There is a long list of variables that can factor into a law firm’s assessment of a lateral partner candidate. This list includes demonstrated expertise, practice area, professional and educational credentials, and client (or potential client) networks, just to name a few. Much to the chagrin of some partner candidates, this list also very often includes an evaluation of a partner’s book of business.
Some partner candidates view their book of business as a big selling point and they are comfortable being up front about it. But other partner candidates are apprehensive about the idea that a portable book of business may be too much of a focal point for certain firms. This reluctance typically stems from a concern that the law firm assessing the partner is not doing so holistically and is instead merely attempting to buy the partner’s book of business. This concern is amplified by the possibility that the book of business will not be replicated or will fall short of expectations. But the truth is that while a partner candidate’s book of business is undoubtedly an important component of a law firm’s evaluation process, in the vast majority of lateral partner assessments it will neither make nor break the partner candidate, and its discussion should not be considered as an indication that the law firm has a myopic view of a partner’s potential value.
It’s a Common Conversation—Embrace It
Within the Am Law 200, there are only a handful of firms that place very little emphasis on a portable book of business when evaluating a potential lateral partner—these tend to be the firms with large and longstanding institutional clients, especially those with lockstep and/or more structured compensation models. There are also relatively few firms that will focus on a book of business almost exclusively—these tend to be the firms that have determined that the primary path to growth and increased profitability is through high value lateral acquisitions. But the majority of the Am Law 200 will attribute varying degrees of importance to a partner candidate’s book of business and will want to discuss the partner’s book as part of a more complete evaluation of the greater strategic fit. Partner candidates should not be deterred or annoyed about having these discussions. Instead, partner candidates should recognize that the conversation is almost always going to take place, appreciate the value and role of the conversation, and prepare for it accordingly.
When the majority of law firms discuss books of business, more often than not, these firms are trying to get a feel for synergies that may exist at the prospective firm and how the lateral partner and prospective firm might be able to capitalize on each other’s client base. The best way to comprehend this potential is by having a candid conversation. Partners should expect to find themselves in such discussions throughout the ranks of the Am Law 200.
The 3 Reasons Law Firms Bring On Lateral Partners
There are generally three (not mutually exclusive) reasons law firms bring on lateral partners, but only one of them involves a narrow focus on the acquisition of portable business.
The first reason a law firm brings on a lateral partner is to add depth—to strengthen the market presence of a particular practice area, industry vertical, or geographic footprint. These lateral partners are intended to deepen the bench, and signal to current and prospective clients that the firm is a significant player in the respective market. As indicated above, books of business will still likely be discussed in the process, but this type of lateral search is more about adding a partner with name recognition and specific expertise to the practice group that the firm is trying to fortify.
The second reason for adding a lateral partner is to broaden the firm’s service to strategic institutional clients. In this scenario, firms are looking for lateral partners that can plug into the firm’s institutional clients and expand the scope of service through practice areas where the firm believes opportunities are being left on the table. In this case, portable business will be important, but the primary motivation for the lateral search is not to acquire a prepackaged revenue stream, but rather to build out the firm’s capabilities to service certain institutional clients more comprehensively.
Lastly, in some cases law firms are indeed aiming to grow the firm by means of acquiring a book of business through a lateral partner. It is worth noting that recently some of the top lockstep firms have become more flexible with their compensation models in an effort to attract (and retain) partners with significant portable business. But even in this situation, most Am Law 200 firms will be keen to assess the complete picture and potential of a partner candidate, since firms understand the wealth of ways a lateral partner can add value to the firm. Yes, the motivation for taking on a lateral partner may be revenue generation, but law firms know that the best lateral will be a partner that can both port business and add to the collective experience, reputation, and network of the firm. The biggest book of business does not always win.
Experienced Legal Recruiters Make It Easier
Lateral partner candidates that remain reluctant to discuss their portable book of business will find that legal recruiters with the right experience handling partner moves can facilitate the exchange of crucial information in a manner agreeable to both candidate and firm.
Legal recruiters that maintain long-term relationships with law firms will be privy to the reason (likely one or a combination of those described above) a firm is pursuing a lateral partner, and these recruiters can help educate a partner candidate as to the degree of emphasis they should expect to be placed on projected or existing portable business. A truly knowledgeable legal recruiter should be able to provide a view into how a book of business and other variables will factor into a firm’s assessment, as well as how each might impact compensation.
There are times when it can be difficult for a partner to know exactly what their book of business is, since firms differ in compensation structure and how matters and clients are shared. An experienced legal recruiter can help a lateral candidate understand at least a ballpark figure by taking into account such factors as originations, working attorney collections, billable hours, realization rates, and client relationships.
An experienced partner-level legal recruiter will also be able to help a partner candidate create a business plan that is on par with market expectations and that optimally conveys the partner’s current and potential book of business. Note that a business plan is separate and distinct from the common lateral partner questionnaire (LPQ). If the partner candidate is coming from a law firm, the business plan should include a revenue generation snapshot with a summary of at least the last 3 years of the candidate’s billings, highlights of their 5+ top clients, a deal sheet or list of representative matters, and an identification of any business development roadblocks the candidate faces at their current firm (e.g., geographical limitations, lack of practice resources, inconsistent compensation models, conflicts, limited complementary practices) that will be overcome at a new firm.
But whether a partner candidate is coming from a law firm, in-house, or government, they should nevertheless be creating a business plan that envisions how the candidate is going to transition their practice into a new platform. The business plan is not just about evidencing the business that can be transitioned, but also about demonstrating the candidate’s potential to generate new business, either out of existing institutional clients or new clients. Recruiters that specialize in lateral partner recruiting will know the techniques to best communicate in a business plan, no matter the role the candidate is transitioning from.
Lateral partner candidates should simply be upfront about business generation. Since almost all Am Law 200 law firms will be eager to gain some understanding of a partner candidate’s book of business, even though very few of them will concentrate on that variable exclusively, candidates should feel comfortable and confident in discussing their revenue generation past, present, and future. Partner candidates, aided by an experienced lateral partner recruiter, should be ready to talk with poise about their book of business (or lack thereof) knowing that the majority of firms will want to discuss it earlier in the process rather than later. And that is not something to fear or to indict a firm for. On the contrary, partner candidates would do well to appreciate firms’ revenue generation and business development concerns, and to embrace this aspect of the process.