The promise of new client relationships is driving the vast majority of lateral partner movement today. In fact, lateral acquisition has become the primary growth strategy for many law firms. Both the new firm and the lateral are often surprised by how few clients actually move to the new firm.

A study I did in 2016 with American Lawyer Media found that 30% of the law firms interviewed brought less than 50% of the clients they had projected to come with the lateral. Keep in mind that law firms often discount the book of business by as much as 50% to begin with. I doubt the results are much better today.

Is there a way to accurately project which clients of the candidate will move?

There is no way to guarantee a lateral's clients will make the move to a new firm. But a series of questions can examine the quality of these relationships and the likelihood that the client will move with the lateral candidate.

...a series of questions can examine the quality of these relationships and the likelihood that the client will move

Currently, most firms take the word of the candidate about which clients will move. But in my experience, candidates have a difficult time being objective let alone understanding their clients’ motivations for moving. More to the point, there is an inherent conflict when negotiating a guarantee while at the same time examining the candidate’s book of business.

We need a more objective approach to teasing out the clients the firm will likely pick up. An approach that examines the business interests of the clients when they consider the disruption their provider is forcing on them.

This analysis assumes that the attractiveness of the firm to the lateral's clients has already been positively established, and the new firm offers a price or platform advantage for the client. But because price and platform advantages alone don't reliably predict client portability, a deeper dive into the strength of the relationship between laterals and their best clients is warranted.

Firms interested in this approach may want to consider designing a scorecard to track these qualities in each candidate and for each practice area. Over time, that data will significantly improve the firm’s lateral recruiting, vetting, and hiring performance.

Questioning the quality of the attorney-client relationship should include at least five main categories of questions: relationship dynamics; business reach; practice importance; incumbent firm reach; and competitive alternatives.

This is an overview of the process. There are actually 26 distinct markers that can be objectively tracked to examine and monitor client portability. Many of these can be observed objectively while others need to be part of a client book interview process. Regardless, asking about these five areas of the candidate’s client relationships will provide a vast improvement on the intelligence you can use to help you make lateral hiring decisions.

Relationship Dynamics

The dynamics of the relationship is a strong predictor of whether clients will likely move with a lateral.

This line of questioning should seek to understand the duration of the client relationship, the volume and consistency of work over time, how and where the relationship began and the social activities and personal relationships between the attorney and each client contact. Frequent, non-business related social activities can indicate relationships which both parties will likely avoid disrupting.

Business Reach

This line of questioning attempts to understand the reach into the business the lateral has built.

Does the lateral have only one person he works with at the company or are there multiple relationships with a cross-section of lawyers and business managers? Laterals with strong company ties tend to have multiple relationships with several non-lawyer business leaders in a company. This makes these relationships not only enduring, but provides the attorney with better and more accessible information about the company. This is also an indication the lawyer is an advisor to the company, something most company leaders are reluctant to lose.

Practice Importance

Understanding the strategic importance of the work the lateral does for the company is the third line of questioning.

How strategically important is the legal work to the core drivers of the company's business? Special care should be paid to ensure the analysis is from the client's perspective, not the attorney's. This line of questioning can reveal not only the importance of the work to the company but illuminate how well the attorney understands the client's business, another important indicator.

The more strategically important the legal services are to the company's success, the more likely the client is to move with the candidate.

Incumbent Firm Reach

Companies that use multiple practice areas of the incumbent firm—the firm from which the lateral partner is leaving—and who have multiple relationships with other lawyers in the incumbent firm are far less likely to move that work. In this line of questioning, the objective is to quantify the types and depth of relationships that others in the incumbent firm have with the client company.

The questions should attempt to understand the import and export of work in and out of the lateral's practice within the incumbent firm. It should also examine the diversity of the various practices used compared to the typical industry use mix.

Client companies that use multiple, diverse practice areas of the incumbent firm and with whom there are numerous relationships with attorneys in the incumbent firm are generally less likely to move.

Competitive Alternatives

Lastly, how many other law firms does the company work with and in which areas of the law? Are there firms well positioned to take on this work? Does the company have in-house counsel that could do the work? If so, what is the level of experience and expertise among the lawyers in the lateral's practice area?

This line of questioning is intended to understand, from the client company's perspective, the attractiveness of alternative providers for the work, whether internal, external or alternative solutions. The thinking here is: ‘If the client is going to go through some level of disruption to their business (due to the candidate’s move), they will look at alternatives (since the disruption is already sunk costs). From this analysis, a firm can begin to answer the question, "What alternatives does the client have and what will they gain or lose with each one of these alternatives?" This analysis should be performed for each of the key clients in the lateral's book of business.

Conclusion

Client companies with long and strong relationships who are relying on the lateral for strategically important work, who know multiple people in the company, who serve client companies in a narrow or limited number of areas and who have little competitive pressures on the relationship are most likely to move with the lateral to the new firm. Do this analysis and you’ll improve your hiring performance and client retention traction.

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The former chief marketing officer of several large law firms, Eric Dewey is a business development coach for lawyers who has been helping lawyers and other professional service providers win new business for more than 25 years. His approach is practical, client-centric and practice-specific, using tools and techniques developed over years of coaching lawyers from every imaginable practice area through a host of challenging situations.

Eric is the instructor-coach on eLegaltraining.com and has coached and advised hundreds of lawyers over his career. He can be reached at 502.693.4731 or by email at Eric@eLegalTraining.com.