The Citi Private Bank and Hildebrandt Consulting Report released last week stated that in 2016, the hiring of lateral partners will be a significant factor to all firms’ financial success. My recent conversations with law firm chairpersons and partners confirm that firms in the Am Law 200 will be looking to hire lateral partners in record numbers in the coming year. I have also heard from my contacts that top Am Law 100 firms will be opportunistic players in the lateral partner market for 2016.
For those of you considering a lateral move in 2016, here is your “to-do list” to put you in position to make the best possible move:
I. Carefully Assess Your “Sustainable” Portable Book of Business: It is important for a partner to assess his/her sustainable portable book of business. The key words are “sustainable” and “portable.” With regards to sustainability, carefully look at the platform that will benefit your clients. While some law firm platforms may seem attractive, they might not be the types of platforms that will support your client base. The portability of your business centers on your client relationships. The stronger the relationship, the easier it will be for you to port your business. Here are some suggestions for the assessment of your book of business:
A. Client Names and Business Generated: Firms are looking for historical metrics with respect to the business generated and collected from your significant clients. Three years of historical metrics are preferred.
B. Billing Rates: Carefully assess your billing rates for each of your clients. Take note of any blended rates or alternative fee agreements.
C. Realization Rate: Firms are very particular with regards to a partner’s realization rates. If your realization rate for a particular client is lower than your average realization rate, make sure that you note the reason for the disparity.
II. One-Page Business Plan: Many of the Am Law firms are looking for the “one-page business plan” in order to determine if the prospective lateral partner is a good “fit.” The one-page business plan differs from the LPQ and the standard business plan by combining the most vital parts of each document into a one-page summary that offers firms a snapshot of a prospective lateral partner’s potential. The one-page business plan does not replace either document, but it saves time in the beginning stages of lateral inquires for all parties.
What should a one-page business plan consist of?
A. The Narrative of Your Professional Experience: The first part is telling your “professional story.” For example, if you are government lawyer, then why have you decided to (re)enter the private sector at this time?
B. Metrics/Clients or Contacts: It is very important to focus on “real” contacts. The relationship with the contact is crucial for the law firms. Law firm contacts are important because partners give work that is conflicted out of their firm to friends who will not steal their clients.
Important metrics to list include: billings/collections; originations; realization rate; billing rate; and billable hours. You should list for the last three years if possible.
C. “Road-map in the Firm”: Part three should be a paragraph about your plans for client development and/or business generation in the new firm (with the new platform). In essence, it is taking some of the “key” contacts or clients listed above and describing an action plan.
III. Lateral Partner Integration: The key to making a successful lateral move for partners is the firm’s lateral partner integration system. There is a huge difference from one firm to another in the system (if any) they utilize to integrate lateral partners. Understanding the various types of lateral partner integration is essential for any partner considering a lateral move.
IV. Selection of the Right Legal Recruiter: Selecting a good legal recruiter can be difficult in this saturated market, but it is also imperative. A bad recruiter will lead you astray for a quick buck, but a good and knowledgeable recruiter knows that the industry is built on relationships and trust.
What should you look for in your recruiter?
A. Access to Law Firm Intelligence: Law firm intelligence is not freely given and good recruiters spend years building and fostering relationships with firms to get access to intelligence that will help their clients. This information can make or break a lateral move, it can help find the best platform for your business, can inform you of potential leadership opportunities, and more.
B. Guidance Through the Process: The process for a lateral partner move from conception to execution is long, often taking over six months. Your recruiter should be a part of the entire process, not just the submission. There are many avenues for errors in partner moves from client conflicts to lateral integration to salary negotiations; deals can fall apart quickly. Your recruiter should be with you throughout the entire process. If they disappear after the submission, it’s time to find a new one.
C. Compensation and Integration: Perhaps the most tangible value a recruiter can add is in compensation negotiations. A good recruiter will have a breadth of knowledge of partner compensations from their past deals. This allows recruiters to benchmark your offer and leverage their intelligence to get you the best possible offer.
Once an offer is accepted, your compensation package is only one part of your eventual take home. In the long run, proper integration will have a lasting impact on compensation — and it is an impact that is sustainable. Focusing on the compensation package alone is short-sighted; the key is integration because it will lead to the expansion of the lateral partner’s client-base. A good recruiter will use their insider knowledge to help you plan your integration to grow your business.
It always pays to keep the number of a good recruiter in your phonebook, and if you are thinking of making a lateral move, your first call should be to a reputable recruiter.