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Evidence-based Due Diligence for Lateral Partner Hiring Webinar 3 ăƒť September 2014


Lawyer Metrics

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ners and Peacocks

understand why the lateral market has gone so wrong, look to the animal kingdom.

Henderson & Zorn in The American Lawyer

LATERAL PARTNER HIRING

By William Henderson Christopher Zorn THREE YEARS OF COVERAGE IN THE and AMERICAN LAWYER

Y

s f l y g f y e r e

ache

t clouds the mind, - have your cure.

e , “Playing Not to Lose” (Feb. 2013) By William Henderson e and Christopher Zorn -higher gross revenues. This is a very nical information. We think law firm -teral partner hiring (or acquiesce to sng urged by powerful partners) beve l to. Such partners came of age dur-

ndustry growth. Growth feels good. has - been largely absent in most firms. ho bill 2,000-plus hours per year on roe or Jennifer from rival firm X is a

“Of Partners and Peacocks” (Feb. 2014)

© 2015 Lawyer Metrics

“A Rx of Lateral Heartache” (Feb. 2015)

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Agenda

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Market Assessment

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The Science of Selection

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Application to Law Firms Š 2015 Lawyer Metrics

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Market Assessment

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Is lateral partner hiring an important strategy issue for law firm?

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Market Analysis: 1. Unprecedented market competition 2. Client reliance on convergence and procurement 3. Firms are specializing 4. Laterals are part of re-alignment 5. Long-term consolidation is coming Š 2015 Lawyer Metrics

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02

The Science of Selection

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Two ways to think: 1. Reach conclusion, gather supporting facts 2. Gather facts, reach conclusion

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Two ways to think: 1. Reach conclusion, gather supporting facts 2. Gather facts, reach conclusion

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How to Do This: You need to make sure you are using the same metrics to evaluate each candidate to avoid the “illusion of validity.”

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“The illusion of validity” (Daniel Kahneman 2011)

• • • • •

Availability bias (define) Halo effect (define) Motivated reasoning Confirmation bias Overconfident judgments © 2015 Lawyer Metrics

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Countering the “Illusion of Validity” You need to make sure you are using the same metrics to evaluate each candidate to avoid the “illusion of validity.”

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Countering the “Illusion of Validity� Use an evidence based due diligence process to vet each candidate. This has been done in many other corporate settings, including the venture capital market

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ghSMART: company that uses due diligence to vet all candidates in the venture capital market.

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Different Methods of Making Hiring Decisions: • • • • •

Airline Captain: (Define) Art Critic: (Define) Sponge: (Define) Prosecutor: (Define) Suitor: (Define)

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Internal Rate of Returns (IRR) Associated with Different Methods of Human Capital Evaluation, Venture Capital Industry 90% 80% 70%

80%

60% 50% 40% 30% 20%

24%

10%

20%

0% Airline Captain

Art Critic

Sponge

10%

0%

Prosecutor

Suitor

Source: Geoff Smart, The Art and Science of Human Capital Evaluation (1998)

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03

Application to Law Firms

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Two keys to lateral hiring 1. Hold decision-makers accountable for the quality of their decisions 2. Let them use evidence-based tools

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“Accuracy Oriented” Motivated Reasoning

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Lawyer Metrics Lateral Partner Process 1. Lateral Partner Executive Briefing 2. Calculating Baseline Lateral Partner Success Rate 3. Defining a Strategy for Success and Building Hiring Scorecards 4. Lateral Partner Interview Training Using Scorecards

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Key Definitions Recruitment: meet firm leaders and key partners; build rapport and trust; discuss strengths of firm.

Selection: Gathering data to score candidate based on factors directly tied to future performance.

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Separate Recruitment from Selection

If you try to both sell and judge candidate, validity of judgment drops to zero.

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Sample Schedule Time

Component

Purpose

10 am

Initial interviews

Recruitment

12 pm

Lunch with leadership Recruitment

2 pm

Selection interview

Selection

4:30 pm

Q&A

Recruitment

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Format Interviewe r1

Candidat e

Table

Interviewe r2

Interviewe r3

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Factors Used To Interview Lateral Partners Internal Drivers Score based on personal and professional drivers as evidenced by pattern of past behaviors and accomplishments.

