News
Labor/Employment
Feb. 22, 2002
Recruiters Can Help Partners Make a Lateral Move
Employment Column - By Chuck Fanning - While lateral associate hiring has dried up and corporate in-house hiring has slowed significantly, the market for lateral partners is extremely high. There are several reasons for this.
By Chuck Fanning
While lateral associate hiring has dried up and corporate in-house hiring has slowed significantly, the market for lateral partners is extremely high. There are several reasons for this.
• The strong are preying on the weak. Throughout the dot.com boom, most Bay Area firms were doing well financially, so the overtures from mostly out-of-town firms whose profits were "diluted" by old fashioned clients unwilling to pay $350 per hour plus 2 percent of the company to get a deal done wasn't attractive to local partners.
The tables have now turned, the economy is no longer masking the weaknesses of some local Bay Area firms, and the stronger out-of-town and local firms have increased their lateral partner hiring efforts.
• Pent-up demand. Many out-of-town firms opened, or tried to open, Bay Area offices over the past five years. These firms expected to grow their new offices quickly by hiring marquee partners from top local firms. They engaged headhunting firms and contacted partners in an aggressive effort to build full-service Bay Area offices. With few exceptions, almost nothing happened. Until recently, essentially all of the corporate partners on every firm's "Top-10-to-recruit" list politely declined overtures from these top firms. The out-of-town firms chose to stay and build more modest local presences while waiting for their window of opportunity. The window is now open, and these firms are going forth with their plans.
• It's that time of year. Most firms distribute 20 percent to 50 percent of the previous year's profits in January or February. Most partnership agreements allow firms to withhold these profits from partners who are not with the firm at that time. The result is that the vast majority of partner movement occurs in the first quarter of the year, with modest activity in the second quarter and almost no activity in the second half of the year.
So, the confluence of these factors - stronger firms with pent-up demand preying on local firms weakened by the current economy at the time of year when partners are most willing to move - is causing the spike in partner hires. And as partners with significant books of business change firms, they leave behind weakened organizations vulnerable to further recruitment efforts.
So, if you're a partner who is considering other options, what's the best game plan - calling your friends at other firms, taking those headhunter calls and hope the right opportunity finds you or finding your own recruiter to guide you through the process?
Calling friends at other firms is advisable only when you are sure there are only one or two firms that you would consider and you have close, trustworthy friends at those firms. There are, however, disadvantages to this approach. You could risk the friendship if it doesn't work out. Also, this person might not have the knowledge to counsel you through your compensation and equity arrangements. You also might need someone to guide you through the potentially thorny fiduciary duty issues that arise when a partner tries to bring clients/matters/other attorneys to his or her new firm.
While I can understand why someone might want to call a friend at another firm, I am startled, however, by the number of partners who wait around for headhunters to call with the right opportunity. There are two flaws with this approach.
First, a partner needs to consider all available options before making the decision to change firms. Hoping that you are going to cover the range of options by waiting for the headhunter to call is futile. In fact, for a partner with a substantial practice, a well-placed legal recruiter can actually "make a market" at firms that are not necessarily searching for someone like him or her.
Second, by waiting for a headhunter to call with that perfect opportunity, partner-level candidates essentially are forfeiting the opportunity to choose the right headhunter.
Partners who decide that they want to consider other options should go out and find an agent to represent them in that process. Here are some of the things a partner should look for when choosing an agent.
Look for a recruiter with close relationships with as many firms as possible. You want to make sure that your agent has quality information about many firms and opportunities. If you want to consider firms that either recently opened in the Bay Area or are planning a new office here, you should consider using a recruiting firm that has a presence in the city where those firms are headquartered.
It is important to use a recruiter with experience placing partners. Be wary, however, of claims from recruiters who boast of doing more partner deals than anyone else. Volume does not necessarily mean quality. Some of the best recruiting firms decline requests by law firms to engage in "cold calling" campaigns for partners. The reason is simple: the same close relationships that you want your recruiter to have with many law firms often precludes that recruiter from actively soliciting partners to leave those firms. The result is that some of the smaller headhunting firms, or those that care less about conflicts of interest, place partners by taking on those cold calling assignments. Hence, while some experience in the partner search arena is important, the sheer number of partner deals a headhunting shop has done is less important than the strength of relationships that your recruiter can offer.
Ask a recruiter you are considering using what other types of services they can provide. Aside from compensation and equity negotiations, the most difficult issues that arise for partner candidates often involve questions of fiduciary obligations. A good recruiting firm can help you decide the kind of information that a partner can provide to a prospective firm. Or what can a partner tell his or her clients about a possible move? Once a partner gives notice, what are the logistics of moving files or matters to the new firm? Your recruiter should be able to give you some general guidance on these questions and refer you to counsel with expertise in this area when appropriate.
It is important to be comfortable with the person representing you. Your recruiter may be the only person you can talk with openly about this important and sometimes emotional process. While you could go it alone, if you respect and trust the recruiter you have chosen as your representative, he or she should serve as a valuable personal adviser throughout this important process.
