The Lateral Integration Process Has Gotten a Facelift as Firms Search for a Leg Up

Law firms are scrapping old methods of lateral integration in favor of staffed-up programs designed to deliver.

Andrew Clubok’s first day at Latham & Watkins was technically a Saturday. The prized lateral recruit, a former Kirkland & Ellis litigator, was supposed to start at the firm’s Washington, D.C. office on a

Monday in December 2017, but the firm had invited him and his wife to its annual holiday party to kick things off.

When they walked into the room, Clubok says, he felt like he already knew half the people there, even though he had yet to work a day for Latham. He credits the warm welcome—as well as his wife’s approval of the move—to Latham’s extensive lateral integration process that began during the recruitment phase.

“If Latham had just called up and said, ‘We would love you to join,’ I would not be here,” Clubok says. “I got comfortable—and my wife got comfortable—because she and I met so many people. …

On day two, I already felt integrated at the firm.”

Clubok, who left Kirkland after 23 years to be the global chair of Latham’s securities litigation and professional liability practice, is a lateral success story. But it wasn’t all that long ago that he might have had a vastly different experience in the lateral market.

In the not-too-distant past, law firms held the partners they poached from their counterparts at arm’s length, hiring them primarily for their books of business, plopping them into an office with freshly printed business cards and sending them on their way.

“A lot of firms have learned that’s not a recipe for success,” Lauren Goldman, whose work on Mayer Brown’s management committee centers on lateral partners, says.

Law firms are constantly on the hunt for top talent, and they have recently begun building programs focused on lateral integration. The reasons for doing so are interconnected.

For one thing, firms use their programs as a selling point in their recruitment efforts. They also lead to better retention rates. Nearly every law firm The American Lawyer spoke with for this story touted a higher five-year retention rate than the 60% average that ALM Intelligence and Decipher reported last year among Am Law 200 firms.

“We want to hire partners who will become enmeshed in every part of the firm,” Thomas Fitzgerald, the chairman of Winston & Strawn, says. “Immersive onboarding makes them more successful, it makes the firm more successful, and it fosters loyalty—an incredibly effective retention tool.”

Lateral partners themselves also want these programs, because they have issues they want firms to address, says Kent Zimmermann, a law firm management consultant at Zeughauser Group.

“It’s harder than it used to be to keep people long-term,” Zimmermann says.

For their part, law firms say they’re launching lateral integration programs “because it makes us better, and it allows us to better serve our clients,” Steven Merkel, the chief operating officer of Barnes & Thornburg, says.

Welcome to the Road Show

For many law firms, the integration process begins the day they begin recruiting a partner. Otherwise, there might be “missed signals” and “bad communication,” says Toby Brown, Perkins Coie’s chief practice management officer.

“You can have a formal integration program, but if it’s not linked with the recruiting side, you’re going to have less favorable results,” Brown says.

As part of the process, laterals meet with other partners, firm leadership, associates and professional staff. Lawyers looking to join Barnes & Thornburg will typically talk with 10 to 12 of their future counterparts; Clubok talked to 50 partners at Latham before he joined.

The interviews are key because it gives the firm an idea of whether the partner’s character is a proper fit.

“We’re not looking to acquire a book of business,” Mayer Brown’s Goldman says. “We’re also considering whether the candidate is going to fit well with our culture.”

Brown says if he learns that a potential lateral isn’t easy to work with, “that moves them down the list pretty quick.” Latham vice chair Ora Fisher says the firm has declined to hire certain lateral partners with promising books of business because of concerns about cultural fit.

But it’s a two-way street. As law firms vet laterals, the laterals themselves are also vetting their potential new homes. If it wasn’t for Latham’s road show, Clubok might not have left Kirkland. He says partners like him are constantly being blasted by recruiters, and it takes a concerted effort for a firm to rise above the noise.

Day One—and Beyond

The days of letting lateral partners fend for themselves are over. In the past few years, law firms have begun adding professional staffers whose only job is to help laterals get integrated.

Debby Usher, the director of Barnes & Thornburg’s lateral integration program, has a direct line to people like the firm’s firmwide managing partner and Merkel, its COO. She and her counterparts at other firms develop integration plans, mapping out whom the lateral will meet with and when. More and more laterals want to know what life will be like in their first year at a new firm, says Kristina Lambright, Perkins Coie’s senior director of strategic growth.

