Intermediaries...3rd party or 3rd wheel?

In the intertwined world of growth, transactions and relationships, intermediaries play a crucial role. We often use them without question. For example, when buying property, our go-to for expert input is a real estate agent or a mortgage broker. In finance, advisors connect investors with the appropriate risk-weighted opportunities. Trying to improve our fitness, we might work with a personal trainer to help us reach our health and wellness goals. If a company is sued or investigated, they call in the most trusted cavalry of lawyers to steer them through the stressful period. Dating? Call on the wingman!

In many areas of our lives, we instinctively call on experts to help us with major milestone moments and investments. Sometimes we have no clue where to start. Other times, we may want to do it better or quicker than the last time. Even if our day job was real estate, the benefit of that third-party voice as an advocate is to get the best value and spot the risks we may ignore because we’re too invested – it’s a smoother, surer path to success, right?

But not always so, it seems, when it comes to making a move in your legal career. A decision you are, on average, likely to only make three or four times at the most (if you get it right!).

Intermediaries in the legal career world are referred to by many terms...legal recruiters, head-hunters, talent management consultants, legal resourcing specialists, talent acquisition specialists - the list goes on. Like every other industry, there are some business models which will dictate their approach – some are in the volume market, some more boutique, some are global, others are geo-specific, some are highly experienced, and others may be fresh into the industry. In short, there are, like all industries, variants. But most of them will know more about how to make that next career move than you – because it’s their job. They live and breathe the people side of the industry. You are an asset, and they can help you assess your value, your go-to-market options, proposition and plan. You advocate for your clients; they advocate for you.

When looking into how different regions use legal recruiters for lateral moves, it was interesting to find such a notable contrast between the UK and the US legal markets - in the UK, various industry reports estimate that about 35-40% of lawyers use recruiters; while in the US, the variable figure is estimated to be much higher at around 60-70%.

Is the role of an ‘agent’ or a ‘coach’ just standard in the US? Or are Brits maybe less trusting?

On the client side, US firms don’t hesitate to instruct recruiters. Data clearly shows that US firms have overtaken UK firms in London regarding lateral growth. According to data from Pirical, pioneers in the area of people analytics and legal market data, the leader for net Partner growth over the last four years in London is Kirkland (no surprise), whose favoured growth strategy has long been lateral hiring. Latham, Goodwin, Simpson Thacher, and White & Case—a similar story.

Could the willingness to use head-hunters be a contributing factor to this success? Are UK firms missing out on attracting top talent by not universally engaging in the same way with intermediaries?

I spoke with the founder of Group8 about this contrast. She explained,

'Generally, the UK and US mentality about acquisition cost differs. The US mentality considers value of the asset they are acquiring - say the projected revenue for the first 3 years - juxtaposed with the cost of acquisition (i.e. the recruitment fee). The value is then easy to see – even if all you receive is an introduction. And then there's the beneficial flow-on hires. From my perspective, having worked as part of a private equity portfolio that also analysed acquisition cost in this way, this is the right comparison - what value will we get, over what period and what will it cost us to get it?'

Taking that into an example with some basic numbers, if a partner is paid say $1m per annum and is expected to generate $10m over three years vs a 30% year 1 acquisition cost, that's a deal which makes clear commercial sense.

She continued, 'In contrast, UK-led firms tend to instinctively adopt a more conservative approach with a different comparison, especially if the individual is known to them - what's the cost vs. what they could save by direct hiring? It's hard for anyone to see the value of a third party with that juxtaposition. But there is always a cost because the process takes time, and if not managed carefully at each stage, the risk of zero outcome is increased.'

So, how effective is this direct approach from an individual Partner's perspective (i.e. the candidate)? Most high-performing partners aren't actively seeking a move, and many prefer not to discuss career ambitions or compensation with peers, friends or competitors. This makes it difficult for firms to rely on personal networks. Moreover, the current talent wars—with US firms offering up to $50,000 for referrals—underscore the intense competition and challenges of lateral hiring.

While personal connections can help to open a door, they may not necessarily lead to the right or best one – for the individual. An intermediary can help ensure that when the door swings open, it’s leading to where you aspire to be. They’ll ask you the questions you should be asking yourself. And, when you’re working all the hours on closing that transaction for your client, reviewing those term sheets.....they’re doing the same - for you.

The biggest risk of not using intermediaries? Missed opportunities.

Ultimately, it’s not about whether you can manage without an intermediary; it’s about whether you should.

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About Group8

Group8 is a global career and growth consultancy focused on the legal sector. We are independently owned and adopt a personal approach to business. Our purpose is to accelerate your growth. We help our clients to access the world’s evolving possibilities and maximise their potential, sustainably and globally.

We operate according to an “inch-wide mile deep” business strategy. Our immersive approach means we go above and beyond to get the best result for all involved. We love building dynamic, diverse and ground-breaking teams and witnessing the transformative impact growth can have on an individual, firm and a market. We unlock opportunities through our tried and tested data-led methodology. We flex and adapt quickly to meet the changing needs of the market and our clients. We are always thinking ahead. The journey is as important to us as the destination and we coach and support with every step.

Our team houses recognised and trusted experts in coaching, strategy and resourcing. With over 35 years of global experience combined, we bring our depth of experience to facilitate your vision and growth objectives – wherever in the world that may be….

Sources: Thomson Reuters; The Lawyer; Legal Business; ALM; FT; and Pirical

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