Episode #200: Lateral Partner Moves: What Every Law Firm Partner Needs To Know

[00:01:19] Hello. Hello everybody. Welcome to the Life in Law podcast. This is your host, Heather Molder, and this episode is a result of, number one, a recent coaching conversation that I had with a client who was considering a move to another law firm. And number two, the number of lawyers I’ve seen jump from one law firm to another thinking it was going to be the perfect fit only to find out it wasn’t. And not only that, only to find themselves either in the exact same place that they were and very frustrated by that, like, different place, obviously, but all the same problems that they had before ended up being problems in the new place as well.

[00:02:02] Or even worse, realizing that maybe they are in a worse situation. And I am just going to tell you that most of the time when this type of thing happens, it really isn’t because somebody lied. It isn’t because, you know, they made false promises. I mean, sometimes, yes, that happens, but often that is really not the case. Typically it’s because not enough due diligence has been done.

What Most Lawyers & Law Firms Focus On (Isn’t Enough)

So what I traditionally see is everybody wants to know what the book of business is, right? Is the book what the people claim? And if it looks like the book is good, then we’ll make the offer.

[00:02:40] And then the attorney is mostly looking at the money, the financial considerations, but they’re not looking at Some sometimes the right financial considerations, which we’re going to get into here momentarily and then they’re not looking at a lot of other things. So that’s what we’re going to go into and today is almost like a checklist. We’re going to go through a checklist of things that you need to be asking about before making the move. Now, before I get into this checklist, note that we are primarily talking here about partner moves, shareholder moves, lateral moves. When someone, somebody has a book of business, or maybe not, but they’re moving from one firm to another as a partner, or even from in house into a law firm as a partner, that does not mean if you are not yet a partner, you don’t need to listen to this because there are a number of things that you should probably be thinking about even if you’re not a partner and you’re not pulling in a book of business with you and asking questions around. So some of this stuff you’re going to find isn’t applicable to you if you’re not yet a partner. But much of this is. So stick with me and take what you can from this checklist.

Financial Considerations

So checklist number one.

[00:03:54] First you want to look at financial considerations. Now this is where everybody usually starts and it’s the biggest thing for many of us. But make sure you’re looking at the right things when you’re looking at the financial considerations. So what is the salary? Is there a salary? What are the equity payouts? How does that work? Okay, and you need to get really into the weeds around what kind of hours are required of you to make the money you desire or that you need to make? Right? How much do you even need for this to make sense? Like how much do you need to get paid? You need to have that as your first consideration. What’s the minimal amount? How long can that go? For? Most of us, we know that there’s a ramp up period. Maybe that first year isn’t going to be, you know, you’re not going to make as much money as you would like, but you’re moving because there’s real potential, there’s a bigger upside. So look at what the upside is. What is the upside? Why is there upside? What do you need to be doing in order to get that upside?

[00:05:04] What’s the downside too? There’s always a downside, y’all. Okay, what if something unexpected happens, an economic downturn that really impacts your book of business and you’re not able to collect as much as you normally would? What happens then? You need to get a very clear understanding of how it all works. Okay. And one of the things that I’ve seen happen a lot to people and where they get really upset if it comes to it didn’t work out financially is, number one, there’s an assumption that all business that you have at your current firm is going to move with you. I hate to break it to you, but that’s often not the case, especially if you’re at a bigger firm. Even if you were the originator on it, even if you were the main person who has all the connections, if you’re at a bigger firm and there’s tentacles within that client from many aspects, some of that work may not move with you. And I see that happen a lot.

There’s always an assumption that it will all move or at least within a year. Some of it never does. And you need to be prepared for that. And you need to be realistic and run some of those scenarios so that you can be prepared should that happen. The other thing that I see is people assume a ramp up much more quickly than is actually possible. There is real time that is necessary when you move, let’s say you have a huge book of business and you do ultimately move all of it over. It doesn’t happen overnight. It doesn’t happen as quickly or as seamlessly as you would like, and it will impact your bottom line. So you need to be prepared for that, certainly during the transition period.

But then also you need to think about, okay, how would this impact my relationships with these clients? If it doesn’t go as seamlessly, be prepared for that too, because it’s not just tough on you when you move firms, it is tough on your clients as well. And you want to be ready for that. The other thing that I would say is there are a lot of firms who will try to pull people in because of their expertise, not necessarily their book of business or because of their expertise.

And they have a book, but it’s not quite as big as they want. Right. And so they want to jump to a new firm because they feel like it has a better platform for them. So they’re really pulling them over for the potential. And the person who’s coming over is coming over for the potential that’s provided. Now, something I see happen a lot is everybody has these rosy assumptions that you’re going to build your book in this lockstep, easy, linear fashion, and over the next 12 to 18 months, you’re going to get exactly where you ultimately want to be. I hate to break it to you. But that very rarely happens.

