These days, most professionals can expect to change firms three or four times in their career.  Firms seek out warm bodies to fill those vacancies, hoping for a better fit and a strong incoming book of businesses.  It used to be that once landed, an incoming professional had some time to get settled and build their practice; but tough economic realities have shortened that grace period considerably.  Now, laterals have about a year to prove themselves.   So how are they doing?

The majority of research on laterals available on the internet relates to law firms, likely because law firm laterals are among the most expensive placements of any industry and so they are the most closely monitored. As such, they make an interesting case study.  Within the legal industry, lateral employment is on the rise.  A recent American Lawyer/LexisNexis survey found that 96% of respondents planned to hire laterals within the next two years.  This hiring process is not cheap.  A NALP Foundation survey found that the cost of investment and recruitment for a typical associate is $250,000.  Yet the same survey found that an average of 75% of associates leave their firm within the first five years.

How many of these laterals have a hope of being successful?   A Bloomberg Law study by Julia Savarino identified that 70% of law firm laterals are considered unsuccessful, meaning they were incapable of hitting their financial targets.  Further, 10% of laterals were considered absolute failures.

In the UK, author Mark Brandon (who wrote “Later Partner Hiring for Law firms: Hiring for Success”) cites a study that suggests 32% of lateral hires are considered absolute failures. This was echoed by another UK study done by The Lawyer (on-line source) which, based on a survey of 2,000 lateral hires, found that 33% of them had left within three years and 44% had left by year five.

But not all failed laterals leave, although none of these studies quantified the remaining failure population.   From my own experience I would estimate that about 25% of them remain past five years.  In doing so, they take up resources and put added revenue pressure on the other lawyers in the firm, often while continuing to collect compensation that was structure to lure them into the firm in the first place.  This inequity is noticed, and can cause good people to leave an organization.

Yet laterals are on the rise. A 2012 American Lawyer Media survey of laterals found that during a 12 month period between 2011 and 2012, laterals increased by 22% over the previous 12 months.  Why are firms still hiring them?  Lots of good reasons.  A firm needs critical mass so serve its clients so if bodies leave, they generally need to be replaced or the firm will have to consider turning away work.  Firms also need a good range of professionals, by area of focus and by years of experience.  Gaps are noticed by clients and may result in a lack of confidence or termination.  Firms might bring in professionals to expand knowledge base in a certain area, or to prep for the retirement of an older professional.  Laterals that come in with a good book of business are no brainers – provided they fit with the firm culture and can hold onto their book.  But I’ve seen stats that suggest you should expect a lateral to retain 1/3rd of the work they say they can.

Why is that number is so low, and why do so many laterals under-deliver or outright fail within their first five years?   Most of the research referenced above points to three critical factors for success:

  1. Better planning for partner hires;
  2. An improved hiring process;
  3. An integration plan for all new hires.

Of these, the most important is a strong integration process. Lateral expert and author of “Hiring for Attitude”, Mark Murphy suggests that 89% of lateral failures are not the result of lack of skill but rather, attitude and cultural reasons.  In my own experience, organizations often spend considerable time carefully considering what and who they need, and they might even work closely with HR or an external search company to try to place the right type of person. And finally, they speak with lawyers in the same or related areas of the hire, obtaining commitments to assist with integration, introduce the new lawyer to clients and have them help out on files.  But those things don’t always happen.   From what I’ve seen and has been confirmed by countless friends in law firms, accounting firms and other professional environments, often the only formal integration process a professional receives is limited to technology training, policy awareness, and a couple of lunches with key stakeholders in the organization. Then the lateral is told to start interacting with clients or suppliers, managing staff, and representing the organization generally – sometimes through business development initiatives.    But clearly, the lateral isn’t ready.  They don’t understand the organization, industry and competitive landscape sufficiently. They aren’t fully aware of the culture and organizational chart of the company.   As such, they have a very high risk of stepping on toes, saying the wrong thing, getting off to a bad start or even unwittingly causing damage with clients.

Yet there is a remedy for minimizing this risk and maximizing productivity within the shortest possible time period: a lateral integration plan. It includes an assessment of the incoming professional’s skills and capabilities, training on any shortfalls, coaching through development of a better understanding of the products, service offerings, culture and key contacts within an organizations, exploration of the best target market for the lateral, development of an initial integration and business development plan for the lateral, and coaching/assistance through the initial implementation of that plan. Sometimes this type of service is available through in-house marketing departments.  Alternatively, I offer this service through my coaching practice. I am not aware of any book or worksheets that have been developed to assist professionals through this process but would be interested in hearing in any exist.

Failing that, an organization should work with the incoming lawyer to at least create a formalized document that declares in no uncertain terms precisely what will be done – on both sides – to get the professional integrated into the organization and developing business as quickly as possible. The plan absolutely needs to include a reporting schedule – I like monthly touch point meetings and then formal quarterly reports to add greater accountability to the process. And make sure that everyone who touches on that plan knows about those reports, so that if they don’t follow through with their promised assistance, someone is going to know about it.

With the typical, unavoidable churn most firms experience with their professionals, laterals are fact of life.  Without proper support, laterals are a high and expensive risk for most organizations.  But with proper support, they can easily move from high risk to high return within a couple of business cycles.  And after going through all of that trouble trying to find the right person, why wouldn’t you protect your investment with a bit of productivity insurance?