Watch for Red Flags When Hiring Lateral Partners!

Watch for Red Flags When Hiring Lateral Partners!

One key to lateral hiring success is understanding and mitigating any red flags that crop up throughout the recruiting process. These warning signs can differ dramatically from firm to firm, depending upon each firm’s people, hiring process, and history. They’re also easily overlooked, either because they’re subtle, or because the candidate is likeable, has connections within the firm, or allegedly has an impressive book of business.

Common Red Flags

Red flags can arise any time during the lateral partner hiring process and may include:

  • Frequent moves;
  • Performance projections on the LPQ (Lateral Partner Questionnaire) that differ dramatically from past performance;
  • Decreasing compensation or other indication of subpar performance at the current firm;
  • Candidate blames the current platform for lackluster achievement (Most candidates will have the same problems elsewhere);
  • Inconsistencies in the data provided (ask for information several different ways);
  • No diversification of clients or relying on just a few;
  • Length of time to get the deal done without legitimate reasons for delay;
  • Protracted negotiations over terms of the offer;
  • Candidate appears more interested in money than the hiring firm’s growth strategy and the opportunity presented; there is risk that the candidate will leave for more money elsewhere.
Mitigation strategies

1. Make lists

The first step in handling these and other risk factors is identifying a list of warning signs tailored to your firm. Red flags and success factors will differ between firms since various styles of candidates work best in specific firm cultures and situations. Conduct a 3- to 5-year lookback at which lateral hires worked out and which did not and why. Assess any risk factors less-than-stellar hires demonstrated during the hiring process and use that list when vetting potential hires.

Conversely, look for attributes of successful past hires and how those were demonstrated during the hiring process. Identify your top performers and ascertain commonalities—even subtle attributes—and structure your interviews to reveal those traits. Watch out for candidates who fall short of those factors, regardless of how attractive they otherwise may seem.

2. Identify your best interviewers

Ask everyone who interviews candidates to write down whether they think the candidate would be successful at your firm. Look at which interviewers get it right most often. Use those people in the hiring process because they have proven themselves to be the best at assessing and predicting future success or failure of candidates at the firm.

3. Use hard data

Remember, the LPQ, along with the candidate’s resume or bio and business plan, are marketing documents and possibly susceptible to puffery rather than hard data. That’s why many firms use computer data analysis and algorithms for prediction rather than relying heavily upon traditional gut-level decision-making. Hard data also gives firms the confidence to push against traditional boundaries. This mitigates the explicit and implicit bias of hiring in one’s own image and opens up the process to a more diverse pool of candidates.

Consider risk tolerance 

Once you identify any red flags pertaining to a particular candidate, the firm must decide whether to terminate the hiring process or move ahead depending upon your firm’s risk tolerance. If proceeding, determine what information you need to either eliminate or mitigate the risk. The more risk factors, the more scrutiny is warranted. While one or two might be overcome, risk is compounded when there are multiple red flags.

Risk factors are weighted differently at different firms. Once identified, determine whether the red flag is a deal-breaker for your firm or merits further vetting. In most cases, no one factor is a knock-out punch but, for most firms, honesty is a core issue. Some red flags that, on their own, can nix a deal include: being less than forthright on data provided on the LPQ or in interviews; the candidate being fired from the current firm partway through the interviewing process and not disclosing that fact; or not revealing convictions, liens, claims, or other issues upfront, which later are discovered in the background check.

Some firms are more conservative and risk-averse than others, and it can vary even between offices or practice groups of the same firm. It’s a cost/benefit analysis: Weigh the perceived benefit of the addition against the overall impact on the firm of a failed hire. Remember, cost can be more than financial; it can include harm to the firm’s reputation in the community, or to morale or culture internally.

If your firm chooses to ignore red flags, it does so at its peril. However, you can manage the risk by:

  •  Assessing whether the firm can afford to take the hit if the lateral doesn’t succeed;
  • Keeping the new hire on a short chain;
  • Going into it with eyes wide open and documenting everything. (Then, if it doesn’t work out, you have ammunition to remind your partners of the situation if the firm again wants to ignore warning signs in the future);
  • Sharing the risk when setting compensation, offering a low base and upsides with benchmarks so the candidate bets on him or herself. If a candidate balks at this, it’s a MAJOR red flag!
Working with search firms

Partnering with trusted search firms can facilitate the lateral hiring process and help identify and investigate red flags along the way. To maximize the search firm/law firm relationship, share your lists of red flags and success factors with your selected outside recruiters. Compile a checklist of the information you need from candidates so the recruiter can provide it up front. Law firms also can enlist the search consutant’s assistance in getting more information if further vetting is warranted.

If a risk factor crops up during the process, the search consultant needs to disclose it immediately. Good legal recruiters understand that the long-term client relationship is more important than an individual deal. Once a relationship of trust between a search firm and law firm is established, the law firm may be more willing to listen to a compelling reason to review a candidate even with some risk factors attached.

Valerie Fontaine
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