Most of these people who are very successful, it takes about two years because there’s a transition period. There’s a period of getting used to things and getting to know people. And then it changes how you do business development to some extent. Okay. There’s also a real emotional mental toll when you move, you just can’t get around it. There’s stress that’s caused over this. Right. So you need to be prepared for that. And then there’s also rosy expectations oftentimes in that situation that the firm has enough work for you while you’re building up. That is also rarely the case. And the firm often actually thinks it has enough. But what I see, it’s not that they’re lying. It’s that nobody has sat down and really, truly crunched the numbers well enough to play around with that and say, okay, is that true?

[00:08:51] So a client of mine recently had one of those experiences where the firm was like, we’re crazy busy in work. We have enough for you. There was this assumption made, and when they thankfully sat down together and crunched the real numbers and looked at their next six months of projections, they realized that things were starting to change a little bit, that they weren’t as busy as they thought, that they were likely not going to be as busy as they had been over the next six months.

[00:09:18] And that changed the amount of work they could ultimately provide to this person, which massively changed what this person would make there. Because a large piece of how attorneys are paid at this firm is based on your actual billables and collections of work that you bill and then the originations. And this is one of those cases where they knew the originations would go up over time, but it would start very low. So it, it made it untenable. Like what this person needed for their family could not obviously be provided. It just wasn’t going to happen. It wasn’t going to work. Now, they didn’t kill the conversation forever, but it’s a, okay, not now. Let’s regroup in 6, 8, 12 months and see if things are better then. Okay. So these are the type of financial considerations you need to get into. It’s not just about what’s your book, what do you project, how much do you pay based on that? You need to start looking into real world scenarios and running the numbers. If things don’t go as well in worst case scenarios, what does that look like? And is that okay with you? Be more prepared.

Have these difficult conversations with your potential future employer. Trust me when I say they will regard you better for it and it will make your transition much more smooth.

Consider Your Expectations vs. The Law Firm’s Expectations

[00:10:40] Number two of kind of your checklist, know the expectations.

Now there are your expectations and there are their expectations. So what kind of expectations am I talking about? Billable. What’s the expectation for you to be able to bring in billable work? How many hours do they expect of you on a weekly, monthly, annual basis? What about non billable work too?

Not all firms are alike. There are a lot of different policies. Some have very little non billables for partners, some have a lot. What about leadership and management expectations? What about non billable extracurriculars that aren’t business development like mentoring?

What are the ramp up expectations? How quickly do they expect you to ramp up to the numbers that you ultimately want and promise to get versus what is your expectation to building that out?

And what is your initial target like for the first year or two versus your longer term vision? And have you had discussions around that? And is everybody being reasonable?

o that’s the expectations. And this is where a little bit we talked about this in the financial considerations, but where you also want to think through, you know, how, how much work can they provide as you ramp up and will this get you paid what you want or need?

Consideration #3: Support

[00:12:05] Item number three, support.

What kind of support do you need and want in the short term and the long term and how will they deliver that support to you? This is a conversation that I find does not happen nearly enough. And when it does, it stays at these top levels and it doesn’t go deep enough. And people often go in with questions and assumptions. The worst thing that can happen is for you to make assumptions and also for you to have questions that you don’t get answered before moving. Ask the questions, never assume.

So think through what’s their support staff, what’s their structure, how does that even work? Do they have paralegals? How many attorneys do they have? How do those people get assigned? Are they basically already taken up? You need frank conversations around that. Do you need to be bringing somebody in? If you need to bring somebody in, when will you have that ability at the outset? Or do you need to get to a certain level of originations that you’re actually collecting on before you can do that?

What do they pay their people? This is actually really important to know because it determines the quality that you can get. And I’ve seen a lot of relationships go south because maybe they don’t pay paralegals market and so it’s really hard to get Good paralegals and then keep them.

[00:13:33] The other thing you’re going to want to look into is what kind of marketing and business development support do they provide? Do they have a marketing department? If so, what do they do? Meet with them, talk over what they do, how they provide help. Get a good understanding for what they can do for you and how you might want to utilize them. Get a good understanding based on what you’ve already got and what you expect to bring over, what you didn’t have at your current firm and why you want to move. Can they meet those needs? And one thing I would note, do they have a marketing budget and if so, how much? Most firms do, but they vary drastically. The other thing I would also ask is will they pay for coaching to help with business development? Now, I’m not saying you need it, but should you want it? That is something I would ask because at a lot of the bigger law firms that comes out of your budget, they’re like, well here’s your budget, use it as you please and you can use it for that. That’s often not going to be enough to hire a really good coach or it’s going to eat up all or most of your budget. Many firms will actually pay if you ask them. So ask the question. Doesn’t mean you have to utilize it, but you want to know what the answer is.

[00:14:45] Ask questions around how support gets hired and how much say you will have if you want to scale and grow your own practice group.

And also talk to other attorneys to find out the reality versus the hope be talky kind of points.

