Thursday, April 16, 2015

How to Successfully Integrate Lateral Partners

There are two ways lateral partner recruiting can grow the revenues of a law firm. The first is through the acquisition of additional client relationships brought to the firm by the lateral partner. The second is the added work generated by the lateral partner serving more of the legal needs of the firm's existing clientele.
Neither growth strategy is a sure bet. The first strategy, though, will benefit significantly from a comprehensive due diligence process. The second strategy relies on a well designed integration process, one that has broad internal support and commitment and is strategically focused.

There are three levels of integration into a partnership. The first level is the physical integration. This includes all of the administrative, marketing, human resources and technology tasks and training associated with integrating a new attorney into the firm. The second level is the incorporation of the attorney's practice. This involves the degree to which the new attorney's clients are absorbed into the firm and the new attorney is welcomed into the firm's existing client relationships. Lastly, there is the cultural integration of the attorney into the firm. This is the social and personal blending of the attorney with the social fabric of the firm. The physical and cultural integration into the firm are relatively easy to accomplish. It is the practice integration that presents challenges for many firms.

Roadblocks to Success

In many cases, the primary focus is to port over the attorney's clients to the firm. But when this takes time, which it often does, or clients choose not to move to the new firm, the lateral must fill his plate with work from other attorneys and existing firm clients until he can rebuild his practice with new clients. Cross-marketing a lateral partner's services to the firm's clients is far more difficult than porting over the lateral's own clients. Even though recent research suggests cross-marketing is more lucrative for both the firm and the individual attorney, it continues to be a difficult challenge in many law firms. Laterals find themselves needing to supplement their hours with work from other attorneys in the firm in what becomes a frustrating, uphill battle for the new partner.

And that's the crux of the issue. Practice integration planning often starts too late in the process, frequently lacks sufficient strategic focus and rarely identifies what should happen if things don't go as planned.

Start Early

The first interviews a lateral has with the firm can lay a powerful foundation for that lawyer's success later on. The partners who interview laterals often develop a stake in their success, so selecting partners with complimentary practices, a willingness to share their client relationships and whose clients may have needs can influence how successful the new lateral is in integrating their practice into the firm. Even before a candidate is chosen, though, firms should identify the attorneys who are more open to sharing clients and map out which clients may have legal needs in the targeted practices of the recruiting committee. As a side benefit to this, the information gleaned can be persuasive to candidates in the interviewing process. The ability to plug into a plan that has already been developed and vetted can be quite attractive—even to attorneys who are expecting to bring most of their clients with them.

Develop a Strategic Focus

Lateral recruiting and integration is a dynamic process which hinges on a large set of variables for its success. What works in one situation may not work as well in another. It's difficult to know with certainty which laterals will be successful. Without a map of the process and a clear set of criteria to test and benchmark the process, growth by attorney acquisition will be little more than a crapshoot. Adopting a strategic focus to the recruiting program by using a "lateral recruiting scorecard" and focusing on fewer but better-qualified cross-servicing opportunities can help improve results significantly.

The lateral recruiting scorecard is used to align candidate sourcing, due diligence and integration activities to the strategy of the law firm and practice group. It helps improve internal and external communications and is used to monitor the firm's performance against its strategic talent acquisition goals. Adapted from the "balanced scorecard" concept used for decades in business, government and nonprofits around the world, the lateral recruiting scorecard combines strategic, non-financial performance measures to traditional billing and client data to give firm leaders a more "balanced" view of lateral recruiting success and improvement opportunities in the firm.

Secondly, practice integration plans are often too broadly defined. They frequently lack the specificity and action steps necessary to hold people accountable and generate results. Practice integration plans should focus on a few select client relationship opportunities among willing partners who are most likely to achieve results. The early successes can build critical momentum for the lateral.

Plan for Failures

I've developed a set of questions to predict which clients will move with the attorney to the firm. It's a good system for predicting client mobility but it's not foolproof. Clients don't always move as predicted. When this happens, the firm should have a backup plan to ensure the attorney can make his or her hours quota. Law firms should not wait too long to pull the safety chute. Backup measures often take longer than one would like.
There's a saying that "integration starts in the first interview." But in some respects, integration starts long before that. It starts with an understanding of the challenges a lateral will face coming to a new firm, and finding ways to ease and assure this transition as much as possible.




