A 2015 study by GDC and ALM Legal Intelligence found that AmLaw 200 law firms averaged over 300 resumes a year from attorneys seeking a change in law firms. Several firms reported more than 600 resumes a year from recruiters. It’s a buyer’s market. Lawyers looking to move to a new firm face not only stiff competition but must accept the financial risk and the consequences of client disruption if their plans fail to materialize as expected.
What can make laterals more attractive and put them in a better negotiating position? The answer is an independent client portability assessment.
In business, mergers and acquisitions are considered only after a thorough due diligence process to test the viability and risks associated with an acquisition. This due diligence not only validates the assumptions of the transaction but provides insights into how best to manage the process and squeeze the most value out of the acquisition. However, in the legal sector, this level of due diligence is generally not performed on the clients of a lateralling attorney. Nor do the candidates themselves offer an objective assessment of which clients will move with them, only their own biased assumptions.
These assumptions are more often wrong than right.
A 2015 study by GDC and American Lawyer Media found that less than 30% of laterals in the study brought all of the clients they expected to port to the new firm. To alleviate this risk, most firms have adopted a performance-based compensation plan that pays only when client retention is realized.
Portability reports lay out the rationale for why each of the key clients in the candidate's book of business will likely move. For some reports, this analysis can include the projected desirability of the new firm to each client. At a minimum, the analysis examines more than two dozen factors which influence the client's decision to move. It is performed from the client’s perspective and considers their risks and potential rewards of making a move with the lawyer. The analysis does not have to include actual discussions with the client through such interviews improve the reliability of the forecasts substantially.
For each client, a confidence rating based upon those factors is given along with an explanation of each finding. Reports can then be used by the candidate and recruiter to focus their search, strengthen their case for the move, sway opinions in partnership votes, help formulate compensation plans and use the findings to form the basis for strategic integration and cross-selling plans once the lateral makes the move.
While a client portability assessment can be done on behalf of the firm looking to hire the candidate, it makes more sense for the recruiters and candidate's themselves to initiate the analysis. Think of it like a home inspection, either buyer or seller can request a report. But the seller puts their home in a better competitive position for a quicker sale when they assess the home up front.
Client portability analysis requires a deep dive into the relationship an attorney has with her or his clients and the structural obstacles that clients face in a making a move to a new firm. For the candidate, it is often a highly educational process which provides direction to the lawyer for further cultivating and securing those relationships. It provides insights into how to position the lawyer's practice and to which firms that lawyer's practice will be most attractive. And it maintains control of the information that is or is not shared with prospective firms safely in the candidate's hands.
Recruiters that are not getting traction in the interest firms have in their candidates can use this analysis to identify the challenges that candidate face in their practice, obstacles that are often unseen by the candidates (and frequently the recruiters) themselves. It provides an objective perspective of the marketability of the candidate giving important insights into positioning, targeting and negotiating on behalf of the candidate. This helps that candidate better understand what they can do to make their practice more attractive to more law firms.
Lawyers who are considering a move to a new firm can use client portability reports to increase the attractiveness of their practice and improve their negotiating position. Buyers, convinced of the portability of an attorney's client portfolio can act more quickly, raise the guarantee and plan more strategically for the integration of the lateral's clients.
If you are thinking about making a move, consider a confidential portability assessment and client book due diligence report. It will set your practice apart from the dozens of other laterals with whom you are competing for a placement in a new firm. Contact Eric Dewey at firstname.lastname@example.org for more information.