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  • Two elephants in the room here: (1) the panel system, which presumably must make it far harder for even genuine "star" partners to take clients with them when they move; (2) the glut of partners made-up during the good times (i.e. the ten years or so before the crash) who may still be knocking around in the profession for another 10-20 years. Forced or semi-forced moves (of already underperforming partners) as partnerships restructured must account for a lot of the figures in the article. What happens to all these people going forward is also a big story - not least as they may be bed-blocking for current and future mid-level upwards associates, for many of whom partnership prospects are at historic lows.

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  • Good points both. There is a real tension between the differing strategies pursued by the different cultures (UK and US firms). UK firms' diffusion of client relationships across the firm, which plays well to the panelisation of relationships, is in direct opposition to the client-ownership model favoured by US firms. This, I feel, makes it much more challenging for many UK partners to move and may be one important factor in the higher failure rate among US hires.
    Alas, for UK partners anyway, the pendulum does seem to be swinging gradually in favour of the US firms. Partners need to be careful that the systematic 'defanging' inherent in the diffusion strategy operated by UK firms as a defensive mechanism doesn't leave them high and dry.

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  • Fascinating article - thanks Mark. Do you have any pre-recession data? I expect that corporate, finance and property laterals would have enjoyed greater success in the boom years. To what extent do you think that your findings are just a sign of the economic times?

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  • Hi Sally, thanks. My data only goes back to 2005, when this stuff started being collected in very comprehensive form, I guess it will build up over time. The market has changed in the meantime too, of course. While it has become more acceptable to move, client relationships have become larger and more difficult to port from one firm to another as they become more embedded across greater numbers of partners (the diffusion strategy pursued by UK firms).
    I think what lies behind the data is that this is quite a complex enterprise, and as with much data, the deeper you dive into it, the less apparent are the lessons and the greater the effect of rogue results.
    To my mind, more work needs to be done by firms on the planning and integration of hires, and by firms and candidates alike during the process. Far too many lawyers still treat the process as of secondary importance until it comes to the crunch, and I think as a result, quite a few mistakes are made in terms of choosing final destination.

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  • I run a search boutique and thought that I wouldcompare this research against the individuals that I have helped to move in the last 5 years. Of the 26 partners that I helped to move in the last 5 years, five are no longer with the firms.

    However, on a deeper analysis, three of those that have since moved on were senior associates going into partnership which were high risk (but low cost) investment hires for whom the platform and support offered by the firm would have been at least as important as the ability of the partner. The other two could fairly be seen as bad hires.

    Interestingly, the bad hires were both candidates that I placed into firms that I do not know well and were actually contingency "opportunistic" hires for the firms rather than the planned, strategic hires that came through search.

    I suspect that my experience is fairly typical for search firms. In my experience, there is much more thought given to the fit and role of a lateral search hire. Also, there is often more buy-in and responsibility taken by the firm for the success of hires that come in this way. With opportunistic hires, firms may be more prone to sit back and see if the candidate delivers.

    I also want to comment on the following paragraph in the piece:

    "One could argue that it is in fact against the recruiter’s interests that a hire lasts. If someone only lasts two years in post, not only is it not the recruiter’s responsibility but when the partner does leave, they may well get the candidate back and the post to recruit for once again - a nice win-win-win. With churn like this it is little wonder the legal recruitment market in London is saturated with players eager to join the free-for-all.

    "Firms need to ask themselves whether their suppliers have a genuine conflict of interest or whether this is just a quirk of the system they have to live with. Firms might also quiz recruiters more carefully about what they are doing to overcome this and what they can do to ensure that not only are they finding suitably qualified hires, but hires that will endure, before parting with the eye-­watering sums often associated with a search assignment."

    In fact, search relationships are hard won by recruiters and it would be senseless to opperate a "churn" policy. Much better to help our clients to find the right people and help them with the next strategic lateral hire. It is an approach which also allows us to sleep at night.

    Litigators will recognise the slur as being no different than the equally falacious arguement that litigators are conflicted when it comes to settling cases because settlement turns the tap off on their fees. In both cases, it is a logic that only makes sense if you start with the axiom that the individual litigator/recruiter is greedy, immoral and stupid.

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  • Fascinating stuff, with so much to mull over. A few thoughts spring immediately to mind:

    I have seen law firms recruit at Partner level and there may be 5, 6 , 7 or more interviews with literally dozens of interviewers involved, but when if one analyses the process it is probably a case that the same interview is simply repeated 5,6 or 7 times and that there’s little variety or robustness to the process. The decision to hire is often made by the key stake holders during the first two interviews and thereafter it was a case of the potential recruit simply avoiding doing anything wrong to ensure consensus is gained. In short, firms may benefit from designing more robust and varied selection processes that really get to the crux of the matter.
    Business Plans are too often just numbers on a piece of paper. I know of one law firm FD who calculated that, on average, actual billings were only two thirds of those projected in the business plan. Firms would be advised to conduct similar analysis and plan accordingly.