Again, most firms are not trying to mislead you, but sometimes the people who are telling you something don’t actually know and they’re making assumptions too. So talk to the people who are in the group itself. Talk to other partners in the group, talk to some outside of the group and find out what’s your perception. Get a good lay of the land. So that was item number three.

The Structure Around Transitioning You Into The New Law Firm

[00:15:33] Number four is transition support.

So what does onboarding actually look like? What kind of internal introductions and integration efforts are made on your behalf? Will they help communicate the move to your network? How do they support you in getting files over and cases or deals staffed? You know your current needs, you’re going to need immediate help. So you want to set that up before you even get there.

This is one of those areas that floors me when I hear about how little it’s dealt with pre move like it’s nobody asked the questions that are just a bunch of assumptions that are Made and then they move over and it’s two or three days in and they feel like they have no support. Well, did you ever ask?

And frankly, oftentimes they can give you the support. They just need to know what it is.

[00:16:29] And no, unfortunately most law firms don’t seem to have a system for that. FYI, law firm leaders, if you’re listening, you really should put one together. It can’t be that hard. Make sure you understand onboarding. Make sure you have some type of internal introduction and integration effort. Ask the questions, how do we support our new attorneys? And getting files opened and over that are ongoing cases or deals that need to be staffed immediately.

Make sure you’re supporting those people because it’s one of those things that when in this, this goes awry, it, it creates this initial resentment that is hard to get rid of.

Logistics, Day-To-Day (How Do Things Work/Get Done?)

[00:17:13] All right, Checklist item number 5. Know the Day to day logistical stuff.

How often do you need to be in the office? Do they have requirements around that? What, what kind of flex schedule do they have? How often are other people in the office? This is important.

[00:17:32] Some of us are meant not to work from home. Need to be around more people. And if that is you, you need to get a really good understanding of who’s actually there. Because what’s the point if you’re going into an office with no one there? Also get a good idea of what your non negotiables are in terms of systems, tech, pricing, billing, et cetera. I put this under the day to day. This is the stuff that we just inherently deal with on a day to day basis for intake, billing, et cetera. You need to sit down and think through how do things currently work, what do you like about it at your current firm, what might you want to change? And then ask questions around how it works in the new firm. Something to definitely ask. Ask the question, how much say you have over how you bill what you bill? Write offs? What are the rules around write offs? It’s really good to understand that before you move over because that can get you in a lot of trouble with clients if you don’t understand that.

Alignment To Your Values (Culture, Policies & So On)

[00:18:33] Next, I want you to think through cultural alignment and values. So what’s the real culture around work life balance. It’s not just what they say, what do they actually do? Talk to fellow partners and also talk to associates, paralegals of counsel. Those folks are probably going to give you a better idea and you don’t have to do this in a negative way. Ask some questions about their life, ask about their biggest challenges.

Get them talking about their war stories. You can learn a lot just by getting people talking in that way.

[00:19:15] Ask how they define success. Success of their attorneys, success of their partners, success of the firm. That helps you to understand their values, the things they think are important. Does that match your definition?

Ask how they handle conflicts.

Ask how transparent they are. Ask what happens when mistakes happen. And ask for examples, not just general. Give me an example of what you’re talking about, please. This is going to tell you a lot. This gives you a lot better sense of cultural alignment and values. And I know I’ve said this before, but it’s really important to understand that a lot of times no one place is a bad place, but it could be a bad place for you. A toxic work culture may not be toxic to everybody. In fact, it often isn’t. But it could be toxic to you because there’s such unalignment with your values.

Check Your Mindset (Around Change In General & Why You Want This Change)

[00:20:19] Finally, you need to think through your own mindset.

If you’re coming from in house into a law firm environment, are you ready to bill by the hour again? That’s a big one.

What’s your mindset around building a book or growing your book? What’s your mindset? And this one’s a really big one. Around change, around doing things differently. You’re going to be in a new place with new people and new rules. You need to be ready to embrace change and know why you’re really making the move. This matters a lot. Are you doing this out of excitement or fear? Fear of being left behind? Fear of not earning enough? Or is it really excitement about the opportunity that’s presented in the new place?

 How will this move serve your long term legacy, not just your income?

[00:21:13] We get so caught up in the income piece we forget to ask this. And this is an important piece to being happy and fulfilled within our practice. Are you trying to prove something or are you building something? What story are you telling yourself about this move and is it true? This is important because your mindset impacts how you perceive your current firm versus your new firm.

[00:21:40] And when you get real about these questions, you might just find that maybe you don’t need to change firms just yet. You need to work around your mindset a little bit and then decide whether you need to move and where the right place is. Because sometimes y’all, you end up in a very similar situation, even though it’s a very different firm because the issue was more you than them.

Okay, so that’s everything. A checklist of sorts for you to consider before making a lateral partner move. Next week we’ll have a guest, Janet Falk, talking about legal marketing tips that you probably haven’t heard before, so be sure to join me. That’s it for this week. Bye for now.