If SportsCenter had a sister station named LawCenter reporting on news in the legal profession, its Stuart Scott (what is lawyerese for Boo Yah!?) would report on the big lateral hires throughout the year and not, as is the case in the NBA, for a brief period after the end of the season. Unlike players in the NBA, lawyers are free agents 365 days of the year and can be lured away from their existing firms at any time.
As has been reported, law firm reliance on lateral hiring has fueled a lateral hiring culture for many years. Much like NBA general managers that have tried to buy a championship through free-agent acquisition, law firm managing partners have repeatedly gone into the open market to build their firms-many times without a well thought out strategy.
The efficacy of lateral hiring for law firms is subject to debate and analysis. The American Lawyer recently published a series that suggested that lateral hiring might not be a clear winning strategy. The NBA standings likewise suggest that free agent signings or trading for big names nearing free agency does not always work (Lakers anyone?). But if a law firm is committed to growth through lateral hiring, the world of the NBA can be instructive.
Hire Like You Have a Salary Cap. The NBA has a salary cap but law firms do not. That does not mean that profligate spending makes sense. Rather, any law firm seeking to build or supplement its roster through lateral hiring should impose its own salary cap. That requires strategic planning prior to jumping into the lateral hiring marketplace. What hires will further the firm’s strategic plan and how much can be spent on those hires? This will help avoid tertiary hires that provide short-term excitement but do not fit long-term. It also will preserve “cap space” for more strategic hires.
Hire to Build a Team. Again, before you hire, what are the long-term objectives embedded in your firm’s strategic plan? Hire to those objectives and avoid being swayed simply by talent. You only need so many point guards-only one ball is played at a time. Also, character and coach-ability matters in sport and it can matter at a law firm. We know that lawyers are an independent lot-if someone’s personality or past history suggests that he or she won’t play well with others, take a pass.
The Good and the Bad of Long-Term Contracts. In the NBA, long-term contracts can be good. Had Miami signed LeBron to a 10-year contract four years ago, that would have been a good thing. Long-term contracts also can be bad. Gilbert Arenas’ contract, viewed the worst of all-time, is a loadstone. Due to lawyer mobility, long-term contracts in the legal profession have little meaning except when they hurt. Although law firms can’t lock up a LeBron, many firms offer lawyers multi-year guarantees to induce them to lateral over. A firm should refrain from guarantees lest it have a Gilbert Arenas dragging down profitability while heading its corporate section.
Ask Whether a Long-Term Approach is Better. Is a long-term approach to growth better? The Spurs, a team built over a long period of time with predominately cornerstone players, beat the Heat 4 Games to 1. That does not mean that hiring laterally is off the table. But lateral hiring in moderation while building for the long-term may prove better. That is how the Spurs have become the Wachtell Lipton of the NBA.
Leadership is Important. It takes talent to win. But leadership forges talent into a cohesive team that maximizes results. Greg Popovich sports five championship rings because he took talent and molded it into a number of superior teams. In the lateral hiring realm, once a lawyer is hired, the real work for leadership begins, not ends. Making the lateral hire an integral part of the firm’s future success is the mark of a leader that approaches lateral hiring with vision. A great leader will think about integration as part of the lateral hiring process.
Like it is often the case for NBA teams seeking to add new talent, law firm lateral hiring is best if any addition furthers a well developed strategy-a strategic plan. Does your firm have the discipline to only hired laterals strategically?