Candidates, at least the ones firms like ours are interested in, are putting less weight on short-term factors, like adding another dollar to next year's compensation and the strategic flavor of the month, and far more emphasis on the indicia of long-term strength and stability that contribute to ultimate career success. They're looking for a consistent firm trajectory based on fundamentals, including basic financial strength, an absence of debt and a palpable sense of mutual respect and partnership culture that allows firms to see their way through the inevitable financial cycles.
As Bruce MacEwen, president of Adam Smith, Esq., told The New York Times, "[Dewey] was an example of Mismanagement 101 across the board. They had a mismatch of assets and liabilities. They took on a massive amount of long-term debt, but their assets were short term." This may sound like business-speak, but it is the type of language those entrusted with running a law firm, or those considering joining one, need to understand. Lateral partners who aren't able to easily decipher all the different columns and numbers should have a knowledgeable recruiter and/or financial advisor go through the books with them.
Partners considering lateral moves are also analyzing prospective firms' partnership agreements much earlier in the process. They are reviewing carefully the definition of "equity partner" and whether there are any "look see" periods during which their performance will be evaluated before they are admitted to the partnership. In addition, firms are increasingly making incoming partners, at least at the outset, "at will" employees, representing a significant change from the past.
It's a Business
Lawyers relish the brotherhood (and sisterhood) of the law, but Dewey and others before it have taught us that lateral partners need to enter their negotiations with "eyes wide open" and investigate the "numbers behind the news." It is nice to be friends with the lawyers you're going to work with, but that shouldn't keep a lateral candidate from asking tough questions. Nor should it stop firms from performing the requisite due diligence by carefully reviewing the lateral partner questionnaire. Firm managers also need to remember to involve the entire executive committee and, when possible, the larger equity partnership in the discussion. Firm leaders, or the practice leaders tasked with the responsibility, should be ready to explain what they're doing and why. After all, equity partners have a right to know what is being done with their money and they might know things about the candidate that were not uncovered in the firm's research. Even if they do not contribute any new information, it is important that they be included in the process and be made aware of the details of the package being offered.
Dewey was a story of excess and a lack of controls. The behavior was, in some instances, so egregious that it provided other firms with a startling example of just how wrong things can go without a system of checks and balances. Law firm managers and partners need to remember that law is a business—not a terribly complicated business, but one that requires vigilant management, open communication, transparency, due diligence (on both sides of the lateral process), and basic fairness to everyone who calls (or wants to call) the firm their home.
Lawrence N. Mullman, a partner at global legal search firm Major, Lindsey & Africa, can be reached at lmullman@mlaglobal.com.
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