5 questions to weigh when considering a lateral hire for your law firm
INSIGHT ARTICLE |
Today’s successful law firms are continuously scanning the horizon for talent and ways to revitalize practice areas to better serve their clients. Whether it’s acquiring a firm with a niche practice or hiring lawyers to beef up an existing service offering, firms are implementing lateral hiring strategies to stay competitive in their market and improve practice profitability. However, before embarking on an acquisition and lateral hiring strategy, law firms should take a step back to assess their needs as well as weigh the impact of adding new people and practices. Consider the following questions.
What’s the current state of your firm?
It’s important to weigh firm strengths as well as challenges. Do you have a weakness in a practice area? Is your competition providing services you’re not? A thorough assessment of current practice offerings and your firm strategy is key to pinpointing your future hiring needs.
Are you meeting client needs and do you anticipate growth areas in service or geography?
Perhaps you have a general practice, but you’ve seen a rise in your clientele requiring additional services around family law. Your firm doesn’t provide that service, so clients have been referred to an outside firm for their needs. If this is happening more frequently, you may be missing out on serving your clients fully. In addition, are you seeing opportunities to expand your practice in other areas, for example, or perhaps opportunities to broaden the geographical reach of your firm to other cities? It’s important to weigh the needs of your clients and the marketplace as well as the growth desires of your firm, and then explore hiring measures to help you meet those desired goals.
What strategy fits your hiring needs?
Does it make sense to acquire a boutique firm to meet the needs of a new practice area for your firm or will hiring a few talented attorneys to revitalize an existing service address your growth goals? In addition, will your hiring approach come in phases with additional hires to come? Consider the best strategy for your need and how you must execute it.
What’s the capital need to implement your lateral hire?
After a lateral hire or acquisition of a new practice area, billable hours and revenue may not be realized immediately. Meanwhile, salaries are paid on day one. Make sure your firm can withstand the investment of new hires while they are integrating into the firm and building billable hours. Costs in training, relocating, office and support needs should also be factored in to overall hiring expenditures.
How does firm culture affect hiring and acquisitions?
The major reason why acquisitions falter frequently involves a poor culture fit between the acquiring firm and the acquisition. For example, if the acquiring firm is a traditional practice focused on tight budgets, the bottom line and chargeable hours, while the acquisition of new hires are from a firm with added luxuries and posh offices, then this mismatch will have challenges. Look for new hires and acquisitions that reflect your firm’s traditions, values, mission and core operating philosophy.
Executing a successful growth strategy via acquisition and lateral hires can be fruitful for firms, but it’s important to take a circumspect approach. Assess your firm’s needs, identify the appropriate growth strategy and weigh the overall impact on your firm first to get optimal results later.