During the lateral partner recruiting process, virtually all law firm representatives argue that their firm’s culture distinguishes them from the competition. It comes in the form of the following statements:
- “We’re very collaborative.”
- “We’re very entrepreneurial.” (Often ignoring the fact that it is difficult to be both collaborative and entrepreneurial, since the latter implies that partners are rewarded for their business development acumen.)
- “Nobody owns any clients here.”
- “Our compensation system rewards teamwork.”
- “We have a no-jerk policy.” (Or a more earthy way of stating it.)
Yet when it comes to compensation offers, all of that goes out the window. Most firms fall back to the base plus bonus formula, and in most cases, the overriding criteria is originations. So the message to the lateral is that you will be judged only on what business you bring in, not on utilizing your expertise to help institutional clients, other partner’s clients, teambuilding, or other contributions to the firm.
As an initial matter, this begs the question of why firms bother with so-called integration programs. Why send new partners around the country to meet with partners (or in these days, scheduling a series of zoom calls), if the lateral entrant won’t benefit financially from collaborating with them—except when the new lateral actually refers business to these partners. It’s a virtual one-way street. Firms would be better off just concentrating on business development coaching.
It is totally reasonable that firms set base compensation in a manner that assures they don’t take a bath on the investment in a new lateral. And it’s also reasonable that originations should be a factor -even a significant factor – in setting bonus targets. But in an era where the watchword for law firms is innovation, surely firms can come up with more creative ways to reward performance in the first year or two. Some of this will invariably be subjective, but there are numerous metrics that could be used. Working attorney billings is a natural one, but firms could also look at things like the number of pitches and RFPs participated in, introduction of clients to other lawyers at the firm (even if no business follows), and participation in client team projects.
Otherwise, firms will often get what they pay for—lone wolf partners (or groups) that focus only on how much business they can bring and develop on their own—and who will subsequently leave for another firm if they get a better offer.
Steve Nelson is an executive principal at The McCormick Group, an executive search firm based in Arlington, VA. Steve conducts partner-level searches, searches for in-house counsel, and searches for administrative professionals for law firms. In addition, he serves as a consultant for law firm merger planning, practice area expansion, and in recruiting strategy. Steve is a former attorney with 17 years in legal journalism and publishing and is a Fellow of the College of Law Practice Management. Follow him @SKNLegal.
