Middle, or Due Diligence Phase
. . . continued from The Legal Recruiting Process
Due diligence at the partner level consists of three distinct inquiries:
- Are there any client conflicts?
- Are the numbers presented in the referral borne out in fact?
- Would this candidate be a good cultural fit for the firm?
Virtually all firms now require that partner candidates fill out a series of forms detailing their client billings for the prior three years, as well as a narrative description of their practice. Competent recruiters will typically do the “grunt work” on the forms, so it is important to work closely with them to ensure accuracy. Many firms also ask partners for K-1s or other documentation of income to verify compensation in the preceding 3-year period.
Perhaps the most challenging task each partner candidate faces is to prognosticate: “How much of my book is truly portable?” For example, a patent partner—and the prospective firm—might legitimately wonder whether any portion of his or her portfolio will remain behind. Likewise, a litigation partner may have several large cases on the cusp of settlement.
Corporate and transactional partners are not immune from the concern either: the corporate/transactional and bankruptcy practices are notably cyclical, so a solid book of business can evaporate at the drop of an interest rate point. In each of these situations, it is important to make as accurate an assessment as possible, disclose the concerns, and indicate a range of numbers that are reasonable in the circumstances, e.g., $1.5 – 1.7 million.
“Fit” obviously needs to be a mutual assessment, and firms have yet to devise any means superior to interviews. Both partner- and associate candidates should expect at least one preliminary interview (usually with 1-3 partners simultaneously, often over lunch or coffee), followed by at least one round of interviews with other members of the firm, possibly including associates.
A second round of interviews is not uncommon. While firms rarely ask for the recruiter’s perspective on fit, candidates should make free use of recruiters’ experience to gain insight into firm direction and culture—in fact, this is where we can be of greatest utility.
Because we deal with the partner recruiting process every day, and benefit from the hindsight of having seen many other candidates through it, legal recruiters are our candidates’ “secret weapon.” We know the law firms. We know the lawyers. We know the compensation structure, culture, and history. And in many cases we have even deeper insight into firm strategy than do some of the biggest billers or practice leaders. Candidates should make full use of everything that recruiters have to offer during the due diligence process—it’s what we’re here for and besides, our service is free to candidates.
End, or Negotiation of Offer Phase
Once the firm has had an opportunity to review the numbers and to introduce the candidate to firm members on a personal level, it usually makes a preliminary decision on whether to extend an offer. However, the offer and acceptance are rarely distinct activities—as indicated above, firms are loath to make offers that will not be accepted. Accordingly, the offer is itself a function of significant negotiation, often with the recruiter serving the function of a broker.
The Negotiation of Offer phase is fraught with greater risk than any other part of the recruiting process. More potential deals—some of which would have been excellent bargains for all concerned—come undone during this phase than during any other part of the recruiting process. Part of this may be due to the fact that candidates are likely to be more nervous as things come down to the wire; part may be due to the fact that firms tend to come through the due diligence process with a skeptical impression of the size of a candidate’s portable book of business.
In either case, it is generally good practice for both parties to work through the recruiter, whether as a broker or even just as a sounding board, to arrive at a deal that suits all parties. Recruiters do this all day long, whereas most candidates only negotiate a lateral move once or twice in a career.
There are usually very few variables involved in negotiating an offer: base, bonus and whether the new partner will join as an equity partner or under some other arrangement. No hard or fast rules apply—the only measure of a deal’s suitability is whether all parties are pleased with it. From the candidate’s perspective, that usually comes down to one thing: is this deal better than my “BATNA”? (“Best alternative to a negotiated agreement”—see Fisher & Ury, Getting to Yes). And here things come full circle: having multiple simultaneous options is the best way assure a superior offer.
Post Script: Onboarding
Let us assume that an offer is made and accepted, and that the lateral attorney has agreed to join the new firm. There are still a few outstanding items with which a good recruiter can assist. For example, there are various ways to inform the soon-to-be-former firm of a change. Likewise, there are good ways and there are better ways to inform clients. (Presumably, some clients will have been sounded out during the process).
Partner recruitment candidates should assume that their former firm will fight to keep clients, often in a “gloves-off” manner. And all candidates should be prepared to receive a counter-offer from their existing firm—which it is almost never in the attorney’s interest to accept. (See our Recruiting FAQs for an answer to this). Adept legal recruiters can help ease their candidates through the transition by sharing the experiences of countless other lawyers who have gone through the same process.
