Rebrand new lateral partners to win clients, attract more talent and keep a seat at the executive table.

• Author: Hellerman, John
• Position: "LATERAL" SHOULD MEAN UP, NOT SIDEWAYS

Pretend you're a managing partner and imagine this nightmare scenario: The economy is quickly tanking and clients, upset over $160,000 first-years and skyrocketing legal fees, are demanding rate cuts and other discounts, if they are not pulling low-level work altogether. This makes the firm's ability to skillfully handle ever more complex and premium rate matters paramount. Meanwhile, the pool of talent available to service and attract such work is dwindling.

The really bad news? This isn't a hypothetical. Firm leaders are up at night worrying about talent and how they're going to retain it.

The Fight for Talent

"The American Lawyer" recently reported that there were 2,423 lateral partner moves between AmLaw 200 firms last year, a 12.5 percent increase compared to 2006's 2,153 reported moves. This is an astounding number and has been the trend for several years.

Sadly, the magazine also revealed that 16 percent of lateral partners who joined new firms in 2005 have already moved again. If the trend continues, nearly 400 unhappy lateral partners will move again in 2009.

At a conference in New York for legal recruiters earlier this year, $600,000 was the consensus estimate of what it costs (including actual expenses, lost partner time and head-hunter fees but excluding the actual compensation package) to integrate a lateral partner with a $1.5 to $2 million book of business. If the figure is accurate, then more than $240 million is being wasted because firms aren't able to make their lateral partners happy. (That amount of revenue would put a firm on the AmLaw 100!)

Clearly, getting this right is important and firm leaders are spending upwards of 60 percent of their time on identifying, courting and signing talent. Why is talent so important and what makes it unhappy?

"Talent is what they sell so it's what they have to pay for." So said "New York Magazine" in explanation of the billions of dollars Wall Street paid out in bonuses last year. The same holds true for law firms. Talent is important, obviously, because talent is what attracts and services clients and maintains lucrative relationships with them on the partnership's behalf. In other words, talent is a law firm's biggest asset and its only marketplace product.

Why do partners leave their firms for competitors? The top reason is "lack of support." It is a vague catch-all, but it is not hard to give it definition: Lateral partners join new firms for various reasons...