The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.
The emergence and massive expansion of this international bazaar for senior legal talent over the last 25 years has had a profound impact on the profession – often unhappily so.
This has happened despite widespread acknowledgement that the returns on partner recruitment are patchy – a finding backed by a significant and growing body of research. Compared to internal candidates, external recruits are more expensive even without counting direct recruitment costs, prone to fail in the first two years and more likely to leave. Added to which is the fundamental difficulty of accurately identifying and then persuading key business influencers to move.
Yet if such problems are rife in the legal profession, the impact of the sustained downturn in Western economies has done little to deflate the partner bubble. If anything, the upwardly mobile US law firms that have increasingly defined the partner recruitment market at home and abroad have pushed this merry-go-round towards even more aggressive levels.
And this has happened during a period in which the record of partner recruitment has arguably become worse not better. When partners first began moving in the late 1980s, a path was provided for ambitious and driven individuals to find better platforms or just check out of firms going nowhere. Those hires generally did well because there was a clear economic rationale for the move on both sides. The last decade has seen the emergence of a genuinely sideways market for partners who are just moving, well, laterally.
That’s not to suggest that all of this recruitment is irrational. Some firms have used partner recruitment to effectively super-charge their growth, with Latham & Watkins, Kirkland & Ellis and DLA Piper being among the most striking examples in recent years. The poor overall performance of lateral recruitment has always masked the vast discrepancies in individual performance.
Here is our assessment of the track record of partner recruitment: a small group of firms use it very effectively to deliver great results. A much larger group gets returns barely worth the effort once you account for the time and costs of recruitment. What’s left is another minority that performs so badly that firms in the club actually damage their business. But law – like many fields – remains poor at identifying the formula for success.
We consider the experience of a handful of the transferring partners that have excelled in this month’s edition and there are common factors in what makes a star signing an actual success, but it’s never easy. In essence, firms should be strongly biased towards organic progression unless there is a compelling, clear strategic reason to go to market. Then you must have a senior candidate that actually fits the bill and is energised about the opportunity of your team. The best lawyers don’t do it for the money or a home. They do it for the game. They play to win.