When the love affair is over: 2 things to consider before switching firms.
When you finally made it to partnership, you were filled with joy. This surely was the best thing that happened in your professional life. Now five years down the line you are not so happy anymore and you have started thinking about switching to another firm.
According to The American Lawyer’s Laterals Report, there were 2,895 partner moves among firms in The Am Law 200 between September 2016 and October 2017. Back in 2016 we at TGO Consulting looked into the German market and found an annual increase of 20% of partners switching firms (report Mercenaries on the Move 2016). Like the divorce rate, the rate of partners leaving their firm for another firm has dramatically increased.
So the numbers suggest that if you are a partner considering to leave your firm, you are certainly not the only one. A growing number of partners is having similar thoughts. But before you decide to jump ship there are two things we think you should consider.
1. The grass might not be greener
Statistics show that nearly a third of the laterally hired partners move on again. This suggests that once partners start moving, it is not unlikely that he or she will move again. These statistics are very much in line with our own experience. We frequently come across partners who after a couple of years have started to question their decision. Maybe, the new firm did not provide the synergy and the new clients they hoped for. Maybe they started to miss the ‘brotherhood’ of their old firm (even if at the time they ‘hated’ their fellow partners). Maybe the pressure to perform in the new firm is too high or maybe the new firm is not ambitious enough. Whatever the reason, the grass that seemed so green might not be greener after all.
2. Will your clients be happy?
Every partner knows that without his/her book of business there is little chance in getting hired by another firm. Partners work hard to keep the relationship with their clients as close as possible. Not only is this the best guarantee that all matters can be put under their name (see the previous blog on partner performance), but is also the best ‘guarantee’ that the clients will follow when the time has come to move to the next law firm. For any partner clients are key for their career. Even more for those who are considering to switch firms.
How clients might see your switch
At TGO Consulting we frequently talk to in-house legal departments. Did you know that the big multinationals are confronted with one partner move every month. Once every month these companies go through the process of having to involuntarily spend significant time and resources to deal with the consequences of a partner who is handling their matters moving to another firm. And you know what, clients are always the last to be informed (typically on a Friday afternoon).
What happens if a partner decides to shift firm? It is likely that the new firm is not part of the existing panel leading to countless administrative nightmares that have to be addressed to assure critical work is not jeopardized. Maybe the new firm is conflicted. Maybe the new firm has higher rates than the old one - Would this automatically mean that the same partner can now charge more to undertake the exact same work, to the same client? Rates are locked-in for at least a year with a panel firm – Who talks with client about the increase in operational costs? Even if it is only one partner making a lateral move, he or she is seldom alone. About a week or two after a partner move the senior associates, and often the entire team, follow the partner.
Some General Counsel have suggested to charge the moving partner with the administrative costs.
Knowing this, now think about your own clients.
It is quite possible that your clients are not as organized as the legal department of the big multinationals. In that case there will be no administrative hurdles or costs. What will remain is the issue of the potentially higher rate and the possibility that your new firms is conflicted. Placing yourself in the position of your client, what would you think if you suddenly have to pay more for the same person performing the same routine. You probably would not be too pleased, would you?
Start putting clients first!
This article is not meant to say that partners should not switch to another firm. There might be perfectly good reasons for that. Reasons that will typically revolve around better opportunities for practice development. But before you make your decision, at least question your motives as in general about 30% gets this wrong.
What this article is mainly saying is that being a successful lawyer is not so much about you as it is about your clients. Our clients are the sole reason that lawyers are in business. Therefor the interests of your clients should be central in the decision you are about to take. Almost half of all lateral moves ends up to be a disappointment because the clients did not follow or left soon after…