Diligence is the mother of good fortune. – Benjamin Disraeli
Major, Lindsay & Africa recently released its 2014 Lateral Partner Satisfaction Survey. The results offer numerous insights into the state of lateral law firm recruiting. With so much at stake — for the lateral and the firm — three statistics seem worthy of special attention.
- Barely more than half (52.8%) of lateral partners responded that they were “very satisfied” with the firm they moved to. Although the survey results do not provide any insights into the lack of enthusiasm, two other statistics might provide a clue.
- Almost two-thirds (63.4%) of lateral partners reported that they had not reviewed financial statements or documents related to the obligations of their new firm prior to making the move. In an environment in which so many law firms continue to fail, downsize and restructure, this statistic is stunning.
- Equally surprising is the fact that almost two-thirds (60.7%) of lateral partners did not review the partnership (shareholder’s) agreement of their new firm prior to joining. One has to wonder what percentage of those partners would have required that a client read any such document prior to making any business decision — much less, a career move.
These three statistics point to the need for change in the hiring process on both sides of the lateral hiring process. To avoid surprise or disappointment lawyers need to do their homework before committing to a new law firm.
A Change for Law Firms
Law firms should, as a normal course, provide prospective lateral hires with recent monthly financial statements, as well as audited statements for the two preceding years. Those statements should include a comparison between actual and budgeted firm performance. Additionally, the firm should provide a copy of the firm’s applicable governing documents. Of course, the privacy of such information should require that the lateral sign a confidentiality agreement.
A Change for Lawyers
Every lawyer (partner or not) should require the above information from his/her prospective new firm, prior to making any commitment.
Many lawyers are understandably inexperienced when it comes to reviewing law firm financials, governance documents and terms of employment. However, the significance of a career move justifies the need for professional counsel. And, for a relatively small investment a lateral candidate can access the appropriate assistance. The risk of a mistake is simply too high…… and the statistics seem to indicate that mistakes are all too frequent.
A Positive Indicator
If our practice is any indication, there is an encouraging move toward a more business-like process on the part of both hiring firms and individual laterals. We have noted an increase in demand for this type of service; in each case, the lateral lawyer and new firm benefit from the heightened due diligence.
What other changes would you add to the lateral process?