There was a time in the not-too-distant past where law firms were for life – if you joined as a clerk or a junior, there was a decent chance you’d still be there 20 years later, albeit in a nicer office and a more expensive suit. The number of 30-year veterans in the profession attests to this trend.
Yet loyalty might not be what it once was. In an increasingly cut-throat market, both lawyers and firms are looking outside their own ranks for fresh opportunities. A lateral jump can often be a giant leap forward in a lawyer’s career – but in the wrong circumstances, it could also be a pitfall.
Naturally, lawyers have always shifted between roles for a variety of reasons, both personal and career-focused.
Legal consultant Joel Barolsky from Barolsky Advisors believes that while lateral hiring is not a new phenomenon, “the pace of change has increased”.
Recruiter Doron Paluch, a director at Burgess Paluch, takes a stronger view, saying in the last five to 10 years or so there has been a “dramatic shift” in the attitude towards changing firms.
“There have been so many changes in the nature and in the shape of the industry as a whole, and also in how partnerships operate,” he says. “I think a lot of law firms are now focused on merit, rather than just on tenure or longevity […] it’s become a lot more acceptable for partners to make a change.”
In particular, he points to the influx of global firms who set up shop on the back of teams pinched from other firms – Allen & Overy, Clifford Chance and Squire Patton Boggs among them.
Other mid-tiers or large nationals have pursued growth via acquiring lawyers from other firms, according to legal consultant Mr Barolsky.
These changes have opened up new avenues for lawyers, but also in some cases pushed up dissatisfaction with lawyers’ current lot.
“Over the last five to 10 years, there have been many high-performing partners who feel like they haven’t been recognised by their firms, or feel like they would have a better cultural or client fit in another environment,” Mr Paluch says.
“In the current market, if there is a senior lawyer with a good client following and a good name, there are likely to be other options for him or her.”
Leaving a firm is often motivated by personal reasons – moving to a new town, wanting more time with family, even a sense of career wanderlust. Increasingly, however, moving can also be a smart career tactic.
In many firms, movement up the ranks has slowed as overall firm growth has faltered, Mr Barolsky believes.
“Particularly with some of the top firms not growing or expanding at the same rate, the career progression opportunities at some firms are not what they used to be,” he says.
“It’s a lot harder to become partner in some firms, or they may become a salaried partner but not an equity partner.”
This may prompt lawyers with partnership ambitions – or eyeing up equity – to switch to a smaller firm.
“From a career perspective, if you really want to become an equity partner, you might want to go to one of the smaller firms where your chances might be better,” he says. “Even then, it’s quite tough to make it to equity partner status.”
Senior associates are having a particularly difficult time cracking through to the upper levels of firms, suggests Kathie Sampson, a director at Mahlab Recruitment.
In her experience, senior associates with a few years under their belt could find themselves at that level for longer than they might like.
“I would say at the moment at the really big firms there’s a queue of those people,” she says. “So because we’ve had slower economic conditions, there is a pent-up demand in that senior associate rank to become a partner.”
Part of the challenge is difficultly of building a portfolio of client work that makes a compelling case for partnership. In slower economic times, partners work longer before retiring and hold on to their clients more tightly.
“If you’ve got 10 really senior partners above you, then just in the pecking order it is sometimes harder to get access to that really great work that you can do that you enjoy and therefore you can build your reputation on,” she says.
For these senior associates, shifting to another firm – especially a smaller one – could provide them with a boost, believes Tim Fogarty, a partner at recruitment firm Taylor Root.
“Some lawyers can be blocked in terms of their progression to partner or even senior associate,” he says. “A move to somewhere less top-heavy can ease the way to that sought-after promotion.”
However, in Ms Sampson’s experience, these senior associates might still have to spend a year or two at a new firm before partnership is on the table. The exception would be if they can bring a client following or offer exceptional skills in high demand.
“Sometimes I tell them they need to take one step back to take two steps forward down the track,” she says.
Partners become tempted to jump ship for reasons that are tied closely to the current legal market. As firms merge, list and restructure, some lawyers could find themselves out of step with the current firm culture, Mr Paluch warns.
“Over the last five to 10 years, there have been many high-performing partners who feel like they haven’t been recognised by their firms, or feel like they would have a better cultural or client fit in another environment,” he says.
This can be particularly true after a firm undergoes a major transformation, such as an international merger.
“There are frequent situations where some partners feel uncomfortable [with the new firm] or don’t think the fit that existed earlier remains, making them look [to another firm],” he says.
Changes such as mergers can often bring a new set of expectations or working environments.