Chuck Fanning is a partner in the San Francisco office of Major Hagen & Africa.
While lateral associate hiring has dried up and corporate in-house hiring has slowed significantly, the market for lateral partners is extremely high. There are several reasons for this.
• The strong are preying on the weak. Throughout the dot.com boom, most Bay Area firms were doing well financially, so the overtures from mostly out-of-town firms whose profits were "diluted" by old fashioned clients unwilling to pay $350 per hour plus 2 percent of the company to get a deal done wasn't attractive to local partners.
The tables have now turned, the economy is no longer masking the weaknesses of some local Bay Area firms, and the stronger out-of-town and local firms have increased their lateral partner hiring efforts.
• Pent-up demand. Many out-of-town firms opened, or tried to open, Bay Area offices over the past five years. These firms expected to grow their new offices quickly by hiring marquee partners from top local firms. They engaged headhunting firms and contacted partners in an aggressive effort to build full-service Bay Area offices. With few exceptions, almost nothing happened. Until recently, essentially all of the corporate partners on every firm's "Top-10-to-recruit" list politely declined overtures from these top firms. The out-of-town firms chose to stay and build more modest local presences while waiting for their window of opportunity. The window is now open, and these firms are going forth with their plans.
• It's that time of year. Most firms distribute 20 percent to 50 percent of the previous year's profits in January or February. Most partnership agreements allow firms to withhold these profits from partners who are not with the firm at that time. The result is that the vast majority of partner movement occurs in the first quarter of the year, with modest activity in the second quarter and almost no activity in the second half of the year.
So, the confluence of these factors - stronger firms with pent-up demand preying on local firms weakened by the current economy at the time of year when partners are most willing to move - is causing the spike in partner hires. And as partners with significant books of business change firms, they leave behind weakened organizations vulnerable to further recruitment efforts.
So, if you're a partner who is considering other options, what's the best game plan - calling your friends at other firms, taking those headhunter calls and hope the right opportunity finds you or finding your own recruiter to guide you through the process?
Calling friends at other firms is advisable only when you are sure there are only one or two firms that you would consider and you have close, trustworthy friends at those firms. There are, however, disadvantages to this approach. You could risk the friendship if it doesn't work out. Also, this person might not have the knowledge to counsel you through your compensation and equity arrangements. You also might need someone to guide you through the potentially thorny fiduciary duty issues that arise when a partner tries to bring clients/matters/other attorneys to his or her new firm.
While I can understand why someone might want to call a friend at another firm, I am startled, however, by the number of partners who wait around for headhunters to call with the right opportunity. There are two flaws with this approach.
First, a partner needs to consider all available options before making the decision to change firms. Hoping that you are going to cover the range of options by waiting for the headhunter to call is futile. In fact, for a partner with a substantial practice, a well-placed legal recruiter can actually "make a market" at firms that are not necessarily searching for someone like him or her.
Second, by waiting for a headhunter to call with that perfect opportunity, partner-level candidates essentially are forfeiting the opportunity to choose the right headhunter.
Partners who decide that they want to consider other options should go out and find an agent to represent them in that process. Here are some of the things a partner should look for when choosing an agent.
Look for a recruiter with close relationships with as many firms as possible. You want to make sure that your agent has quality information about many firms and opportunities. If you want to consider firms that either recently opened in the Bay Area or are planning a new office here, you should consider using a recruiting firm that has a presence in the city where those firms are headquartered.
It is important to use a recruiter with experience placing partners. Be wary, however, of claims from recruiters who boast of doing more partner deals than anyone else. Volume does not necessarily mean quality. Some of the best recruiting firms decline requests by law firms to engage in "cold calling" campaigns for partners. The reason is simple: the same close relationships that you want your recruiter to have with many law firms often precludes that recruiter from actively soliciting partners to leave those firms. The result is that some of the smaller headhunting firms, or those that care less about conflicts of interest, place partners by taking on those cold calling assignments. Hence, while some experience in the partner search arena is important, the sheer number of partner deals a headhunting shop has done is less important than the strength of relationships that your recruiter can offer.
Ask a recruiter you are considering using what other types of services they can provide. Aside from compensation and equity negotiations, the most difficult issues that arise for partner candidates often involve questions of fiduciary obligations. A good recruiting firm can help you decide the kind of information that a partner can provide to a prospective firm. Or what can a partner tell his or her clients about a possible move? Once a partner gives notice, what are the logistics of moving files or matters to the new firm? Your recruiter should be able to give you some general guidance on these questions and refer you to counsel with expertise in this area when appropriate.
It is important to be comfortable with the person representing you. Your recruiter may be the only person you can talk with openly about this important and sometimes emotional process. While you could go it alone, if you respect and trust the recruiter you have chosen as your representative, he or she should serve as a valuable personal adviser throughout this important process.
Chuck Fanning is a partner in the San Francisco office of Major Hagen & Africa.
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