Considering a lateral move as a Partner?
- By Mark Simpson
Are you an Equity Partner looking to move your practice to another firm? Perhaps you’re a salaried Partner frustrated with delays in taking that last step? Or maybe you’re a Senior Associate with something of a practice who feels the goalposts keep being shifted by your current firm?
With the shifting landscape of the legal market, it can be difficult to determine both when and where to lateral. Whatever your motivations, if you’re a senior practitioner contemplating a lateral career move, it must marry your career aspirations with your personal considerations and requirements.
So how do you know if you should consider a lateral move? The following are important factors to consider before you leap, and guidance on how to navigate these often delicate and complex career opportunities.
What are you looking for?
It’s very likely that a convergence of factors will prompt you to consider a lateral move. It’s important to be honest with yourself, determine your reason for moving, and how it may or may not affect your career. The following considerations will help to identify what you’re trying to achieve in making a lateral move and will assist in narrowing down possible/compatible target firms you might approach:
- Financial Considerations - Are you looking for better remuneration? Faster progression to equity? A more profitable firm? A better/fairer system for distributions?
- Work/Life Balance and Flexible Hours - Are you looking to trade off some seniority/status or income for more time outside of work?
- Specialisation vs Generalisation - Are you wanting to focus more in your chosen specialist area of expertise rather than having to work across a number of areas of practice in your current firm? Conversely, are you seeking the ability to move away from your narrowly designated niche and to widen the breadth of your practice areas?
- Working Environment - Feeling trapped in toxic, disjointed or stressful work settings? Consider the work environment where you’re most likely to thrive as well as the personalities you’d like to interact with and the legal work you want to do.
- Adequate Support - Are you in a smaller practice which lacks systems, junior lawyers, support staff or dedicated HR, Marketing, BD, Finance and CEO professionals? Conversely, are you finding the raft of systems and rules in a larger firm stifling and seek more freedom to run your own practice?
- Compatible Client Lists - Are you currently battling conflicts of interest which is restricting you from picking up work and expanding your practice?
What’s your practice? How do you quantify it to your new firm?
Historical billing data over the last few years (both your own and fees billed under your management by others) is a good place to start; but you need to break it down further than that. You should delineate who you consider to be your clients (as opposed to clients you have been servicing) and who you consider to be clients of your old firm (or other partners thereof).
Trying to accurately gauge your portable business requires a fair amount of finesse and foresight. A simple and helpful formula is to list all your current clients and work through what you billed each client over the last year; then multiply that by the estimated probability that those clients will follow you to a new firm. For example:
Are there conflicts which might prevent a client following you to a new firm? Does the client have a panel of legal services providers? Is the prospective new firm on that panel? How easy is it to get onto that panel or work around it? What is your restraint of trade/non-solicitation period and how exactly does it operate?
While Partners have a fiduciary duty to the originating firm, the nature of this duty is often unclear, and the act of making a move with clients is relatively commonplace. Consider a client’s right to choose, and don’t assume your clients will always choose to move with you; take into account that personal or legal conflict, or dissatisfaction with new billing and collection practices can affect decisions.
What is your business plan to grow your practice in a new firm?
Once there is a clear and firm rationale supporting and backing the decision to make a lateral move as a Partner, there is a need to consider whether or not there is also a business case. You need to have some detailed plans which show how you will continue to build your practice in a new environment.
Who are your existing contacts? Who else will you target? Which of the new firms’ key clients would be most likely to have work for you? Who are the key client contacts you need to get to know? Identifying your prospective new firms’ key clients and the potential for cross selling your services to them is key, as is being able to recognize which of your new firms’ other services can be cross sold to your clients.
Another consideration if you are moving to different sized firm is how will your new charge out rates, and that of the salaried staff servicing your clients, will impact your clients and the likely flow of instructions?
Obtain reliable sources on your potential new firm/team
Once you have approached a prospective new firm and start entering discussions, research and investigate as much as you can about them. The firm will likely present you to a small group of Partners but try to meet all the Partners, at least in your area of specialization or practice group. Take the time to talk with other recent additions to the partnership. When the recruitment process is getting well advanced, find out if you know other senior lawyers who are currently working or were recently working at the new firm and organise a chat with over coffee.
The new firm should be as transparent with you as you are with them. This means opening their books to you. You also need to make sure you fully understand how their partnership operates, the capital contributions (if any), other benefits and obligations such as how retirement/exit from the partnership works under their partnership deed.
Get it down in writing
Ensure you get the key points of your agreed lateral move down in writing. Particularly as it concerns such things as timelines to equity, targets and bonus figures, budgetary relief periods, assistance in marketing and business development, agreements regarding which clients you are bringing to the new firm and which are specifically excluded from your new restraint provision.
The New Zealand legal community is reasonably small so making a lateral move on your own is a risky proposition; it can add real value using a knowledgeable legal recruitment specialist who knows the market, firms and key players, and can make cautious “no-names” approaches to firms you’ve identified together.
When making a lateral move as a Partner, your primary consideration should be whether the new firm can provide a better platform to enhance your ability to attract and service clients - so it is vitally important that you do your homework before making a move. With a smart, well thought-out lateral move, and appropriate due diligence on both sides of the lateral partner deal, both you and your new firm can enter into a mutually beneficial and long-lasting relationship that best serves your mutual financial interest, your clients and your overall personal wellbeing.
This article featured in LawTalk Issue 943.