“Some people just say they don’t want to work that way or work that hard – I can’t do what is expected of me in that role or I want to practice in a different way,” Mr Barolsky says.
On a similar note, some partners feel disempowered by restructures, and move to regain their sense of influence on the firm. This can be particularly true where a partner goes from being one of 20 partners to one of 200.
“They might move to a smaller firm where they regain that sense of being a true owner, whose input counts for a lot and who can have a meaningful impact on the firm,” he says.
In some cases, however, changes are more subtle than a name change on the door. As a firm’s priorities and strategies shift, lawyers could find that their practice group has dropped out of favour, Mr Barolsky says.
“Sometimes it relates to the fact that their practice may become not aligned to the firm’s overall direction. You won’t get the firm’s encouragement and support if you don’t have an aligned practice.”
Mr Paluch has seen a similar trend, where lawyers feel their practices “aren’t being given the same level of attention”.
“Areas like family law, property law, and insurance law – some law firms don’t seem to be investing in those areas, so partners in those practices [could] make a move to another firm that does.”
Where a lawyer finds that their practice has been neglected, Mr Fogarty suggests: “It’s crucial to do your due diligence in assessing the market to ensure the next firm offers the best platform available.”
At times, this push can also be client driven. A lawyer could find that their client base is growing in a way that cannot be sustained by their current firm, Ms Sampson says – requiring international connections, for example, when the firm is staunchly national.
For institutional clients who use panel arrangements, a change in panel could also tempt a lawyer to switch teams if their client relationship is particularly strong, Mr Fogarty suggests.
Of course, money is also a factor, even if many lawyers are reluctant to point to salary as their motivation. Mr Paluch suggests many partners “are seemingly underpaid in the market”.
“A lot of them realise there are other opportunities in which they can earn a much higher percentage of their billings.”
In Mr Fogarty’s experience, lawyers who target the right firms could make a tidy profit from changing.
“There are some firms in Australia where the profitability is seriously high, way above the market norm, and in those instances, assuming you can take your practice across with minimal left behind, the return on your financial contribution can be significant and game-changing,” he says.
This can be particularly true where your skill set is in demand, so that firms are prepared to pay top-dollar for your expertise, he suggests.
Interestingly, Mr Paluch believes fewer lawyers these days are looking to move into the top-tier, especially at partner level.
“Ten years ago, there seemed to be an idea that if you could get a job at a top-tier, you absolutely should,” he says.
“I think today there has been a momentum shift where there is a recognition that at a boutique firm you can earn as much or more money; you can enjoy as good or better a work environment; and you can have an as good or better cultural or client base fit.”
While partners have good reasons for wanting a change, what makes firms look outside their own walls? For some firms, lateral hiring is a part of their growth strategy in an otherwise flat legal market, Mr Barolsky suggests.
“This idea of lateral hiring quickly has become attractive to firms looking to grow,” he says. “If you look at firms like HWL Ebsworth, Mills Oakley and Hall & Wilcox, a substantive portion of those firms’ growth has come through lateral partner acquisition.”
However, he questions whether this strategy actually increases profits per partner or merely boosts revenue on paper.
“Does it add profits? In some cases it does, if the firm is well-led and returns to scale and gives some practices critical mass. But growing for growth’s sake is not always a good idea,” he says.
In some cases, a firm could lift a whole team or practice group from a rival. An extreme example was Hall & Wilcox’s poaching of 25 Sparke Helmore insurance lawyers in early 2015.
Generally, this occurs when the team is highly loyal to the partner or is experiencing the same frustrations as their partner. However, Ms Sampson emphasises that group moves are made up of individual decision makers.
“If they feel that the ‘strength’ is leaving the firm – from a technical perspective, a client perspective, expertise, the fees – then they’ll go with the strength,” she says.
Aside from raising head count, lateral hiring also often means access to a suite of new clients. Indeed, particularly at partner-level, partners are expected to bring along a client book.
“Over the last five years, as a senior lawyer, having a client following has become more and more important,” Mr Paluch says. “Senior lawyers who don’t have client followings are generally going to be less attractive to future potential employers.”
He adds: “If you’re looking at a move to a mid-tier or larger firm, partners are generally required to have [around] $1 million or more worth of their own clients.”
By contrast, Ms Sampson believes bringing over clients is becoming less significant to firms, who in many cases see reputation as “more important than the actual fee base”.
“It used to be that unless you had a million-plus in fees to follow you, preferably two to four million, than forget it,” she says.
