Post Armageddon: "Green Shoots" for Lawcruiters?

Mass layoffs. Salary cuts. No associate job orders. Desperate associate recruiters suddenly becoming partner recruiters. Every recruiter calling and chasing the same 100 viable candidates. It’s enough to make a despairing Lawcruiter abandon the business for good. (But see this video for the contrarian view.)

Memorial Day Starts: Summer Slowdown Begins

The kick off of the Memorial Day weekend means the start of the summer slowdown in the lateral recruiting business. This usually happens for two reasons:

1. Money never sleeps – but people take vacations: meaning that it becomes harder to martial the necessary interviewers to complete a lateral hire
2. Summer Associates: The arrival of the summer associates has a two-fold dampening effect on lateral hiring. Firstly, these folks demand a lot of attention by law firm management and recruiting departments - and this attention is usually at the expense of lateral hiring. The second dampening effect is the availability of bright and eager (and relatively inexpensive and temporarily employed) law students to do the kind of work that would otherwise be done by a (more expensive and permanent) new junior-level lateral hire. This latter effect is mitigated temporarily once the summer associates leave - but is then increased again in September as the new first year associates join their firms.

This summer, Lawcruiters will need to deal with the third factor of a potential slow-down in inhouse hiring, as typified by this story in the WSJ about Goldman Sach’s summer hiring freeze.

Speaking for myself (and no doubt for many of my Lawcruiter colleagues), I am frankly welcoming a summer slowdown after an unusually frenzied start to the 2007 lateral recruiting year. It’s been a great year so far, and there is much to look forward to in the remainder of this year. In the meantime, here is wishing a peaceful Memorial Day to all.

Lateral Hiring Best Practices: Sonnenschein

For those of you who missed it – February’s American Lawyer contained a fascinating case study, by Ross Todd, on Sonnenschein Nath & Rosenthal’s efforts to improve and optimize the effectiveness of their attorney lateral hiring program.

Sonnenschein is not alone among the AMLAW 100/200 law firms in wanting to grow – and grow more profitable. And many firms have implemented some or all of the ideas, strategies and tactics described in this article. And while I cannot point to any dramatic Sonnenschein lateral hiring successes in the New York market and – more pointedly – although their AMLAW 100 rankings for 2007 are a disappointment compared to their 2006 results – I am nonetheless highly motivated and encouraged by this article as clearly, when it comes to the process of lateral hiring, Sonnenschein seems to “get it”.

Here’s what I like:

1. A Strategy – In these days of management consultant driven business development, it is maybe unsurprising that Sonnenschein is working from a strategic plan – developed with the assistance of a strategic consulting firm - declaring lateral hiring to be an integral part of the “road map for growth from the firm's current middle-of-the-pack $800,000 in profits per equity partner to $1.4 million in 2008”. And yet, having the strategic plan (and so many firms do not) – and disseminating its existence – is a sure sign that the firm has (or is attempting to have) a focused and integrated approach to lateral hiring.
2. An Dynamic Lateral Hiring Acquisition Partner with Real Authority ­– Kara Baysinger sounds like a real go-getter – with $4 Million of portable business (being managed by firm partners as she devotes her time to lateral hiring and business development), all while raising a family (she was pregnant with twins when the article was published).
3. Paying Up – Reportedly, Baysinger accepted the job only after the Sonnenschein leadership promised her that the firm would be "willing to pay top dollar for talent and aggressive in paying recruiters." Meaning, as it turns out paying recruiters more for recruiting groups – rather than less (on a per partner basis) which is an all too common practice amongst our clients.
4. Building Relationships with Lawcruiters – In Sonnenschein’s case, this meant hiring someone to manage the lateral hiring process (scheduling, conflicts checking, database maintenance), and working to establish and maintain (through regular and frequent contacts) a small network of Lawcruiters who know Sonnenschein's practices and needs and - with the added incentive of higher fees – were more likely to devote more of their energies to Sonnenschein searches.
5. Internal Interviewer Training – This blog has discussed before (here and, with a more hopeful air - here) how our clients fail to train their lawyers in the skill of interviewing potential lateral hires. In Sonnenschein’s case, since the proper screening of lateral hires is within Baysinger’s bailiwick – she also took upon herself the responsibility of getting her fellow partners to work from the same page. The questions she trains them to ask: “Who are your clients?” “What are your rates?” “What are your clients' attitudes about your rates?” and “How productive are the associates who work for you?” may all seem obvious and basic. You’d be surprised…
6. Maintaining “Buy-In” from Other Partners: It seems clear, from the article, that Sonnenschein also took pains to maintain partner “buy-in” and esprit-de-corps throughout the process of implementing the strategic plan. It cannot have been easy for some partners to watch firm management de-equitize and/or fire 33 fellow partners (10% of the firm wide partnership) and hire 17 new partners in 2006 – all significant costs and changes to be borne in the interest of increasing profitability and competitiveness.
7. Effective P.R. – However Sonnenschein succeeded in getting the American Lawyer to publish this article – and it takes some doing to make this happen (assuming that they were involved at all) - its publication is clearly a big cheer for the firm’s lateral hiring initiatives.

