In 2015, the market witnessed its most robust year in over five years in terms of partner movement at Am Law 200 law firms in Asia (please see Representative Partner Moves in 2015) and this trend is set to continue in the Year of the Fire Monkey. The Hildebrandt Consulting Report and the Citi Private Bank have both released reports stating that the hiring of lateral partners will be a profound element to law firm financial viability and growth this coming year. This sentiment has been confirmed by our recent discussions with various Hiring Partners throughout Asia. Many of our law firm clients are keen to grow through accretive and synergistic group, partner and associate hires. Given the current economic climate, firms’ growing focus on bottom-line profitability and increased due diligence when conducting lateral partner hires, it’s becoming increasing important to work with a recruiter who is keenly aware of these changes.
While there was some doubt as to the profitability of bringing on lateral partners in recent years, firms took the plunge and have been successfully bringing in more lateral partners as the rapid expansion in both breadth and depth of demand for legal services fuels hiring despite a slowing of recent economic growth. With lateral partner and group hiring metrics changing, it’s also more important than ever to use a trusted recruiter with local expertise on high level searches and awareness of the current trends, past pitfalls, new internal firm protocols driving partner hiring and a comparative viewpoint of successful procedures in place. Learning from the past, hiring committees are vetting potential lateral partner hires with more discernment and a more focused eye on overall profitability for the firm as a whole versus gross revenue.
We encourage a thorough and more systemic approach when evaluating lateral moves by both the partner and a hiring law firm. Trying to minimize the risk that new laterals won't work out in the long run, a growing number of firms are conducting more research and using analytical tools to assess whether candidates actually will bring in the expected clients and revenues and are likely to be profitable to the firm’s bottom line. Taking into account many factors including the viability of a new partner's practice within the overall practice of the firm, fee structures, potential conflicts, areas of synergistic growth. It's equally imperative that lateral partner candidates review the same metrics, a new firm's client base, partnership agreements and anticipated areas of growth and on rare occassions even financial statements. Here are just a few considerations in evaluating a partner or group move:
***The portability, integration and sustainability of the overall platform of the firm worldwide, client relationships and synergistic growth potential. Adequately access your book of business/services offered and the current needs of your clients and the potential needs that a new law firm/partner could possibly service. Be realistic about the relationships with your clients when using historical or projected metrics and firms must conduct an adequate investigation into potential conflicts. Many firms have updated their lateral partner questionnaires requiring more detail and examination as well as tethering pay to performance benchmarks. It's imperative that both parties be realistic in terms of their projections and assessments.
***Review of past and potential revenue of each client as well as a profitability metric to the firm's bottom line and it's equally important that a partner use similar metrics in accessing the firm's client base, financial statements and partnership agreements.
***Close analysis of fee structures, currently approximately twenty-five percent of Am Law 200 firms currently use analytical tools and competitive intelligence such as Aderant's Spotlight analytics and Tymetrix's Rate Driver, a data-driven estimator of lawyer billing rates. There are also alternative tools for making compatibility comparisons.
The Cypress Team has stayed in close communication with our law firm clients throughout Asia for over 14 years and have a deep understanding of the market with regards to internal hiring procedures and financial projections as well as compensation packages and benchmarking competitive packages for our law firm clients and partner candidates.
Dawn P. Robertson, Esq. March 10th, 2016