“But these days it seems to me that some firms have got lots and lots of clients and they have plenty of money flowing in the door, so what they really want to do is lift the reputation of their group.”
For mid-tiers or boutiques, recruiting from the top-tier can give their reputation a boost, Mr Barolsky believes. This is both because of the training large firms tend to invest in their juniors, and the cache that attaches to alumnae from brand-name firms.
Mr Barolsky calls this a “secondary brand effect” – having a team of ex-Allens or Mallesons associates can imply to clients “you’re getting the same quality of work and advice in the mid-tier context”.
Lateral hiring also allows firms to tap into specialist skills or expertise that might be lacking among their own staff. Mr Barolsky believes this is particularly prominent at the senior associate level.
“If they’re looking to develop a practice in a field, those senior associates might have that speciality,” Mr Barolsky says.
“That complements the recruiting firm to add a new string to their bow.”
Firms with an ageing partnership might also be looking to the future. If a slew of partners in a particular practice are on the verge of retiring, Ms Sampson suggests, new blood can ensure that group’s continuity.
“To bring in a fresh young partner – and by young I’m talking someone in their forties rather than in their fifties – helps with succession planning.”
On a less quantifiable level, hiring from outside the firm can reinvigorate a stagnant team. Ms Sampson describes itas bringing “fresh DNA” to the culture.
“If you have a really functioning group but you really want somebody who can get in there and stir the pot a bit, then a new partner might be able to do that,” she says.
Think before leaping
Attitudes towards loyalty may have shifted – but in many situations, lawyers can make a strong business case for sitting tight where they are. A new firm means negotiating a new environment, with its own set of politics and foibles.
“There’s a cultural risk that the person will come across and not necessarily fit in, that there might be animosity or friction,” Mr Barolsky warns.
“Secondly, people come across and they have their own particular way of working and particular methods and processes. Sometimes that is not aligned with the approach the firm currently uses.”
Ms Sampson believes it can take up to six months for a partner to find their feet in a new firm.
“When partners move to a new firm, they usually find it energising and reinvigorating. But they also find it, for the first six months or so, a bit bewildering. All of a sudden, there are all these new people that you have to relate to and create relationships with.”
In the same way, staying at the same firm denotes a sense of comfort and stability. As Ms Sampson puts it, “we all like to have a home”.
For many lawyers, loyalty to a single employer is deeply satisfying, Mr Barolsky finds.
“They feel that they’ve contributed to their legacy in one firm,” he says.
“That sense of being a true business builder is a powerful proposition for some.”
However, Mr Paluch warns a comfort zone can soon become a trap. While he believes lawyers who are happy with their current firm should stay put, those who feel dissatisfied could be overlooking the chance to accelerate their career.
“When you make a move, you’re sacrificing that element of comfort zone for the unknown,” he says.
“But over the last five to 10 years, the feeling often seems to be that the greater risk is in staying where you are and not taking advantage of the greater opportunities you may have in another environment.”
On the flipside, chasing too many new opportunities could make a lawyer look flighty, he warns.
“If your CV has too many moves on it, you will become unattractive as a prospect,” he says. “Law firms like to see at least two- to three-year stints at any one firm and longer for partners.”
Mr Fogarty agrees, suggesting lawyers painted as “job-hoppers” could have trouble attracting interest from firms. However, he also urges lawyers not to stay in a role that is a bad fit.
“Ideally you need to be strategic about all your career moves and have an endgame in mind when accepting a job offer.”
Firms also take a risk when they bring on board a new partner. Apart from the potential for personality clashes or poor culture fit, firms could find that the promised client following never materialises.
“Sometimes clients tend to be loyal to their prior firm or just go elsewhere, not following the person,” Mr Barolsky says.
“There could be a promise of revenue flow that doesn’t materialise.”
More critically, firms could risk sending a negative message to their home-grown up-and-comers. Some rising stars might feel overlooked or edged out when a partner position is suddenly occupied by a stranger.
“It sends a signal that their career path is then limited. Sometimes what happens is that firms lose some of their best people because they feel they have been overlooked or blocked,” he says.
This brings the cycle full circle, as those lawyers go on to become lateral hires at other firms. Ultimately, both firms and lawyers need to be convinced that the timing is right for a move – which means some transitions can involve six-month negotiations.
Given the potential risks – and the potential rewards – Mr Paluch urges for a carefully thought-out strategy.
“Both sides need to be comfortable when a move like this is occurring, not just on a cultural level but on a range of different levels – financial, structural and client,” Mr Paluch says.
“There are a range of different areas that both sides need to be comfortable with before a successful move can be made.”