Monday, April 6, 2015

Keep Epic News to Yourself

It's tempting to open a conversation with a prospective client with a tale of your epic vacation to Tahiti. You had a wonderful time, the weather was beautiful and Tahiti is an exotic place few people get to enjoy. Who wouldn't enjoy hearing about your epic vacation?

It turns out, you will feel worse off after having told the story because people will feel less like you. I've noticed this phenomenon in my own sales presentations but didn't understand why this occurred. Epic tales (a large purchase or exotic vacation, for instance) are extraordinary. To be extraordinary is to be different, and social interaction is grounded in similarities. It runs counter to what you would expect, but social research backs this idea up. Participants in a recent study thought that sharing their extraordinary experiences would make for an engaging conversation. But in fact, the opposite happened as the people being told the extraordinary story felt more distant and less able to relate to them. 

Monday, March 30, 2015

The Single Most Important Question to Ask

A simple yet very effective way to gauge how well you are doing in servicing your clients is to ask one simple question: On a scale of 1 to 5, how likely are you to refer my services to your closest business associates, peers, family or friends?  The question is known as the Net Promoter Score (NPS) and has been used extensively across many different industries for the past two decades. When I was the VP of Marketing for a regional bank, we added the question to as many customer touch points as we could and reported the monthly average score on our management reports. Financial reports are a trailing indicator for your firm's performance. But the NPS gives you a real time snap shot into how you are perceived by your clients and their willingness to participate in your success. 

Monday, March 23, 2015

Pupils are the Window on the Mind

A person's pupils expand and contract depending upon what they are thinking and how engaged they are in a conversation. When a person's pupils are large and remain large, it can indicate they are interested and engaged in what you are saying. Conversely, when the pupils get smaller, the person has lost interest, their brain is overloaded or their mind may be wandering.  But don't stare at your prospects pupils too long. Looking into someone's eyes for longer than 5 seconds will make them feel uncomfortable.

Monday, March 16, 2015

Help Yourself by Talking to Strangers

Striking up a conversation with a complete stranger is hard. But it may just prove more useful to you than the target of your conversation. Engaging others in conversation not only opens up potential new relationships and connections but it can also improve a person's sense of well being and put individuals in a more positive mood. Being civil toward random strangers is typically believed to benefit others—society at large or those who are befriended. But results of recent research indicate that 'pro-sociality' benefits the individual as much if not more than the target of the kindness. Think back to the times when a stranger has started a conversation with you or even just commented on something you both just witnessed.  In the vast majority of those instances the person proved to be interesting, friendly and good natured. So say hello to strangers and start a dialogue. You'll be glad you did, and happier.

Monday, March 9, 2015

The Reign of Error in Lateral Recruiting

The legal landscape is littered with lateral partners who didn't meet the hiring firm's expectations. The underwhelming performance of lateral partners includes a range of ways in which laterals can fail to meet the firm's original expectations. The most obvious is a failure to bring their clients to the firm. But lateral partners also frequently struggle to develop new clients or are ineffective in promoting their practice in a new firm. Some leave their new firm too quickly while others simply don't get along well with others.

What were we thinking?

How can law firm's improve the success rate of lateral hires. That's a central question posed in a February 9th, 2015 article in The American Lawyer entitled An Rx For Lateral Heartache, by professors William Henderson and Christopher Zorn. They point out what they believe may be the most prevalent error in the recruiting process, confirmation bias. 

"We believe the biggest source of error in the lateral hiring process involves a form of motivated reasoning, or emotion-based decision making, that works like this: The mind has a tendency to lock into conclusions relatively quickly. We use our mental processes to look for evidence that supports our views, while evidence that would undermine those views is discounted or ignored. Psychologists refer to this phenomenon as confirmation bias."

