When making a lateral move as a partner-level attorney, your primary consideration should be whether the new firm can provide a better platform to enhance your ability to attract and service clients. Just as hiring firms conduct due diligence when acquiring a lateral partner, it’s equally important that you, the candidate, do your homework before making a move. Below are seven factors you to consider before you leap:
- Rainmaking support - Does the prospective firm have the size, practice breadth, geographical scope, and resources necessary for you to better service your current clients and the type of clients you hope to attract? How efficient are the processes for bringing in new clients and matters, and handling conflicts and waivers? Ask about the firm’s marketing support capabilities and cross-selling opportunities. What is its track record for supporting the rainmaking efforts of lateral partners it previously hired? Negotiate your business development budget and clarify which expenses will be reimbursed by the firm.
- Billing Practices - Will your existing clients be comfortable with the prospective firm’s billing and collection practices? If not, you risk losing them. Negotiate with the firm, if applicable, any increments for rate increases and their timing. On the other hand, is it possible for you to charge lower rates or initiate alternative fee arrangements, thereby attracting clients you couldn’t serve at your present firm?
- Staffing - If your client base requires others to fully service it, is there adequate support currently available at the prospective firm? If not, can you bring with you or quickly hire the associates, paralegals, and support staff you need? It can kill the deal, however, to insist on bringing along more people than your book of business justifies.
- Financial health - What are the prospective firm’s average profits per equity partner? What was its financial trajectory over the past several years, and projections for the future? Firms have found ways to “game” the profits per partner numbers, however, so the revenues per lawyer statistic may give you a more accurate picture. Before you accept an equity position, especially, it’s vital to understand the firm’s liabilities including leases and debt since you will be taking on a portion of the responsibility. Can you see financial records? Beware that firms not in the best financial health often are the most willing to offer equity status to spread the risk among a greater number of partners. An “Of Counsel” or nonequity partner status at a healthier firm may be a better deal than a full equity position at a weaker firm.
- Management structure - What is the management and power structure of the firm? Are there professional executives, in addition to lawyers, in charge? Who serves on important committees such as the Executive and Compensation Committees? How are the members chosen, and which offices and practices are represented? Is the firm organized by office or practice group? How much interaction is there between offices? Are there multiple profit centers or are profits calculated firm-wide?
- Growth - Look at historical growth and turnover rates, including the successes and failures of previous lateral partners. Is the firm contemplating dramatic expansion, opening or closing offices, or adding (or shedding) specific practice areas in the near future? You may not want to join a firm that, in short order, completely changes its character, size, structure, or practice focus. Of course, not all such events are foreseeable, but you at least want to know the firm’s attitude towards such changes.
- Cultural compatibility - Equally important to the facts and figures is whether the firm’s culture and personality suit you. Common values matter. What are your long-term career goals? Are your chances of achieving them enhanced by the move? Do you see growth or leadership opportunities such as the chance to head a group, open a new office, or establish a new practice area? Will the firm support your efforts if you wish to take on a more visible role in the larger legal community? Conversely, if you currently run your own firm but desire to turn over the day-to-day management to others, can you do that in the new firm, and focus instead on rainmaking and the actual practice of law?
With appropriate due diligence on both sides of the lateral partner deal, both you and your new firm can enter into a mutually beneficial and long-lasting relationship that best serves your clients, too.