Lateral Partner Questionnaire

Lateral Partner Due Diligence: The LPQ

 

hiresDue diligence is an essential part of the lateral partner hiring decision.  In addition to practice and cultural fit, law firms must verify your book of business, avoid client conflicts, and manage risks as much as possible. Factors taken into account include your reputation, revenue origination, client relationships, and business portability.  After preliminary meetings to establish threshold suitability and fit, most law firms will ask you to complete a lateral partner questionnaire (LPQ) to facilitate that process.

Timing the information request can be a delicate issue. The potentially acquiring firm may find it difficult to properly present the opportunity to you without knowing the extent of your practice. Similarly, you may be reluctant to share “confidential” information until there is a significant level of interest on behalf of both parties. Consequently, some law firms bifurcate the LPQ, with the first part asking for basic information shortly after initial meetings to ensure there are no “deal killers”.  The second half, requesting further detail and more sensitive information, is required when a potential offer is on the horizon.

 

The following information is requested early on:

  • Biographical Data - Resume or narrative with legal employment history, including a list of representative matters; and educational background including degrees, academic awards and publications.
  • Economic Data - A three- to five-year history of originations, collections, realization rates, billable and nonbillable hours, billing rates, and compensation, with notes on which billings you originated, which billings you were the responsible partner for (but not necessarily the originator), and which of those clients and/or matters are likely to follow you to the new firm.  At this point, some firms ask only for the names of the clients that comprise the largest share of your billings, with a more general description of your remaining clients.
  • Client Data - A three- to five-year history of each of your clients and their respective billings, collections and realization rates; and a revenue projection for your first year of employment with the new firm, including: a) minimum; b) reasonably expected; and c) optimistic levels of production.

The second round of due diligence requests typically would include:

  • Detailed conflict information.
  • Professional and personal references.
  • Questions regarding any malpractice claims, lawsuits, participation on corporate boards, etc., for risk management purposes.
  • Permission to conduct criminal and financial background checks (subject to state-by state restrictions on what information can be disclosed).

When completing these forms, you must be complete and accurate—don’t puff!  Feel free to add sheets to explain your answers since not all firms calculate their data the same way.

The LPQ’s must be completed in a timely manner so as not to unduly delay the hiring process.  But, you might have difficulty obtaining the necessary facts and figures from your current firm without tipping off your colleagues that you’re considering a career move.  If you ask for such data on a regular basis, and for an apparently “safe” and reasonable purpose such as for tracking your own productivity or business development efforts, there should not be an issue.

Therefore, even if you’re not currently seeking to switch firms, gather reports on your yearly billings and collections, broken down by client and matter, on a regular basis. Keep the data in a safe place in the event that you need it to complete an LPQ. But make sure you only transfer the relevant information to the LPQ, NEVER provide copies of your current firm’s proprietary data or printouts to a prospective employer! Although it’s more work, it avoids legal, ethical, and fiduciary pitfalls.

Click here to see a sample LPQ, so you can start gathering the necessary information now!