Lateral damage: failed hires cost London dear

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  • This is interesting research, but I am rather sceptical about describing all lateral hires that result in a further move within 5 years as 'failures'. There are loads of reasons why people might move on, only some of which are connected with 'success' or 'failure'.
    5 years is a relatively long time in a professional career, and I think the culture of viewing people who have moved between a number of firms as suspicious or substandard adversely affects those within the profession. The 'trickle down' effect of this view allows firms to get away with exploiting associates to a greater degree than would otherwise be possible if there were less stigma about moving between firms.

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  • I agree to an extent. The term 'failure' is taken from various interviews with HR directors at law firms, and refers primarily to the firm's experience, in that if lateral hires stay less than five years, they have not usually contributed enough to the firm to become profitable; hence a hire that lasts less than five years could be said to have failed.
    Equally, I suspect that if you spoke to most candidates and asked them if they wanted to stay more than three years in post in their new job - which is when things start to go wrong if they're going to - they would almost certainly say they did. I would bet most of them would want to stay more than five years too - lawyers do not like moving, and for many good reasons.
    Having said all that, the reasons for things working or not are, as you hint and as I say in the article, are complex and varied.

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  • This is an admirable piece of work. I also wondered about the five year/failure paradigm, but the point is taken. It would be fascinating to see how these figures measure up against some comparable groups (Lawyers in NYC, Accountants and Bankers in London, for example). That 50 % of 2005 Partner hires have left by 2012 seems alarming, but is that figure significantly better in, say, Investment Banking or for Corporate Finance Partners in Accountancy?

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  • Thanks Rob!
    That would indeed be an interesting comparison. Taking up Mandy's point, I suspect there is a stigma to moving around in law which, as I understand it, does not exist to the same degree in, say, banking, where in some areas if you stick around more than two years you might be considered to be stale.
    At the moment in law, lateral hiring is a high-cost model which does not work quite a lot of the time, and is one which can be very high risk for the partner or partners moving. Your career will survive one failed move, but a second one can be the beginning of an inexorable downward movement in status and compensation.
    The risk of moving is rarely, imho, covered off with candidates by recruiters, who have every interest in moving them (and don't really need to concern themselves with how long the lawyers remain in post after having placed them).

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  • Interesting research and confirms my assumption that law firms tend to buy first and ask questions later when approaching lateral hiring.

    Would be interesting to know the comparisons in attrition between when firms instruct headhunters to scour the market / undertake due diligence and when they hire partners because an apparently great opportunity knocks on their door. As with many things when an opportunity looks too good to be true, it generally is...

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  • James
    You raise a very interesting point, and it's an area I'd love to look at in more detail (and may yet do...)
    My own view, for what it's worth, is that in a headhunting/search situation, law firms often 'fall in love' with their desired candidate and make additional concessions during the process. The candidate often feels 'wooed' and is content for the law firm to make all the running. The pressure on the hiring department to make the hire is huge, and compromises are often made in the business planning process.
    In contrast, with opportunistic situations the onus is on the candidate to demonstrate why the law firm should take them on. The business plan tends to be a lot stronger but, arguably, there is often less internal buy-in and that may lead to a trickier recruitment context, with less support forthcoming from incumbent partners. I suspect the failure rate might be just as high, but for different reasons!
    I would like to see law firms being much tougher with laterals' business plans, but a precursor to that is getting their own plans fit-for-purpose and developing an understanding of how to construct and operate strong business plans throughout; only then can they approach laterals' business plans with any degree of confidence or understanding.
    When I was a recruiter I acted for a number of candidates who were rejected by law firms because their business plans were simply too good, and spooked the incumbents. A bizarre situation.

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  • A nice piece Mark, as always. Your point on business plans is interesting. I doubt if firms look at the business plans once the lateral joins. If firms were more rigorous about supporting and holding laterals to account to deliver the agreed plan over the agreed time frame, the % success rate would surely rise. Sadly, I have yet to come across a firm who takes this approach.

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  • Mark - not sure if you are familiar with Bill Boorman? Recruitment guy who genuinely does think about things differently. He's been advocating a retention based fee model for a while now. Look up his tru unconferences (I know) - worth the time if only to get some different points of view. Here's a link to a piece Bill had in the latest edition of The Recruiter:

    http://www.recruiter.co.uk/opinion/time-to-reward-retention-over-introduction/1012849.article

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  • References taken, psychometric testing perhaps at any stage of the career...then it boils down to the gel with the new firm's culture and incumbents who may resent/accept the incomers. It's all competition after all, so it may be the best way to integrate is to perform but also to attend all of those out of work social gatherings that create the real "family" culture. As long as it's not like a certain "Firm" that Tom Cruise had the indubitable pleasure of joining.