    It's impossible to tell from the data, but it would be interesting to know if there are differences in the success of lateral hires made on a proactive basis (i.e. law firm advertises or conducts a search for a lateral) and those made on a reactive basis (i.e. firm is approached by a Partner who is looking for a move). In the former instance the firm's desperation may be higher and so risks are taken; in the latter the candidate might just be one of those people who moves every two to four years, oftentimes because there are performance issues.

    I'd be interested to see how these success rates compare to similar fields such as accountancy, senior sales positions or investment banking. In comparison the story might be "Two thirds of lateral hires work!" (though I doubt this would be the case!). Similarly, perhaps firms accept - albeit grudgingly - that 1 in 3 fail and account for that.

    These figures have to be set against the biggest economic meltdown since 1929. These are not ordinary times.

    Perhaps recruiters need to share more of the risk and move to a fee system which sees more of the fee being paid in line with the recruit's performance and tenure.

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  • @Anonymous search agent
    No 'slur' intended, I assure you; simply that the system means there is an inherent advantage to agents if a hire does not last, just as there is an inherent advantage to litigators if cases go to court rather than settle. Hence, while ethical agents and ethical litigators will pursue best-case for their clients, the system allows for less scrupulous individuals to churn. This is exacerbated in recruitment because the industry is almost entirely covert, with virtually no information-sharing between clients. It is therefore almost impossible to work out if and where abuse is occurring.
    Bravo to you for your 'sticky' hires; the figures clearly demonstrate that not all agents are as diligent/careful/long-sighted/lucky as you are. If my research has one purpose, rather than casting slurs as you seem to intimate, it is to try to encourage clients to ask more questions of their recruiters, to plan hires better and to think more carefully about the process as a whole. Only in that way will the best providers emerge; while it remains below-the-radar, it remains a free-for-all.

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  • These dates from before the crash (and one would assume figures have worsened since then), but tables 26 - 30 show some benchmark figures.
    http://www.cipd.co.uk/NR/rdonlyres/BE3C57BF-91FF-4AD0-9656-FAC27E5398AA/0/recruitmentretentionturnover2008.pdf
    Whilst the figures for lateral hires still compare poorly, this report provides some sort of context. Similarly, the responsibilities of a Partner for generating revenue are exponentially higher than most other walks of life and therefore it is perhaps not unnatural that there should be a higher rate of attrition.

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  • Very interesting. You are correct about the responsibilities of partnership, but I'm afraid to say that many of the partners I met when I was a recruiter were woefully unprepared to make a successful move, in terms of their attitude and ability to develop business. Most partner business plans I came across were unsuited to the task at hand, and the introduction of Partnership Questionnaires or templates (beloved of US firms) have not improved matters greatly, designed more to get partners across the hurdle of management board approval rather than creating a workable and dynamic business plan. The sad truth is that many partners find themselves incapable of functioning successfully in anything other than the environment in which they were nurtured; both partners and firms need to do more work on planning and integration if they want hires to succeed.

    My friend Ed Reeser, a law firm management expert in the US, neatly outlines the systemic problems created by law firms failing to get this right: "It takes time to ramp up the cash flow and deliver a profit due to the up front costs of underwriting both the recruiter placement fee and the 'pipeline' of receivables. A minimum of 15 months is typically involved, and it can run to three years or more for high priced additions. What this should demonstrate is that it can take several winners to overcome the drag of a single loser. But with the high percentage of losers relative to winners, the overall strategy for most firms is on balance.....a loss, and sometimes a big loss, financially."

    This would seem to me to speak pointedly to dangers of the 'suck-it-and-see' opportunistic recruitment policy that anonymous search agent mentions. I can think of one or two firms in the market which are labouring under untenable bank debts created by funding unsustainable, poorly-managed opportunistic hiring strategies which have built turnover at the expense of profitability and done nothing, in the long run, to improve the fortunes of the firm. I think we will see more high profile failures before this recession is out.

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  • Mark - I agree, as I say, Biz Plans can become "just numbers on a piece of paper", but I think you have phrased it in a more apposite way!

    It's all about risk really, isn't it? Whilst I can't quite believe I am saying this, perhaps it's the hiring law firms which are carrying too much of the risk as Partner remuneration (indeed lawyer remuneration) carries too high a guaranteed element for a role which has much to do with unguaranteed fee generation. Similarly, perhaps recruiters could re model fees to reward the tenure and/or performance of the candidates they introduce.

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