Solving the Lateral Partner Attrition Dilemma
March 20, 2020
It’s not uncommon to hear firm leadership say, “It’s the cost of doing business.” They’re talking about the uncomfortable topic of lateral attrition that has confounded law firms for years, and the staggering impact on a firm’s balance sheet when a lateral hire fails to succeed. These costs can total up to 213 percent of the yearly compensation package in hard dollars alone — not including soft costs associated with wasted resources and loss of client confidence.
But research shows that lateral attrition costs could be substantially reduced by simply rebalancing a firm’s investment in the lateral hiring process: in short, by focusing more resources on ways to help laterals succeed after they are hired.
Lateral hiring by the numbers
On average, law firms invest 15 percent of their time, money and effort in lateral planning, 80% in the interview and deliberation process, and a mere five percent in lateral integration programs after the hire, according to Smart Collaboration for Lateral Hiring, by Dr. Heidi Gardner, a thought leader in professional services, and Anusia Gillespie, Director of Innovation for Eversheds Sutherland (US). But the Gardner/Gillespie research further shows lateral attrition rates of 20 percent in year one, 32 percent in year three and 47 percent in year five.
If firms are doing a good job of planning, interviewing and decision making, why is attrition so high?
The answer is simple. Large numbers of talented, thoughtfully-recruited laterals are not given the tools to succeed once they get to their new firms. A lateral partner who is financially successful will receive compensation rewards and leadership opportunities. Such a partner is far less likely to leave the firm than an unsuccessful one, according to a Return on Investment study by Dr. Andrew von Nordenflycht, Oxford University research fellow and Associate Professor at Simon Fraser University. On the other hand, laterals who struggle to transition clients and acquire new business have a higher rate of attrition.
Large numbers of talented, thoughtfully-recruited laterals are not given the tools to succeed once they get to their new firms.
Why laterals struggle
Here are some key factors that may prevent a promising lateral from succeeding:
- The lateral may not know and trust his new partners enough to include them on client service teams, and vice versa.
- Legacy partners have made introductions but not invited the lateral to participate in client matters.
- The lateral does not know the business development process at her new firm.
- The lateral’s business development skills are not on the same level as those of the legacy partners.
Until a firm proactively invests in programs that fill the skills gap in collaboration and business development, the expectation that a lateral can transfer, retain or grow a client with multiple practice needs, and execute at a high level will be unmet more often than not.
A better equation
If the goal is to reduce lateral attrition, the solution should be obvious: Firms need to reallocate resources to bring the planning and integration investments in line with interviewing and deliberation. A suggested distribution might be 20% planning, 50% interview, deliberation and decision making, and 30 % integration.
Integration might include specific training and accountability programs focused on collaboration, communications, relationship development and client growth. Proven, revenue-generating integration programs will give laterals the collaborative and business development skills necessary to be financially successful — for themselves and for the clients and firms they serve.
Cochran Client Development has been working with law firms for over 25 years to help them meet their financial and strategic goals with best-in-class collaborative, team-based, business development skills. We have the solution.
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