Big is better. Size Matters. We hear those statements all the time and in all contexts. More than a few law firms agree and have adopted growth plans in order to enhance their present status and prospects for the future. Many have grown through mergers, no doubt because management believed that growing existing practices, adding practices or expanding the firm’s geographic reach fit within the overall strategic plan. Some of those combinations seem successful; others have accomplished little while a few have proved disastrous.  As for many of the recently merged, the jury is still out. Only time will tell whether the combinations will work.

Growth through merger is one way to grow. But because a potential merger is not readily available all the time or desirable for some firms, many firms instead turn to lateral hiring to fulfill their strategic vision.

There are a lot of reasons lateral hiring proves to be a good alternative to merger. A firm trying to hire laterally can narrow its acquisition to the most productive attorneys and ignore attorneys that add little. Romancing the lateral may be easier because the hiring firm can more intensely court the potential lateral by focusing only on the lateral’s desires and aspirations. By directing the discussion with the lateral to the potential for an improved platform, access to a broader client base and better compensation, the likelihood of sealing the deal becomes a distinct possibility.

The thrill of the hunt aside, the hiring of a lateral attorney, even with a strong book of business, can bring some negatives. Specifically,

Once portable, always portable. The typical lateral acquisition is premised on the lateral bringing his portable book of business. Unfortunately, if the hiring firm can lure the lateral attorney and his portable book away from his original firm, then another firm can do the same in a year or two. For the lateral, his first move is an education on how to move. There is no reason he won’t do it again and while he waits, he may keep his clients close.

Institutionalizing the Lateral’s Clients May Meet Resistance. Many laterals move to a new firm to take advantage of a better platform. That form of controlled sharing by the lateral can work well. But any attempt at taking it a step further and  institutionalizing the lateral’s clients can often be met with resistance and, in extreme cases, departure.

Satisfaction About A Lateral’s Compensation is Limited. An incoming lateral negotiates his compensation on the basis of past performance and projected future results. Limited testing of the past is compounded by the speculative future. For legacy partners, the deal with the lateral can be viewed as special treatment for someone who has proved nothing. It can make partners feel marginalized and can breed resentment.

Promises are Forever. If there is a perceived special treatment for the lateral, it is most grating at the outset. If performance in keeping with the projections is delivered, most resentment will dissipate, but not necessarily disappear. However, if the lateral misses the mark or stumbles later, the performance promised by firm and lateral alike will resurface. This does nothing for stability, integration or morale.

Numbers Do Not Equal Culture. A lateral’s past metrics and projected future performance present quantitative measures that usually drive the lateral addition analytics. A focus on the quantifiable metrics has its place, but understanding the cultural fit can be just as important. Numbers don’t adequately measure whether the lateral will conform to generally accepted partner behavior in the new firm. Getting the numbers right does not assure a good personality fit. Moreover, if a culturally awkward lateral seems to have jumped to the head of the class in compensation and stature, the conduct of long time partners may change, and not necessarily for the better.

Lateral hiring is here to stay. It is a proven way to grow a firm and many success stories can be told. Nonetheless, lateral hiring tends to do far less for stability in a profession noted for its fragility. Any downside must be offset by the benefits provided by the lateral and his practice. How would you guard against these lateral hiring negatives?