Search and Employ
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The chances are that many of you reading this will have used a recruitment consultant at one time or another. You may have wanted to test the water or were just intrigued by an advertisement, or you may simply have wanted an escape route. The selling point of recruitment agencies is very simple; it is based on hope. Hope for the candidates that they might get that perfect job, and hope for the law firm clients that they can get the perfect lawyer. But with recruitment becoming increasingly strategic, consultants are having to advise on candidates' careers, which they never previously had to do. The day may not be far off when recruitment consultants act for candidates in the same way that football agents act for footballers - counselling on life choices. But The Lawyer can reveal the new generation of consultants who will be shaping the way law firm recruitment operates.
An increasing number of consultants coming to the fore are women. "Without being sexist, I think women often make better recruiters," says Nick Root of Taylor Root. Recruitment consultancy ZMB has traditionally had a high number of women - director Sally Horrox is one of the pioneers and, among others, it now boasts the highly-regarded Yvonne Smyth. Even TMP QD, which is one of the more male-orientated agencies, has a number of highly-rated women in private practice recruitment, such as Sarah David and Michelle McGregor. (Having said that, TMP QD's obvious leader in terms of placements is workaholic Greg Abrahams, who this year placed no fewer than 20 partners and billed nearly £1m in fees.) At Garfield Robbins, meanwhile, Andrea Melnick is the clear star.
Recruiters are increasingly adopting a quasi-counselling role, requiring softer skills, which may be one reason why there are more women coming to the fore. "The majority of people come in because they're disgruntled, and because they don't feel that they're being valued," says Smyth at ZMB. Penny Terndrup at EJ Legal says: "A lot of these people feel useless because of the situation they're in. They feel unconfident and often just need someone to sit down with and take them through what they've done and what they're good at."
This new generation of recruitment consultants will not only be shaping careers, but they will also have to wrestle with the key questions confronting their businesses at the moment. For despite their seeming power, the recruiters are being attacked from two directions. The threats may be small at the moment, but are nevertheless significant. "There's headhunters on one side and there's the internet on the other," says Allen & Overy (A&O) human resources (HR) director Martin Pexton. "[The recruitment agencies] have got to add value now." For the moment, the recruiters have become fat on the status quo. But can they adapt their businesses? Can they carve out new roles for themselves?
It is impossible to consider these questions without first looking at the history of recruitment. The recruiters' power is rooted in the recession of the early 1990s. While traditional market leaders such as Reuter Simkin held sway, the younger, more aggressive outfits of QD and ZMB (itself a spin-off of QD) pioneered a new way of doing business. Both astutely targeted the outsiders who were seeking to build up City presences, notably the regional firms that were opening in London. QD in particular built a huge chunk of its business advising Hammond Suddards and Dibb Lupton Broomhead, as they then were, on their drives into the London market. In those heady days when hiring equalled strategy, Gareth Quarry of QD and Joe Macrae of ZMB insinuated themselves into the heart of strategic decision-making. (They were also there to catch the fall-out - when Dibbs made a wholesale partner cull in 1995 QD was hired to advise on outplacement.)
After the regional firms came the accountants. Again, QD was hired to run the Garretts campaign. In one of the first great examples of team moves, QD's Leeds office put a whole group from Simpson Curtis (now Pinsent Curtis) into Garretts in 1994. And the two firms also dominated the recruitment into US firms, which began in earnest in 1995 and which still forms a staple part of the two consultancies' incomes. "There was a survey of key partner moves from UK firms to US firms between 1997 and 1999, and we were responsible for over 50 per cent of those moves," says Abrahams. Indeed, QD was pivotal in helping to set up the London offices of Sidley & Austin, Cadwalader Wickersham & Taft and McDermott Will & Emery, and also moved Stephen Mostyn-Williams' team from Ashurst Morris Crisp to Shearman & Sterling. ZMB, meanwhile, has done substantial work with Gibson Dunn & Crutcher, Mayer Brown & Platt, Latham & Watkins and Orrick Herrington & Sutcliffe.
Several years on, though, the picture has fragmented somewhat. QD and ZMB are still the biggest brands in the business. The QD group turned over £16m last year, with ZMB grossing some £6m. One of the key challengers for partner placements outside the traditional two is EJ Legal, which moved nearly 70 partners last year and which turned over nearly £2m. Other players within the market include Taylor Root, Garfield Robbins and Michael Page among others. And the threat from the headhunters in particular - while still theoretical in many respects - preoccupies all of them. TMP QD's Abrahams says: "No single headhunter can dominate the market because of the conflicts issue." However, headhunters can certainly swipe some top-end assignments from under the noses of the larger recruitment firms, thereby eating into their territory.
The arguments swing back and forth. To headhunt or not to headhunt? Search or selection? It is easy to see why search is an attractive prospect for the agencies. Quite apart from anything else, it can be very lucrative - typically, it will yield fees of around a third of the lawyer's salary in addition to a retainer. Recruitment agents, meanwhile, usually receive around 20 per cent in commission, though that figure can vary.
But the trouble is that recruitment agents cannot transform themselves into both search and selection, however much they would like to cut off the new entrants into the market. The conflicts are simply too great. "We're not going to run a recruitment company and a search company side by side," says Simon Janion at EJ Legal. The debate has been heated at both ZMB and QD; indeed, Stephen Rodney and Adrian Fox, two of QD's directors, split from QD in 1999 to set up their own search consultancy, Fox Rodney. Perhaps unsurprisingly, Rodney says: "We've only been going six months and it's obvious to us there's a market for senior level search."
The problem for recruitment agencies is that the search model is fundamentally disruptive to their business. The only way that agencies maintain the delicate balance of acting for law firm clients and candidates which might be leaving those law firms is through their insistence that they do not headhunt. Hence the need to find a fresh flow of candidates for their books through advertising as opposed to cold-calling. What is more, recruitment agencies cannot easily sustain the search model on an economic basis. The top-end search companies are research-heavy, which involves a huge amount of investment to get it right. Notably, Garfield Robbins set up a separate search arm, Stenhouse Ballantine, which closed in 1999. "We felt that we wanted to offer a full service to clients, albeit through different companies," says Garfield Robbins partner Andrea Melnick. "But it just wasn't a popular choice, and people just think that the market's too small to support it. We just weren't getting the returns."
Yet search will become increasingly important over the next few years. "Clients are always asking us whether we do [search]," says Janion. "We do see search as a service that would benefit clients, and we're always looking at various options - either organic growth or forming an alliance." And for the client, there is one clear advantage to search, as Pexton at A&O explains: "It's much easier to have us in control of the process rather than wait for candidates to come through the door."
So how can recruitment agencies protect their position? Back to that elusive process called adding value, which can encompass competency-based interviewing, screening and so on. One consultant at a well-known agency argues: "Recruiters will always say that what they bring is getting to the bottom of someone's personality. But most of the time it's absolute rubbish. What they're really doing is project-managing, making sure issues are aired early and presented in the right way."
Despite all the softer issues, there is little danger of recruitment consultants turning into full-time careers advisers. After all, however objective they try to be, they are essentially target-driven salespeople. As one recruiter admits: "I always remind people why they came to us in the first place. Then you just manipulate the facts to keep that argument in front of them."