Staffers like Usher and Lambright operate alongside other firm employees responsible for getting new business cards for a partner and teaching them how to use new computer and phone systems, Winston & Strawn’s Fitzgerald says.

“They really invoke confidence in the laterals, that we bring so much support and attention to them,” he says. “They get the fact that we’ve done this before and this isn’t our first rodeo.”

It doesn’t stop there. Firms like Perkins Coie and Mayer Brown also assign a partner to act as a sponsor or ambassador for the new lateral, ensuring they show up at the right client meetings and firm functions.

Crowell & Moring creates an integration team of partners whose practices are adjacent to each new lateral hire, says Glen McGorty, managing partner of the firm’s New York office. For example, a lateral who specializes in blockchain will be shepherded into the firm by lawyers with white-collar, corporate and digital practices.

McGorty and Brown say their firms found success integrating laterals when they began to treat them with the same care as they would a business deal. That includes setting the right expectations—after all, a career government lawyer won’t have the same book of business as a career litigator, so it makes no sense to hold them to the same standards, multiple law firm leaders say. But it also means a firm will commit to doing what it can to help a new partner succeed.

Regular check-ins are a key part of every firm’s integration program. By frequently asking how they’re doing, firms won’t be surprised if their business is slumping. And that happens often. ALM Intelligence and Decipher found that 62% of lateral partners don’t meet revenue expectations.

Defining Failure

Firms can do plenty to help a lateral partner integrate, but the most important factor is the quality of the partner themselves, says Michael Ellenhorn, Decipher’s founder and CEO.

“The single biggest factor with regard to the success or failure of lateral integration efforts is the raw material: the individual you have hired,” Ellenhorn says.

The four factors that Ellenhorn says determine the success or failure of a lateral hire are: how long they have been at the firm, how much revenue they bring, how they fit within a firm’s culture, and profitability.

Law firms give lateral partners a “reasonable period of time”—around two to five years —to adjust to their new surroundings and practice, Ellenhorn says. But they can fail financially for multiple reasons. For example, a new partner might represent—or have a financial interest in—a client engaged in litigation with a current firm client. Conflicts arise more often than one might think, he says: “If you don’t really truly know the individual you’re bringing on, there are all sorts of potential pitfalls.”

There are also economic forces outside of a partner or firm’s control. The market might shift shortly after a partner switches firms, suddenly making their practice less lucrative. A partner’s compensation can be adjusted if they’re not bringing in the revenue or clients they promised, but Zimmermann suggests those measures can only exist as temporary backstops that might cause resentment among a partnership in the long term. Multiple firm leaders demurred on whether they would fire a lateral for not bringing in as much business as expected. Instead, they say, unsuccessful laterals are likely to leave on their own because they aren’t happy.

“We never fire anybody, we don’t say that,” Fitzgerald says. “What we say is, ‘Look, if you think you’re going to be able to maximize your potential, you can stay. But if you don’t think that, look around and take your time.’”

Fitzgerald says firms should work with struggling laterals, their partnership and their clients to find the best opportunities for the lateral: “If it doesn’t work out, you deal with it professionally, but you don’t fire them.”

Business isn’t everything. Character counts, too. Law firms have begun writing clauses that would allow them to fire a lateral later discovered to have “an undisclosed negative history,” like past accusations of abuse, Zimmermann says.

Nearly three-quarters of Am Law 200 firms have had a lateral partner leave within the past five years due to an issue with personality or law firm culture, according to the ALM Intelligence and Decipher report. Another 40% have had a lateral partner leave due to behavioral issues involving associates and staff.

A lawyer’s business is easier fixed than their character, says Chase Simmons, Polsinelli’s CEO. And while there’s no one lateral partner who can affect a law firm’s revenue numbers on their own, a toxic partner could ruin a firm’s culture, he adds.

“Culture is more permanent. Everything derives from the culture,” Simmons says. “If you mess with that, the dollars aren’t going to follow.”

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Reprinted with permission from the February 4, 2020 edition of The American Lawyer © 2020 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.