Where’s it all going? Getting the best out of your senior lateral hires

Despite the trials and tribulations of a flat market, many firms have continued to make lateral hires, expending time, money and essential resources on appointments that they hope will drive profitability. However, for such an important strategic decision, many firms remain entrenched in silos, making decisions based on short-term needs. Ian Reaves, partner in charge of business development at Hammonds, argues a practical case for business development through strategic recruitment.

I can hear HR directors, managing partners and departmental heads saying: “What does a business-development partner know about recruitment?” You only have to read the legal media to know that one thing is certain: there is a lot of lateral hiring going on in the legal sector of the professional-services industry. But how successful is it, particularly from the perspective of the client and the development of the business that the lawyer is joining?

Going back to basics, the supply of professional services is a simple equation of a professional or a group of professionals providing services to a client or clients. The legal-services sector has become more focused on the client of late, with marketing strategies, pitching, seminars, updates and public relations proving popular ways of winning and retaining key accounts. There is even a developing focus on the management and development of the actual relationship with the client. This by definition means that firms have to look closely at the behaviour of their lawyers (including partners), assessing whether they are giving the clients what they expect and require.

The management of any relationship will result from time to time in team members not performing. Non-performance can happen at all levels and may be a one-off or something more fundamental. The objectives and demands of clients and legal firms are becoming more complex and challenging. If a team member is not performing, retraining may be an answer or the lawyer in question might have to seek a career in a less demanding environment. However, profitable legal firms cannot do what they have done in the past, particularly when a partner has fallen out with a client over performance and service, that is, ignore the underlying performance and behavioural issues and continue as if nothing has happened.

Client-relationship management is an incredibly important area, and law firms are focusing more on the client and its needs as part of the simple equation: lawyer + client = service. However, are we focusing too much on the client? What are we doing internally to improve our lawyers’ abilities to deal with clients through, for example, training, coaching, appraisals and recruitment? Recruitment of lawyers at all levels in a legal business has the potential to strengthen the skills, abilities and experience that is available to enable a legal firm to achieve its objectives with its clients in its chosen sectors. However, do we achieve the full potential of these very costly investments? I would suggest not.

What I want to do is look at some important issues that impact on a recruitment decision. These issues should, to a greater or lesser extent, be considered when looking to recruit a lawyer from three-years’ PQE, or more, to partner. I would like to use some headings under which I will deal with these issues.

Strategy and direction of the firm: Has your firm decided where it is going?

All legal firms are subject to external pressures such as client/competitor consolidation, growth in value-added, law-specialist panels, new US entrants, etc.

As a result, firms need clear objectives and direction that have a sector focus, for example, corporate finance, financial institutions, technology, energy and infrastructure. However, have you adopted and integrated into your business the disciplines of key-client management? Alternatively, is your firm still a functionally driven business with partners in their silos delivering, for example, corporate finance, litigation and property to their clients with little or no cross-selling and client focus? A clearly communicated business strategy and direction for a firm makes it much more attractive in the recruitment market. Further, in simple terms, if a business knows where it is going, by definition it becomes easier to identify and choose a new team member.

Who can recruit in your firm?

I am sure we have all had this feeling. We are walking down a corridor or go to an internal meeting and we are introduced to a new member of the business. He or she could be a senior lawyer or even a partner and we didn’t know they were coming, let alone what they are going to do. I am not advocating consultation with everyone, but in a business with focus and direction there are more interests to consider when appointing, say, a property partner than merely whether he or she is a good property lawyer and will fit in the property department. It’s about getting the balance right in the equation, lawyer + client = service.

The question is, who is responsible for this recruitment? I think that in most legal firms, the power to either make or block a senior appointment is in the hands of heads of the firm’s departments, for example, corporate finance, property, commercial litigation, etc. If an appointment is agreed in principle at departmental level it will probably be taken for final approval to a committee of other senior partners in the business, chaired either by the senior partner and/or managing partner.

If you recognise this process, you must determine how challenging it is in short, medium and long-term commercial terms. If you are part of such a process in your own firm, you should ask yourself whether you start with or at least end up with a clear vision of how this senior appointee is going to contribute to the firm’s business.

The reality in most legal firms is that recruitment lacks the focus that we are now applying to the development of our business and the management of its key-client relationships. Anyone sponsoring a senior appointment must consult with those people in the business that have a clear view and understanding of the direction of the firm: its sectors, markets and key clients.

Why have you decided to recruit?

As a business-development partner, I think this is an interesting question. For example, if you decided to respond on behalf of the firm to an invitation to tender for the work of a major client, you would probably expend a lot of energy in actually constructing the ideal client team for the target client: the lawyers, who they are, what they do, their experience, cost, roles, etc. Shouldn’t we have a similar focus when it comes to senior recruitment? The areas I want to look at in deciding why to recruit are strategy, opportunity and frustration.

1. Strategy

Is the decision to recruit a move that is just one step in an agreed strategy to develop the existing business (or a part) of the firm? It would be very difficult for us to say that all of our recruitment decisions are based on such firm foundations. However, here are some of the elements that should be present in such a decision: strategy, sector, focus, aligned departments, key-client management, sales planning and cross-selling; in simple terms, the right client environment. This focus makes a potentially difficult decision easier for both parties, the recruiter and the recruitee – if I am to use legalese. The discussion will focus, as a result, more quickly upon the role and potential for development and the legal firm will be seen as a commercial business with direction.

