Vol. 84, No. 10, October 2011
According to The American Lawyer, more than 2,000 partners at major law firms switch firms each year – a number that only accounts for the 10 percent or so who practice at major national firms. While some portion of this number is accounted for by large group moves, such as ones that take place when law firms merge or fold, the majority of lateral moves involve situations in which just one or a few lawyers switch firms at a time. Both at the partner level and at the associate level, lawyers are switching firms at historic rates.
What accounts for so much movement? Quite simply, a lateral move can be very good for your career. This applies to lawyers with modest books of business as much as it does to partners with many clients.
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, more than $1.5 million in annual collections – you can often move to a firm that compensates you better. Although a legal recruiter occasionally will 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 cannot 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 lawyers who do not have large books of business? A common scenario is that of partners squeezed between their firms’ rate structures and their clients’ unwillingness to pay high fees. In these situations, lawyers 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 partners with books in the $1 million to $1.5 million range.
Successful transfer candidates have the following characteristics:
- A good strategic fit with the acquiring firm, such as having a practice that complements the firm’s current practice or a client base with many cross-selling opportunities;
- Persuasive explanations of why their current firm is no longer the right platform (that is, the right mix of colleagues, practices, clients, firm management style, marketing support, and other factors that comprise a law firm as an organization); and
- Reasonable compensation expectations.
If these characteristics seem applicable to you, you may want to explore your options, either through a recruiter or informally through conversations with peers at other firms. (Note, however, that approaching firms on your own has drawbacks – most particularly that doing so undercuts one’s stature as a person who is not actively looking to make a change. More on that below.)
Of course, lawyers 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 shareholder agreement; 2) the Wisconsin Rules of Professional Conduct for Attorneys, particularly SCR 20:1.4 (Communication) and SCR 20:1.16 (Declining or terminating representation); and 3) the laws of fiduciary duty, partnership, agency, and business torts. For additional guidance, see Wisconsin Ethics Opinion E-97-2 (Obligations of a lawyer and a law firm when a lawyer terminates association with a law firm).
Perhaps the best way to explain how the lateral recruiting process works is to present a case of a typical lateral move. Any lawyer can apply to his or her situation the concepts underlying the following scenario.
Case Study: “Joe Lateral”
The Situation. Joe Lateral was a transactional partner at an AmLaw Top 10 firm and served a mix of technology and energy clients in one of his firm’s Texas offices. Joe’s focus was merger and acquisition transactions on behalf of middle-market companies acquiring smaller companies. However, his current firm was refocusing to serve Fortune 500 companies and in the process was 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 clients were 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.
The Strategy. 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:
- Time was of the essence. Joe could see the proverbial writing on the wall at his current firm.
- 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 200 list.
- Numerous other law firms in Joe’s market were keenly interested in acquiring 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 focused in serving clients similar to his own – middle-market companies with modest, but real, needs for high-end transactional expertise.
Action Plan. I then set out to do for Joe what he could not 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; and
- Analyzed the partnership composition of firms in Joe’s market to identify opportunities that could be appealing both to him and to prospective firms.
On the basis of this analysis, I created a list of firms meeting Joe’s requirements: AmLaw 200 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 clients 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. Specifically, we discussed these firms’ recent hiring trends, key personalities, and market reputations. We decided to approach seven firms on the list as an initial burst, including firms with which he was previously not very familiar.
Adam S. Weiss is a founder and principal of Charles River Recruiting, focusing in the placement of partner-level attorneys with leading national, international, and regional law firms. He is the author of The Lateral Lawyer: Opportunities & Pitfalls for the Law Firm Partner. He has more than 20 years’ experience in the legal and recruiting industries and formerly practiced law with Weil, Gotshal & Manges and consulted at McKinsey & Co. Visit him at www.laterallawyer.com..
As expected, several of the firms were simply not interested. Some had recently taken on several new partners and could not immediately absorb additional new partners. Others determined that Joe’s practice did not provide them with sufficient cross-selling opportunities. However, three firms expressed interest in learning 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 forms that each firm requested and presented them with customized memoranda that described his practice, client base, and business development plans.
Winning Results. Two firms made Joe attractive offers. He chose to join the one that offered the best combination of compensation, benefits, and support for his practice and business development efforts. Joe is now his new firm’s office managing partner and a member of its national corporate practice.
“Working with a recruiter was one of the smartest moves in my career,” Joe says. 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. Although 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, or a counsel- or associate-level lawyer with a book of business, 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.