According to a report published in the Washington Post yesterday, two Washington, DC law firms are prioritizing lateral hiring as a means by which to achieve growth.
The story of lateral hiring as a means by which to achieve growth is not a new one – despite the fact that lateral hiring is not an effective means by which to achieve that goal. That this strategy continues to be pursed by law firms seeking to grow DC-specific practices – reveals a lack of awareness of what more effective options are available to achieve it. Too, DC arguably has the most attractive potential services offer for both domestic clients as well as foreign. Hence, alternatives to lateral hiring are particularly important for DC law firms to be aware of.
Lateral Hiring doesn’t work
As William Henderson and Christopher Zorn recently outlined in The American Lawyer: “More than ever, firms look to laterals to boost profitability. But the data shows that it’s not working.” Henderson and Zorn cite studies indicating the top priority of law firm partners is revenue growth, but that lateral hiring doesn’t achieve that goal. Instead, the lateral hiring market is driven more by a perception that it does. “In the absence of organic growth, incoming lateral partners provide evidence that the firm is still vital and attractive. Most laterals fall well short of their projected “realistic” revenue goals. Engaging in lateral partner hiring helps persuade partners and practice group leaders, particularly those sponsoring a lateral candidate they perceive to be desirable, that the firm is “doing something” vis-à-vis peer firms”, as Zorn and Henderson outline
Why the lateral issue is particularly important for DC law firms
Washington, DC law firms benefit from sitting atop the world’s top economy. And in particular, the world’s largest public procurement economy. Were it a country, the US Federal Government public procurement regime would be the world’s 4th largest economy. Many legal practices unique to Washington are uniquely well suited to attracting a domestic and foreign client base — as they often appeal directly to a prospective client’s commercial objectives.
Given the low rate of new revenue growth lateral hiring produces, DC law firms ought instead to be implementing the more effective effort of specialized outbound business development initiatives as a means by which to achieve growth. A focus on lateral hiring implies law firm leaders have given up on growth outside the arbitrage of lateral hiring and mergers — and that they believe the market for legal services is finite. This is a myth. Contrary to conventional wisdom, there is a world of opportunity outside Washington and America waiting for an outbound business development effort. It’s time to stop the lateral hiring frenzy and get serious about outbound business development.
John Grimley helps law firms, law firm practice groups, individual lawyers, financial services and governmental relations professionals develop and implement custom business development initiatives. To enquire about his services, contact him at +1.213.814.2855 or at email@example.com.