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How To Keep Laterals From Running Back To BigLaw

By Erin Coe

Law360, New York (September 15, 2009) -- With large law firms continuing to announce salary cuts and layoffs across the board, small and midsize firms that often have been able to draw in laterals based on their rate flexibility and opportunities for greater autonomy are seen as appealing for another reason: more stability.

The recession has allowed smaller firms to snap up talent like never before, but legal experts say this feeding frenzy is not likely to last, and these firms need to think beyond just picking up laterals and consider how to hold on to them when large firms eventually regain their footing.

"Smaller firms are not dealing with the same scale of layoffs as large firms, and they have become a good home for some of the talent out there," said Michael B. Rynowecer, president of The BTI Consulting Group Inc., which provides strategic research to law firms. "But large firms will rightsize themselves and figure out how to compete more effectively."

Large law firms may not show signs of recovery until next year, but when they do, they are likely to seek out some of those partners and groups that they lost during the downturn, according to experts.

"BigLaw could come calling. How successful big law firms will be in recapturing talent depends on how good of a job smaller and midsize firms have done at integrating the laterals," said Cliff R. Jarrett, a managing director in the partner practice of legal search firm Major Lindsey & Africa LLC.

The following are some strategies for smaller and midsize firms to retain the laterals the economy is steering their way:

LOOK FOR RED FLAGS DURING THE HIRING PROCESS

While smaller law firms have more opportunities to grow their ranks by luring in laterals, it is still critical that they make certain each attorney will be the right fit for the firm.

"When smaller and midsize firms make their hiring decisions, they have to get it right," said James L. Komie, president of 50-lawyer firm Schuyler Roche & Crisham PC. "The impact from everyone hired is magnified in a smaller firm compared to an AmLaw 200 firm. If the lateral winds up being a jerk, you can't just stick him six floors down. You really have to be careful."

Chicago-based Schuyler Roche has snagged a few lateral shareholders and partners over the last year, and before it expanded its size by 10 lawyers through a merger with local trial and appellate boutique Crisham & Kubes Ltd. in April, the firm looked at whether the attorneys showed a sense of loyalty, Komie said.

"We decided to merge with Crisham because the attorneys had a proven record of loyalty," he said. "We are not interested in attorneys who are jumping around every five years. We don't want to deal with bearing the cost of transition if attorneys are going to leave after a few years."

PLAY UP STRENGTHS AND MAKE GOOD ON PROMISES

Small and midsize firms should go out of their way to point out the advantages of the work environment at a smaller firm not just when they are trying to win over laterals but also after hiring them.

Smaller firms often are able to offer laterals more alternatives for billing clients, greater involvement and in-depth relationships with clients, and a more accommodating work-life balance, according to experts.

Because smaller firms tend not to have as many conflicts or as many bureaucratic layers, that flexibility can be another big hook for holding on to laterals.

"Some partners are going to like being bigger fish in a smaller pond and will be willing to trade some of the upsides on compensation for flexibility, autonomy and having more of a voice in the direction of the firm," Jarrett said.

But whatever strengths a firm is promoting, it must follow through and ensure that laterals experience those benefits.

"Most laterals are promised a rosy picture of how things will be, whether they will get new leads or that their practice will be strategic. If promises are met, a lateral's happiness goes up," Rynowecer said.

But if firms fail to deliver on their promises, that experience could prompt laterals to make a move if another offer comes their way, he said.

ESTABLISH A FORMAL INTEGRATION PROCESS

The most common mistake firms make is assuming that once the lateral partner is hired, the hard part is over, Jarrett said.

"Firms may think that once they have hired a person or group, things are going to go swimmingly and that they don't have to work on that anymore," he said. "But firms need to have a great integration program set up."

Experts say the best firms have integration programs to help bring laterals into the fold. These programs enable laterals to meet with key partners, practice groups and management committees and help facilitate a smooth transition of laterals' clients over to the firm and the firm's clients over to laterals.

A person or panel should be assigned to watch over laterals' transition and debrief them on their strengths and weaknesses, and the integration process should last two or three years, according to experts.

"Many firms are too casual with their integration process. They say: 'Congrats, you are a new partner in the firm. Now where's the business?'" Rynowecer said. "Without someone watching over to ensure the steps to integrate are taken on a timely basis, a firm won't realize until it's too late that the lateral or firm is disappointed."

Smaller firms also should anticipate that the transition may be tough for some laterals, especially those who are coming over from a larger firm, and firms may need to set straight certain expectations about administrative resources or firm perks.

"A midsize firm may not have the around-the-clock administrative support that a large firm might have. If that support is needed by laterals, make sure that the issue is addressed and find out what the firm can do to help," Jarrett said.

Anderson Kill & Olick PC, a 100-lawyer firm that specializes in representing policyholders in insurance recovery litigation, has boosted its presence through a number of key lateral additions from larger and smaller firms as well as a merger with 14-lawyer firm Wood & Bender in California in January, according to William G. Passannante, co-chair of the firm's insurance recovery group and a member of the executive committee.

The New York-based firm, which recently has ramped up its bankruptcy and anti-counterfeiting practices, tries to retain lawyers by carefully expanding in areas where there is a lot of activity, Passannante said.

"When attorneys are doing the work they want to do and they are involved in a vibrant area of practice, that keeps lawyers with you," he said.

Anderson Kill also works to keep lawyers happy by providing training programs for lawyering and business skills and by showing them how a smaller shop allows them to be more directly involved with clients, court work and the running of the firm, he said.

"Compared to a large firm, a smaller firm helps people practice law and tries as much as possible to get out of the way," Passannante said. "The more organizational parts a firm has, I believe it becomes more difficult to practice law."

PROVIDE LATERALS WITH OPPORTUNITIES TO BE IN CHARGE

Firms also can be more successful in retaining laterals by providing them with management and leadership opportunities as early as possible, according to Jarrett.

Firms should let new partners become part of any of the firm's client and industry teams, and when appropriate, firms should let partners head up a practice group or assume a top role on a committee.

"Giving lateral partners leadership positions is a great way to accomplish integration and make sure that laterals feel part of the firm," Jarrett said. "It will also help when the economy turns and big firms try to lure partners back. If they are more invested in the firm, the less likely they are to leave."

Komie said Schuyler Roche enticed one associate from another firm by elevating him to partner, and as his commodities futures practice took off, the firm provided him with additional support staff. The firm also has taken steps to integrate the lawyers from its merger by getting some of them to serve on the firm's board of directors.

"Once laterals are in the door, we keep showing them value and why they made the right decision. We try to be as transparent as possible about the management and financials of the firm so that they understand what is going on. We also try to make an effort to get people involved in firm activities right away," he said.

The more committed a firm is to integrating its lawyers, the less likely laterals will be tempted to leave when BigLaw starts calling, according to Rynowecer.

"Firms can hold on to new lawyers by understanding that successful laterals are products of a dedicated effort to make them successful. Integration doesn't happen by itself," he said.

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