Reasons for Law Partner Lateral Moves

Reasons for Most Law Partner Lateral Moves

Why do Partners leave your law firm? After speaking with law partners across the United States, here’s my top 10 reasons for law partners lateral moves, or why attorney groups leave your law firm. Often I find law partners leave for more than one reason listed below. Their reasons are usually well thought out. Their moves are calculated, and they are motivated. The last two reasons are personal in nature and do not necessarily reflect law firm leadership choices.

This post is dedicated to Neil Wasser, chairman of Constangy, Brooks, Smith and Prophete. Neil encouraged me to write this post over lunch recently. Law partners who know or work with him are fortunate to have a humble visionary leader like Neil.

Fear of the Future

Since the Great Recession of 2008 and the collapse of law firms such as Heller Ehrman, Howrey, Dreier, Dewey & LeBeouf, Patton Boggs, Bingham McCutchen, Dickstein Shapiro, Burleson and many others, law partners are paying attention to the decisions of the executive committee and executive staff. The phrase “law partner departures” and “debt covenants” are common place now among informed or concerned shareholders. I find partners are concerned about debt usage, expansion, and a leadership that is lacking courage and vision. I have heard the following comments even recently spoken to me: “I do not know how long my firm will be here if they keep expanding like this” or “The partners in charge have no vision for the future except status quo”.

Law partners leaving your law firm are looking for transparent, courageous leadership with vision.

Poor Succession Planning

The founder’s dilemma is alive and well in many law firms today. I have spoken with talented junior partners who are delivering value to clients, winning significant new client business and adding value to the bottom line. But these same partners are being compensated 10% of what the senior partners are bringing home. They are led to believe there is a future for them, but this dream is cloaked in mystery and ambiguity still 10-15 years later. We call this “lip service.” These junior partners will only tolerate this for so long until they speak with a legal recruiters who offers a clear path for their career and an improved platform for their “portable clients”.

Law partners leaving your law firm are looking for senior partners who value their contribution, take action, and mean what they say about passing on the baton.

Cronyism

A number of national and regional law firms that I will not name are controlled by a small, privileged executive committee usually at the headquarters of the law firm. They do not equitably share the management responsibilities nor have representative buy-in when decisions are made. An “us vs. them” culture festers when these law firms expand into new markets but do not invite key lateral partners to their inner circle. Eventual resentment and political jockeying becomes the norm.

Law partners leaving your law firm are looking for proper management representation and opportunity for buy-in before important decisions are made.

Lacking Incentives and Competitive Compensation

Law firm culture is greatly influenced by the compensation system. You reward the behaviors you want. Unfortunately double standards exist and some firm leadership may not match or model what they want from their partners and attorneys. A standard of 1800 hours at X bill rate will provide you Y compensation. I have law partners that approach me saying, “My partners and I are not incentivized to bill more than 1500 hours. I certainly could, but we will not see an extra dime for the effort. The senior partners are lucky to bill that many hours but pay themselves more.” These hungry partners could go to another platform easily, bill more hours and gladly share in the profits with firm leaders who put forth the same or greater effort.

See my post on Law Partner Compensation: An Overview for further reading.

Law partners leaving your law firm are looking for leadership by example, compensation fairness and incentive to “hit the ball out of the park”.

Hostile Environment

Many law firms in the United States have a standard compensation system of Eat What You Kill (EWYK). Client origination and credit for new client business is closely tied to law partner annual compensation. Again, a compensation system will influence law firm culture. Client possession or protection can become a priority if predatory behaviors among partners go unchecked. Law firm leaders who permit and reward this “hunger-game-like” sharp-elbow behavior can drive out key partners and clients.

Law partner, leaving your law firm are looking for a collegial, collaborative environment for their practices and clients to thrive.

Outgrown Platform

“I have national clients but my firm has only one office”; “I am loosing large cases because our bench appears small”; “I could get $1m in additional annual client billings if my firm had X type of practice area”; “They would rather pay themselves more than reinvest in strategic opportunities.” Growth is a wonderful fact of life, and yet it is challenging for anyone in leadership. Unfortunately some law firm leaders do not anticipate the growing demands of a partner’s practice and his/her clients. Eventually these partners are forced to consider their options or have their client base eroded by the competition.

Law partners leaving your law firm are looking for law firms that will accommodate their client demands as their practice grows.

Mandatory Retirement

Law firms are not allowed to do this, right? Several law firms have either a spoken or unspoken expectation that their partners who have reached a specific level of human existence (can’t use the word “age”) transition out as a shareholder and/or give over their clients. What if this law partner still has a lot of gas in the tank? What if this particular partner expects to double his/her book in a year or two? Personally, I find law partners sharp as ever in their sixties and for some in their seventies. They love to practice law and do not want to be told “Sorry, your time is up”. So, partners with books in these positions are boons to law firms with more flexible arrangements for the tenured attorney.

Law partners leaving your law firm are looking for a flexible retirement policy that allows them to transition on their timetable.

Growing Client Conflicts

Law firms are supposed to be a safe place for clients and the partners who represent them. The following are two main reasons why client conflicts exasperate: 1) Firm growth 2) Controlling clients and weak executive committees.

I’ll start with the last first. I have seen lateraled law partners blind-sided by aggressive, controlling clients suing who they wish and dictating law firms actions because they are a “huge client”. The lateral was taken through a conflicts check and was assured his/her clients were welcomed to the firm. But he/she quickly learned that the executive committee was “helpless” to the client’s actions. I know of another group of attorneys that were faced with client hostility because the firm leadership gave other partners a thumbs up to start taking opposing cases without informing the group.

In regards to growth, with any firm fortunate to have 300-1,000 attorneys, the law of diminishing returns kicks in unless the leadership of the law firm is aggressive with their focus, conflict checks and targeted client base. In today’s competitive legal environment, clients are tired of signing waivers and turning a blind eye to “exceptions”. Again, these law partners are forced to either move or lose their clients to friendlier homes.

Law partners leaving your law firm are looking for the best long-term platform for their clients and their team.

Wants In-House

Of course, who would not want an in-house role? There’s the 9-to-5 work-life balance, the fringe benefits, the opportunity to focus on the business, and they do not have to bill another hour, right? Well, myself and every other legal recruiter are approached frequently with this demand for the Utopian position. And yes, some of these reasons may exist, but most of the time the in-house opportunity proves to be less secure and as grueling as private practice. There are the select few who land the dream general counsel role for a period of time only to have their company bought by another and the position disappear.

Law firms generally cannot prevent this and only hope their attorneys secure future streams of revenue for the firm.

Relocation

“Empty-nesters,” lake homes, harsh winters, retiring spouses or spousal employment relocation are a few other reasons why law partners begin exploring options to leave their law firm. There’s not a whole lot the law firm can do unless they allow telecommuting or open a one-person office in paradise.

Conclusion

There is certainly a theme here, and it boils down to firm leadership. Do you find yourself guilty of any of the above, and have partners left yet? What measures can you take now collectively to strengthen the culture, step into leadership and maybe change the trajectory of your law firm? In observing past law firm closures, there is an evident tipping point where partner departures exceed the current leadership’s ability to right the ship and therefore difficult decisions are required. Do not wait till this point occurs.

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Follows us on Twitter @FindtheLions and @ChrisBatz On LinkedIn Chris Batz and The Lion Group

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