Where are they now? Nearly half of lateral partner hires don't stay full five years
About half of lateral hires disappoint the law firms that hire them, according to an analysis of 1,130 hires in BigLaw.
The study by ALM Rival Edge found that 47 percent of lateral partner hires don’t stay a full five years at their new firms, the American Lawyer (sub. req.) reports in an article by Hugh Simons, who is doing research for a book on elite law firm strategy.
It takes about two to three years for a lateral to “come up to speed at a new firm,” and it takes about two to three years for a law firm to recoup recruiting and compensation-above-contribution, the article says. “Not staying five years is a loss-making proposition,” according to the article.
In addition, hiring law firms “typically have a cohort of laterals that is just muddling along” and not providing a return on investment, the article reports. “Combining these two groups—those who move on and those who muddle along—it’s clear that over 50 percent of lateral partners disappoint.”
The study looked at lateral hires by 100 top law firms with the highest profit per equity partner. The study tracked partners hired in 2011 through the end of 2016. Forty-seven percent was a global attrition rate; attrition for U.S. moves is 45 percent.
The study found that law firms at all levels of profitability hire laterals at about the same rate, which is 5 percent of current partners. But the lateral attrition rate is higher at less profitable firms.
Among the top 10 percent of firms by profits per partner, the five-year attrition rate was 28 percent. But attrition began to increase among firms in the third 10 percent, where the attrition rate was 37 percent. Among the firms in the bottom 10 percent, the five-year attrition rate was 59 percent.
“Thus, lateral hiring may be hurting more than helping the relative competitive position of middle and lower profitability firms,” the article concludes.
Only 8 percent of lateral hires come from government and corporate sectors, but their five-year attrition rates are 11 and 19 percentage points below their law firm counterparts. Among practice areas, the attrition rate is lowest for litigators and highest for bankruptcy practitioners.
ABAJournal.com: “Majority of lateral lawyer hires don’t meet revenue expectations, survey says”