Another aspect is succession. Our strategic focus on the market means that more clients expect added-value relationships and continuity. If a legal-services business is offering a long-term relationship and understanding, by definition it is offering succession. Namely, notwithstanding day-to-day activity, we are saying to our clients that we are planning for the future. However, does this statement stand scrutiny? It is rare in life to find people who will recruit their successor, which is an inherent weakness in the recruitment process.

I do not want to be ageist, but any recruitment into a team led by a lawyer aged 45 or more should include an element of succession. This illustrates the importance of an effective partner-appraisal system. Any senior partner or head of department must be able to accurately assess a partner’s market position and the value of the market in which the partner operates. Assessing recruitment opportunities then becomes easier, quicker and more effective.

Finally, on the issue of strategy, is the decision to recruit a planned strategic move focused at developing business for the firm in a new market or sector? This is a real challenge for firms that need to refocus the markets in which they are trading. However, the risks connected with such decisions are so high that you cannot deal with the issues in one or two paragraphs.

2. Opportunity

I must not be flippant, but is your recruitment decision a reaction to lunch with your headhunter and the ride back to the office in his Porsche? More seriously, who manages the relationship with your firm’s headhunters? Whoever it is, they must have a clear picture of the direction and focus of the firm so that they can present the complete picture to the headhunter. Poor communication with a headhunter will result in the market receiving poor information about the firm. The consequence will be diminished recruitment opportunities and, more importantly, a damaged profile.

3. Frustration

Finally, be wary of recruiting on a flawed combination of the above, for example, frustration with regard to the development of the business of the firm and an over-enthusiastic reaction to an opportunity. If you are in this situation, you need to stop recruiting and get your partners together for a serious discussion about the future of the business.

How?

Let us now assume that on the basis of a well-scoped brief, good internal consultation and effective communication of the role, the appointment has been made and our new senior colleague is due to arrive at the business.

This leads me to an aspect of a senior appointment that is often ignored: the ongoing ramifications of the recruitment decision. Failure to focus in the recruitment process normally results in the new employee taking longer to make a contribution to your business. In the worst situations it can result in the recruitee becoming disillusioned, frustrated and prematurely leaving your firm. The result is that you have incurred recruitment costs, wasted time and not developed your business.

During the recruitment process, a senior lawyer’s relationship network and the underlying business flow must be analysed. This due diligence must be used as the foundation of the detailed plan to integrate the recruitee’s network into the firm’s network.

If you talk to senior lawyers who have been lateral hires, their experiences vary considerably. In most firms, when they arrive, the support they receive is invariably related to systems, for example, time recording, finance, billing, marketing support, information and IT.

Due diligence during the pre-appointment period should have given a clear picture to the firm of the lawyer’s relationship network, including clients, target clients and intermediaries. The content and quality of this network will be an important element in the decision to recruit. In most firms, the next element of support is that the recruitee writes a letter to his network saying he has arrived. Invariably, however, the firm and the recruitee sit and wait for the work to walk through the door. This is when significant value is lost by everyone, including the clients who had instructed the lawyer at his previous firm.

We know that every decision to recruit is different. However, to enable a recruitee to be immediately effective, focused support is required in the area of business development. It is no use to merely hand over a stack of brochures and e-mail him a link to the firm’s website.

I would like to outline the framework of a plan to support and facilitate the integration of a senior lawyer into the business (not just the systems) of his new legal firm.

The business of the firm

Brochures and other sales collateral can communicate an outline of a firm and its objectives and experience. However, on their own they are not enough to build a lawyer’s understanding of his firm. It is essential that the firm has as a major element of the induction process a detailed briefing on the structure, content and strategic direction of the firm. Generally, whether a lawyer is a recruitee or an existing member of the firm, most legal businesses do not communicate or regularly update this valuable sales-support knowledge. As a consequence, many lawyers do not know what their firms are doing.

The key clients of the firm

The briefing should be extended to the key clients of the firm. An overview of these clients will give the recruitee a very clear picture of the business. This should extend to the role of the relationship partner and how internal relationships, services and products are used to facilitate cross-selling. The recruitee must understand the look and feel of the relationships that the firm creates with its clients.

The recruitee’s network: Internal and external

A recruitee is no different to an existing member of the firm. He will immediately need an internal network to enable him to cross-sell the services of the firm. Accordingly, the plan must focus on internal introductions to appropriate lawyers to create this very important network. The firm must give the recruitee senior support to facilitate this aspect of the plan.

The external aspect of a recruitee’s network is particularly important when the appointment is a senior lateral hire. Your planning should by now have revealed the cross-overs between the recruitee’s network of clients and intermediaries and the firm’s. In this area, the disciplines of key-account management need to be applied. Simply the existing client must understand how and where the recruitee fits (if at all). Poor communication or no communication is very damaging. Further, existing members of any client team where cross-overs exist must be communicated with and understand the firm’s objectives for the recruitee. If this is ignored, tensions will arise and the client will become aware of this very quickly. Recruitment is for the benefit of the clients isn’t it?

Finally, as a business developer, I make no apology to the HR directors and heads of department reading this article. As professionals, we are in business to serve clients. I think that in recruitment the legal sector has a tendency to lose sight of this very important fact.

Ian Reaves is partner in charge of business development. He can be contacted at: ian.reaves@hammonds.com.