Sergio Martinez* was an exceptional international tax practitioner. He was not only a brilliant lawyer, but he had developed a personal following and book of regular business that totaled several million dollars and stretched to the far corners of the United States and Latin America. His clients were some of the wealthiest people in the world and they loved and trusted Sergio. But Sergio wanted to leave his current law firm.
Sergio and his team had become disgruntled with their firm’s leadership. Among other issues, the firm had set upon a new strategic direction which didn’t include a tax practice. Sergio wanted a better, more sustainable platform for him and his team of three attorneys, two paralegals, two associates and one secretary. They weren’t being kicked out. But Sergio saw the writing on the wall.
Sergio met partners from the new firm quite by accident. But it became quickly evident that the combination would be a marriage made in heaven. A flurry of interviews, negotiations, due diligence and plans ensued. Everyone involved on both sides of the transaction wanted Sergio and his team to make the move.
Sergio explained it to me this way. ‘The man I have admired my whole career, the man who taught me the most important aspects of this business, feels he is too old to make the move. He will retire in two years and thinks he would lose his clients if he made the move now. The rest of the team wants to move. But I cannot make the move without him.’ The older attorney was Sergio’s mentor. And he couldn’t leave without him any more than a mother could flee a burning house without her child. The whole team stood to make a lot more money. Loyalty to one man didn’t seem to fully explain missing this opportunity for the group. I couldn’t help wonder whether something more was going on here.
After several discussions with Sergio to explore every possible angle that might change his mind, I came to the conclusion that Sergio intuitively recognized something that few others had: the value of his team was not just in their collective clients but it was in each other. They were better together as a team than they were split apart. Even the loss of just one team member would cause irreparable damage to the group. And so keeping the team together was of utmost importance. The deal would have to wait for two years until the mentor retired.
Sergio was smart. Intuitively he understood that the team was more valuable than any one of its parts, including himself. That’s counterintuitive in a world that believes rainmakers need only their rolodex and files to be successful at any address.
The fact is the team often contributes more to the success of an individual than the individual’s own knowledge and capabilities contribute. It turns out there’s evidence to suggest the presence of the team may as much as double that individual’s chance of success in a new platform – a lesson that law firms negotiating the volatile lateral partner recruiting market may want to pay particularly close attention to.
Research studying cardiac surgery performed by the same doctor at multiple hospitals showed that the familiarity with a team was the single highest determinant that avoided deaths during surgery. The doctors were equally knowledgeable in how to operate on a heart. It was only their familiarity with the nurses and staff that made the difference that reduced deaths during surgery. And research into the portability of investment manager’s knowledge and investing success also showed a direct correlation with the familiarity with their peers and support people in how well they duplicated the success in a new firm. Similar to rainmakers in the legal industry, the investment advisors brought their clients, knowledge and skills over to a new firm but only maintained the same success rate as they had in their previous firm when they ported over the previous firm’s team as well.
Law firms have aggressively moved to increase the ratio of secretaries-to-attorneys in order to reduce costs. And they have aggressively managed work flow to reduce idle time that was inevitable when paralegals and associates were assigned to a single partner. But this trend may erode the effectiveness of these teams and it surely constrains a lateral’s ability to duplicate his or her success in a new firm when they are unable to bring their secretaries, paralegals and associate’s with them.
It makes sense. By reducing the disruption to a client by taking the familiar resources and institutional knowledge with them to the new firm, the likelihood a client would move its work increases. Faced with training a new attorney but keeping a familiar team versus keeping an attorney and retraining a team, clients are more likely to choose the easier path and substitute the attorney with one from the incumbent firm. It may not be the position the lateral intended to put their client in. But that’s the choice forced upon clients when the team is left behind. If that lateral doesn’t have valuable institutional knowledge of the client, isn’t doing strategically important work for that client, or lacks a deep personal relationship with the client, the decision to move becomes much more difficult for the client. And many choose the lesser of the two evils and simply stay put.
*The story of Sergio is fictitious. Any resemblance to actual people or situations is purely coincidental.