Whether Sonnenschein achieves its objectives is obviously uncertain. The most recent AMLAW 100 numbers have them falling in the gross revenue, revenue-per-lawyer and profits-per-partner rankings from their positions in 2006. Whatever the outcome – the example they have set is now, for better or for worse, clearly set out for any competitor firm considering the same path.

Kickbacks to Candidates: Just Smelly

One of my Lawcruiter colleagues recently penned an article, purportedly responding to a candidate’s question about how respond to a proposal to give another Lawcruiter an exclusive right to represent him/her in the lateral job market in exchange for that Lawcruiter’s written promise to “kick-back” to that candidate a portion of the Lawcruiter’s commission for placing that candidate in a new opportunity.

I am sure that most of us, in the Lawcruiter community (and this Lawcruiter is no exception) has faced a demand for a kickback – either from a third party in exchange for promise to refer potential candidates, or from a current candidate in exchange for the commencement or continuation of the agency relationship. In my case, I decided in both cases to refuse the demand – and, in each case, the candidate backed down. What I remember most of all is how unsavory the whole business seemed – both at the time, and as I again recall what happened.

At the same time, many of us are no doubt familiar with the happy feelings that come from implementing a relationship-building strategy whereby the source of a successful referral is “thanked”, after the fact, by way of restaurant reservations, bottles of champagne, etc. This, by comparison, seems as much as good manners as a heartfelt way of celebrating the good fortune of a common friend - now happily placed, as a result of effort motivated by the referral, in a wonderful new opportunity.

What is less familiar is the recent attempt by at least one new Lawcruiter firm, to attract candidates by offering them a significant cut of the Lawcruiter commission for a successful placement.

I can spend a lot of time analyzing the legal distinction – if any – between these situations. Or I can simply rely on my sense of smell to help me distinguish a right-feeling gift of heartfelt thanks, and the queasy feeling that rises whenever I am confronted with a kickback situation.

Some situations – like the one faced by my colleague’s questioner - can seem pretty straightforward. My guess is that there are a whole host of borderline situations as well - and I know very well that after-the-fact gifts can fall into this category too. And it is in these situations where the smell test works (since nothing else does) best of all.

The smell test can also be called a reality check. Here’s how it works:

1. The Candidate asks himself/herself

a. Firstly: whether receipt of the kickback compromises the sincerity of his/her agreement to take a new position - and whether the position under consideration would still represent the best career move even if the kickback were not paid.

b. Secondly: whether his/her new employer would be happy to learn that their latest hire took a position for the sake of a few thousand dollars kicked back by the recruiter. Since each set of circumstances is different, I think the question should be phrased as though this were a marriage: Would either side - in all honesty - want to know that the other is marrying for anything other than Love? Would they care?

c. Thirdly: whether the value to the candidate of the promise of a kickback is worth tying his/her job search initiatives to a Lawcruiter whose business model may depend more on the kickbacks then upon legal recruitment expertise - and worse , to someone who now has a documented lever (i.e., that smelly exclusivity/kickback agreement) that could theoretically be used to influence the candidate to make a choices and decisions that he/she would otherwise not make.

2. The Client applies the smell test in reverse, i.e., in the light of the new information about the candidate - is the recipient of a kickback really the kind of person the client wants to be hiring? I am sure we can all imagine unusual situations where this kind of behavior is looked upon kindly but – speaking for myself – I generally don’t like working with sharks.

3. The Lawcruiter’s issue (leaving aside what I see as an obvious obligation to disclose the kickback arrangement to the client) is essentially one of self respect. By kicking back a portion of a placement fee – the Lawcruiter effectively devalues his/her services by suggesting that they are undeserved at the rates being charged. It is frankly hard to imagine that anyone who knows what it's like to build a Lawcruiting practice would consciously accept this notion – which probably indicates the experience level, in the Lawcruiting business, of the folks offering kickbacks to candidates.

Finally – let’s talk about NALSC’s issue – which is basically one of relevance. Whatever we think of the idea of recruiters offering kickbacks to candidates – the problem for NALSC and for the Lawcruiter community in general is that this idea, and the business model it represents, seems at once seductively compelling and terribly threatening. To begin with, we will all fear that - in the short term – these folks will be competing more successfully for a greater volume of candidates. Secondly, we fear the paradigm shift these folks represent to the Lawcruiter business – moving it from the relationship-centered consultancy model to a more impersonal, less profitable, high-volume business that few of us are equipped to undertake. Thirdly, the potential for the success of this business model threatens to undermine NALSC’s efforts to professionalize the relationship-centered consultancy model of the Lawcruitment business by potentially rendering these efforts irrelevant. Fortunately for NALSC and for most of the Lawcruiter community, I believe, the kickback model, as we are currently seeing it, will smell too badly to be of much use to anyone. For the time being…