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For many midsize law firms, the choice between growing organically and growing through lateral hires is not an easy one. Growing from within is certainly an attractive option from both an economic and cultural perspective. Firms that wait for associates to blossom into rainmaking partners don’t have to bear the financial risk of luring an unproven partner with a guaranteed salary. They also don’t bear the cultural risk of introducing a relatively unknown personality straight into the partnership ranks.
For these and other reasons, organic growth is often the best route to success for midsize firms. In some instances, and for some firms however, pursuing a lateral hiring strategy may be the best move. Here are five of those scenarios.
Firms that have a strong focus in a particular area will, on the whole, be better equipped to identify and attract lateral talent working in the same area. Luring a lateral who is already a fully trained authority in your specialty can also be the simplest way to find a new attorney who can immediately get to work with your practice. As a bonus, that new hire could help to train others in their practice area, providing a boost to the homegrown pool as well.
For firms looking to branch into a new practice area, finding a lateral hire who is already an expert (and possesses an attractive book of business to kickstart things) could be the simplest solution.
While it may be more difficult to lure an established attorney to a firm that does not already practice in their specialty, some might be enticed by the challenge and possibility of leading their own practice group. Firms in this position may have success targeting candidates who currently find themselves overshadowed in a large practice group, and therefore might be attracted to the idea of becoming the star at a firm with a smaller platform.
While those opposed to lateral hiring will focus on potential negatives, like culture clashes or jealousy over outside promotions, in the right situations these perceived negatives may actually be positives. Lateral hires can bring fresh ideas and capabilities from other firms that will help your firm avoid stagnation.
They may also bring firsthand knowledge of competing firms that can be used to better position yours. Additionally, bringing in outside talent to fill positions can assuage some of the potential conflicts of internal promotion, especially in cases where former peers find themselves at different levels within the firm.
Hiring an experienced attorney with a strong book of business is often the simplest way to quickly expand your firm’s client list, and ultimately, its revenue. In many cases, the cost of making a lateral hire compared to training in-house can easily be offset by the new clients brought in.
That said, many firms have had mixed results increasing revenues through lateral hires, so care should be taken to ensure that the new hire will be able to bring a substantial portion of their book with them.
At the same time, lateral hires can help grow your firm geographically, enabling you to gain a foothold in new areas. This could be useful for luring laterals who may be enticed by your offer but do not wish to move to a new city—especially if it would be difficult to bring their clients with them.
Training fresh graduates can be a time- and resource-consuming process, and there are no guarantees that some of these younger attorneys are cut out for the job. In that sense, growing organically is just as costly a gamble (if not more so) than hiring laterally.
As long as it’s done in a smart and careful manner, making lateral hires of already experienced attorneys will be a much faster route to finding someone with the right level of talent—especially for midsize firms without the deep pockets of the big guys. This is particularly true for firms that find themselves without a wealth of senior associates poised to step up in the near future.
Every firm will have its own considerations in determining to what extent it wants to rely on lateral hiring versus organic growth. The above factors, however, are a good starting point for midsize firms considering whether their existing strategy makes sense given their present circumstances.
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