Lateral partner hiring has accelerated rapidly in recent years. In fact, lateral partner recruitment is now one of the primary growth avenues for major law firms nationwide.
But what exactly IS a “lateral partner?” (And do I qualify?)
A lateral partner is an experienced attorney who moves from one firm to another at the same level: from partner at Firm A to partner at Firm B.
Lateral partners bring clients, expertise, and rainmaking ability to their new firm. The acquisition of books of business through lateral partner hiring has become an essential driver of law firm growth.
Many firms see this now as a crucial part of their growth strategy (with some interesting and notable exceptions). The focus on growth through lateral hiring means that lawyers with books of business are in charge of their careers.
Whether or not you qualify as a lateral partner has everything to do with your book of business. Do you have a valuable book of business and clients you serve that you can take with you to a new firm? If so, there are lateral partner opportunities out there for you.
The larger your book, the more valuable you are and the more power you have in negotiation. There are always exceptions and caveats, but a one-million-dollar book of business is a good starting point for many firms, although some of the larger ones need several million of dollars in business, and some will look at less than 1 million. More is better, and less is saleable if you are a fantastic rainmaker.
Learn more about valuing your book of business here.
In the rest of this post, I explain why lateral partner hiring is vital to law firms and provide some thoughts on why lateral partners make the move.
Why are lateral partners and hires vital to law firm growth strategies?
The key to lateral hires is that firms need lawyers who can grow and manage a book of business. Almost always, a lateral partner brings a book of business, clients, and expertise in a specific practice area they have already cultivated elsewhere.
There are two overarching reasons firms pursue lateral partners:
- Because partners are retiring or leaving.
Lateral hiring is one way firms acquire talent that can step in to replace partners leaving the firm.
- Because it’s a growth strategy.
A growth strategy is a much more common scenario. Clients hire attorneys rather than law firms, but law firms need the clients to keep everyone engaged and grow profits. For many firms, the best way to increase their book of business is to hire lateral partners with their own books.
The Exception that Proves the Rule
A few firms out there do not rely on lateral partners for their growth strategy. Wachtell, Lipton, Rosen, & Katz (WLRK), for example, is famous for growing internally, and they’ve only hired four lateral partners in the past forty years.
But, for most other firms, lateral hiring is their primary strategy.
Firms benefit from having a lawyer with a book of business join the firm because the extra business generates profits for the firm, keeps staff and junior attorneys engaged (which generates profits for the firm…), and the strategic benefit a lateral partner can offer.
The first two, generating profits and keeping people engaged, are self-explanatory. Strategy is more interesting.
A firm may want to grow in a different direction and need expertise or be investing in marketing and need more lawyers to market. Or they are building a particular culture and want lawyers that fit.
What this means for you
You are in control if you are a rainmaker with a book of business.
If you have a substantial book of business, almost any firm will be interested in hiring you (WLRK aside). Because so many firms will be interested in you, you can choose the culture and situation you are most interested in.
There are several common reasons why law firm partners consider lateral moves to new firms, such as:
- You may lack confidence in your current firm’s management and strategy, especially regarding decisions about geographic footprint, practice areas, industries, and other growth tactics.
- You may lack adequate support to serve clients and build your book of business.
- There may be a cultural mismatch; you may not like your colleagues or find the firm’s values don’t mesh with yours.
- The compensation structures may not work for you. Some firms fail to reward rainmakers’ contributions sufficiently, primarily via origination credit policies, so you may want to explore better conditions elsewhere.
- Underlying issues with a firm’s financial health, stability, and viability in the long term may compel you to look elsewhere.
Partners unhappy and unfulfilled by their current firm environment may opt to find a firm that works for them.
As you explore prospective firms, remember the ball is in your court.
Firms need rainmaking lawyers, so the options are wide open if you have the book.
Just remember, the lateral move timeline can be lengthy, partly because you want to ensure you take your time to find the right firm.
I am happy to talk if you want to discuss your options.
Let’s schedule a call to discuss your situation and start mapping out the next chapter of your legal career. I’ll tell you if you are at the best firm for you or whether there are better options.
I look forward to talking.