The Further Decline of Portable Business

This article is based on the recent D.C. Legal Market Briefing, held by Sandpiper Partners and co-sponsored by The McCormick Group

 At the recent Sandpiper Partners D.C. Legal Market Briefing, Kevyn Orr, the partner-in-charge of the DC office of Jones Day and Mike Egge, the DC Managing Partner Latham & Watkins, both stated that their firms no longer consider "book of business" as an important qualification for lateral partner consideration.

At first blush, this seemed like a bit of surprise. But when you consider the firms involved, it really wasn’t. Both are large, profitable firms that have a strong history of collaboration and collegiality. The truth is that they can take chances on top officials from government, from leading in-house lawyers, and even top practitioners from other firms who for one reason or another, can’t port a book of business. And given their respective platforms, they probably have a higher rate of success, since success is much more dependent on the expertise of the recent lateral and their ability to sell as part of a broader team, as opposed to their ability, pretty much on their own, to transform their expertise and contacts into business.

So despite all of the reservations about buying a “book of business” that were expressed at the conference, not much has changed.  In virtually all of our meetings and calls with firms looking to hire laterals, there is a discussion, usually very early on, on a magic number that needs to be met.  Often there’s little discussion about potential, their record as to cross-selling (in either direction) or even quality.

But slowly the whole rubric of the portable book of business is losing steam. First of all, firms are well aware of the statistics that show that the percentage of laterals that can even bring even three-quarters of their projections is 50 percent at best. Second, the increasing efforts of clients to concentrate their work among fewer firms, to go to approved lists, and to emphasize law firm teams rather than individuals, are making transfers of clients from one firm to another more difficult. And finally, the candidates are becoming increasingly jaded about the lateral market in general. Too many teams, we hear the comment, “they really don’t want me, they want my book of business.”

Firms often fail to realize that lateral partner recruiting is still a bit of a romance. When firms, either on their own or through recruiters, do things like set a hard-line minimum book of business, demand a lateral partner questionnaire after the first interview, or conduct a “Spanish Inquisition” into the candidate’s existing client base, they not only turn off many good candidates, but they gain a reputation  of being all about the bottom line.   So in the end, the firm that least needs a portable book of business is the one that gets the candidate with the portable book of business.

We recently met with a managing partner of a law firm who offered us a unique breath of fresh air. â€œI don’t care at all about a portable book of business. What I want to know is if that lawyer lost whatever book he claims he has, does he have the ability to rebuild it.”  As the practice law continues to emphasize collaboration and client service, more firms are going to have to adopt a similar attitude.