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  • It would be interesting to see the same test applied to city - region lateral hires.

    In the regions, there are some awful partners taken from London firms.

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  • @Rob. Thanks, the name rang a bell, will take a good look!

    @'Tower': culture is absolutely key, and you're right to bring up the word 'family' (though I tend to use 'clan'). Alas as firms attempt to corporatise their approach, many of the benefits of clan/family are left behind, yet very little attempt is made to try to transition people from one mindset to another. This is a fascinating area for me.

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  • Perhaps one of the (I am sure various) reasons for the lack of "stick" in laterals is that leopards don't change their spots - candidates will be the same people they were before and after the move, and despite what firms may like to think the fundamentals and pressures involved in the partnership role are much the same from one firm to the other.
    A partner who is looking to move from one London firm to another is doing so because s/he is for one reason or another unhappy with the current firm. The grass is actually quite rarely significantly greener on the other side of the fence, and 5 years is long enough for that to become apparent and the next set of greener grass to grow.
    Firms recruiting need to reality-check themselves about why the candidate wants to move - not just what they will bring to the new firm, but whether the new firm is in practice going to offer the candidate the panacea from whatever woes have incentivised him or her to leave their current firm. It will be quite rare that a candidate will live up to the name and be candid about the true reasons for departing their current firm during the interviewing and wooing process (because they still owe duties of confidentiality and ties of loyalty to the existing firm, and because the proposed move might not take place!)

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  • There is a lot of truth in that, although it's worth saying that many people don't choose to move - one headhunter I spoke to reckons a third of the candidates they see are being forced to move by their firms, and I reckon the proportion is greater once you add in all those people who feel as if they need to move, perhaps having seen the writing on the wall or having hit a career roadblock.
    In addition, it's not just the candidate playing cover-up during the interview process; law firms are just as bad at that, which can lead to some nasty surprises when a partner arrives, by which time it's all far too late.
    If candidate and firm were a lot more honest during the process I imagine far fewer moves would take place, but maybe more of them would succeed! I suspect the answer, as with many things, lies somewhere in the middle...

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  • Firms are looking for milk cows. And the cow better produce milk instantly. Firms, because of financial pressures, do not stick with their investments beyond at best the medium term.
    That said, there are firms thaat also do not stick to their side of the bargain, leaving the lateral in the lurch.

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  • I find this kind of view to be unhealthy: "one headhunter I spoke to reckons a third of the candidates they see are being forced to move by their firms, and I reckon the proportion is greater once you add in all those people who feel as if they need to move, perhaps having seen the writing on the wall or having hit a career roadblock."
    This attitude prevents people from leaving places where they may be quite content, but where they see better opportunities elsewhere, as anyone who wants to move 'must clearly be defective'. Not all firms are the same, and during my training contract it became very clear that different departments within the same firm can have completely different atmospheres and working environments. To choose to leave one of the nastier departments certainly wouldn't have been a 'failure', and timing and demographics (i.e. how many more senior associates are there than you?) have just as much influence on a person's promotion prospects as their abilities as a lawyer.
    This 'promotion' concern doesn't just apply to associates, as some firms hold equity incredibly tightly whilst simultaneously being very reluctant to de-equitise underperforming incumbents.

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  • @Larry
    You make a fair point, and I was certainly not trying to say that all moves have to be seen as failures, far from it, there are good career reasons for moving, of course.
    I should have been clearer though. To clarify my original comment, I should have said "a third of partner candidates"; assistants and associates are rarely forced to move (given that you can simply sack or make them redundant).
    There is, I feel, still a deal of suspicion around many partner moves, especially if that partner has moved more than once. Partners still have to think quite carefully about how they explain their reasons for wanting to move as that can have a significant effect on what transpires down the line.

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  • Mark
    Great piece as ever. I just wanted to add two points from a partner recruiters' perspective:

    1. Good recruiters care deeply if a lateral partner hire fails. It impacts on our reputation and makes winning repeat business difficult. Clearly we are a fee driven business. But we also all rely on referrals and reputation and the best recruiters will always give honest advice - if that means telling a partner that they should stay put, so be it.

    2. To add some balance to the research, there have also been some massive success stories when it comes to partner recruitment and many law firms have prospered off the back of well executed lateral hiring programmes. Law firms carry on recruiting partners because it is the most effective way of winning market share in a fiercely competitive market for legal services.

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