Lateral hiring normally makes the top 5 list of priorities for law firms desiring growth. Some firms follow a process for lateral hiring that focuses on preserving its culture and values. Other firms believe that it is more important to break down entry barriers and seek laterals at an expedited pace.
Regardless of a firm’s approach to lateral hiring, a process that is too rigid will scuttle most deals. A process that is too loose normally ends in unmet expectations – or worse. To temper these extremes, I recommend that firms create a process that includes the creativity of art and the discipline of science.
Specifically, firms desiring to improve their lateral hiring success should consider the following factors:
A firm with a strong history of successful results is likely to maintain its dominance in a lateral transaction, but even these firms may benefit from the thinking of lateral hires. Firms that are most successful are open to incorporating the ideas of lateral hires into their culture. Having just evaluated the firm from a buyer’s point of view, lateral hires are positioned to provide a firm with valuable external market insights.
It is important to understand how a lateral transaction is supposed to be accretive to the firm. Some firms believe that laterals must contribute actual profit to the firm while others are satisfied with help covering fixed overhead. Laterals may also be accretive in terms of new client and or new practice area opportunities. As for timing, I recommend that firms plan on 18-24 months before any real economic benefits are derived.
Firms that are actively seeking laterals are more inclined to engage the services of a recruiter while firms that are in a more passive mode are more likely to be patient and work through their existing network of contacts. Regardless of whether a firm is in an active or passive mode, it is essential that they have a clearly defined approach to engaging a lateral when the opportunity arises. Any ambivalence or ambiguity on the part of the firm will likely scare laterals off.
Implementation and follow up
It is essential to incorporate laterals into the mainstream of the firm as soon as possible. As with a new client procurement, consistent execution is what separates the good from the great. Well executed implementation not only increases the potential for success of an existing lateral transaction, but the ability to have previously recruited laterals assist in the courting process for new laterals is a real edge.
Results evaluation and course correction
There is much to be learned from objectively reviewing the results of a lateral transaction. Skipping this process is a missed opportunity to improve future transactions and to make adjustments to the current situation if necessary. A predefined evaluation process and system for making adjustments will remove the emotion from these decisions and will have the added benefit of encouraging laterals be more candid about their expected future performance.
Lateral hiring will never be without risk. The consequences of a bad deal may include economic loss, morale loss and damage to the firm’s reputation. Creating a process that considers the attributes described above will help to increase a firm’s likelihood of success.