the economy, my firm’s performance has increased, not decreased with the number of lateral partner hires. Our productivity and history is perhaps greater than that of any 5+ search firms placing partner level attorneys. Within that process we work closely with firms and partner candidates to ensure proper fit and to help ascertain important factors within the due diligence process. I believe I am in a position to speak authoritatively as to the subject matter.