Henderson and Zorn may be on to something here although I don't think it fully explains why so many laterals pass muster only to disappoint. Certainly the process is more complex than that. There is, more likely, numerous errors being made or cognitive bias' at play in the due diligence process.   
Out of curiosity, I looked up a list of behavioral science theories and cognitive bias' and tried to match them with my own experience observing the interviewing and due diligence process. The number of them which applied were striking. But to make my point, I'll cite a select few with the caveat that these bias' are not unique to the legal profession. First, there's the Halo Effect which is the tendency for a person's positive traits to "spill over" from one personality area to another in others' perceptions of them. "She is very personable. She must also be good at developing client relationships." There's also the In Group Bias, the tendency for people to give preferential treatment to others they perceive as similar to them "They come from a really good firm. They will fit in well here." Or, how about the Self Serving Bias, a tendency for people to evaluate ambiguous information in a way that is beneficial to their interests. "I'm not sure why they would leave such a good firm. We must offer a much better opportunity for them."

Besides the cognitive bias' that can plague individuals in the interviewing process, I have additional theories about why firm's who rely on their own partners' to interview candidates may not produce a clear understanding of the candidate's potential. For one, these interviews may not to be broad enough in scope. That is, interviews may be limited to the technical abilities of the attorney and the attorney's likability or personality fit with the partners. In my experience, interviews do not attempt to gauge the candidate's managerial and work style, their personal and professional attributes and, most importantly, the strength of the relationships with their clients and referrers.

A second theory, is that lawyers don't ask the tough questions of their potential future partners, especially regarding the strength of client relationships. Most likely this is because pointed questions might be perceived as adversarial or even challenging of the candidate's integrity. Or, they may be perceived as 'intelligence gathering' on the candidate's clients, which at that point in the recruiting process, could be off putting to the candidate. As a result, the critical intelligence needed to determine whether the candidate truly has a portable book, information that forms the basis of the 'deal', goes uncollected.

Similarly, I suspect motivations are rarely questioned. For instance, the question of why a partner is leaving the partnership is an area deserving of thorough exploration. The most common explanations rarely face scrutiny because they are the expected explanations (another form of confirmation bias). If the move is upstream to a larger platform, inevitably the reason is that the former firm doesn't offer the breadth of practices the client requires. If the candidate is moving downstream, the clients are resisting the bigger firm's rates. Or maybe the reason is conflicts but I suspect the steps the candidate took to alleviate the conflicts is typically not fully understood. There are other reasons, of course, but the point is that the rigorous due diligence that one would undertake in, say, buying a business is nothing near the rigor of the process typical of lateral partner recruiting in U.S. law firms.  


In Henderson and Zorn's article, they re-iterate a solution which I originally presented in my August 11th, 2014 column in this publication, entitled UK Style Lateral Due Diligence. Both publications propose the use of independent consultants to conduct assessments of the lateral's client base and portability, their business development skills and managerial style. As I pointed out then, the practice is common among U.K. and other European country law firms. And as Professors Henderson and Zorn point out, independent due diligence is also the standard practice in the U.S. private equity industry as well as many others. Bad hires are costly in revenue and reputation and can hamper future recruiting efforts. U.S. law firms should consider the proven techniques of their U.K. peers and add independent lateral due diligence to their lateral recruiting process.  Readers interested in learning more about lateral due diligence and client mobility can request GDC's Seven Predictors of Client Mobility by sending a request to: eric@groupdeweyconsulting.com.



This article won the BigLaw Pick of the Week award. The editors of BigLaw, a free weekly email newsletter for those who work in midsize and large law firms, give this award to one article every week that they feel is a must-read for this audience.

Humility is the Secret Sauce of Rainmakers

Attorneys who are humble tend to develop relationships faster and are seen as more trustworthy and accessible. They also make better leaders and often can be the source of strategic value by uniting people in shared values across practices, offices and geographies.  
Humility is manifested in self-awareness, openness to feedback, appreciation of others, low self-focus, and pursuit of self-transcendence. Humble people willingly seek accurate self-knowledge and accept their imperfections while remaining fully aware of their talents and abilities. Humble rainmakers  appreciate others’ positive worth, strengths, and contributions and thus have no need for entitlement or dominance over others.