Practice Management Score based on a candidate’s demonstrated ability to develop a practice strategy, build teams, effectively utilize firm resources.

Clients and Business Development Score based on candidate’s demonstrated historical ability to grow client relationships and build new client following.

Relationship with other Partners and Firm Score based on candidate’s historical track record of helping fellow partners and investing in junior lawyers and firm.

Motivation for Leaving Current Employer Score based on business logic of move and quality of fit at new firm. © 2015 Lawyer Metrics 26


Example Of The Interview Protocol INTERCONNECTIONS WITH OTHER LAWYERS

Interview Protocol Opening: Our team would like to hear about your legal career since law school. If you have other relevant professional experience prior to law school, we want to hear about that as well.

F

D

C

B

A

0

1

2

3

4

The candidate claims the ability to port a large book of business but contemplates departing the firm without any of the other partners or senior counsel who support the practice or share the core clients.

Explains interrelationships with other lawyers at the firm; realistically assesses probability that others would move with lawyer.

DEVELOPMENT OF OTHERS

Part I. Career Chronology Please tell us about your first job out of law school. Who did you work for and what type of work did you do? Who was the client base? How did your responsibilities change over time? What accomplishments were you most proud of? What were some low points? Can you tell us about the team of people you tended to work with – for example, division of roles; communication; work styles?

D

C

B

A

1

2

3

4

Candidate has no demonstrated history of advancing the practice development (including business development) of fellow partners, nor of advancing associate colleagues to partner or promotion within their organization.

Candidate specifically shows a pattern of assisting fellow partners in developing their own practice, as well as a pattern of advancing associate colleagues to partnership or promotion within their organization.

FUTURE STRATEGIC PRACTICE EXPANSION

[Repeat through each legal employer, including current] To what extent has your pre-law education or work experience been relevant to your career development?

F

0

F

D

C

B

A

0

1

2

3

4

Looking to leave a firm when candidate’s current firm is growing by size, reach and financial metrics -- can be an indication that the candidate’s own performance is going in a different direction.

Current firm is slow growing or not a market leader; alternatively, current firm lacks complementarity with candidate’s practice area.

Part II. Current Practice; Status at Current Firm Can you describe your current practice to us? How did you build it? Were any colleagues particularly helpful or instrumental? Can you give us an example of how you have contributed to the success of another lawyer at your current firm? Why did you help him/her? What challenges are you facing at your current firm? Based on what you know today, what are some of the reasons why a move to our firm might benefit you and/or your clients?

BIG PICTURE FOCUS D

C

B

A

1

2

3

4

Candidate focuses more on compensation and claimed success at his/her present firm without seriously attempting to explain how the candidate’s practice can be strengthened at your firm.

Candidate is able to articulate a concrete strategy for growing his/her practice within the new firm. Candidate evinces passion / vision as to why and how the deal would work.

MOVE MOTIVATED BY TREATMENT, PERCEIVED FIT OF CLIENTS

What are some of the reasons in favor of staying at your current firm? Can you describe the quality of fit between your clients and the other practice areas and industry concentrations at your current firm?

F

0

F

D

C

B

A

0

1

2

3

4

Candidate’s clients are unlikely to be perceived as valuable or high potential at the new firm; candidate seems unaware of misalignment between clients and proposed new platform.

The candidate’s clients are increasingly feeling that they are not large enough to be given first class treatment at candidate’s current firm; candidate is strongly motivated to fix this perception.

STATUS AT CURRENT FIRM F

D

C

B

A

0

1

2

3

4

Looking to leave a firm when other partners from that firm are simultaneously entering the lateral market, thus suggesting that current firm may be pushing out or putting pressure on underperformers. © 2015 Lawyer Metrics | Proprietary and Confidential

Few others are looking to leave candidate’s current firm at this time.

© 2015 Lawyer Metrics | Proprietary and Confidential

© 2015 Lawyer Metrics

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Internal Drivers Score based on personal and professional drivers as evidenced by pattern of past behaviors and accomplishments.

Practice Management Score based on a candidate’s demonstrated ability to develop a practice strategy, build teams, effectively utilize firm resources.

Clients and Business Development Score based on candidate’s demonstrated historical ability to grow client relationships and build new client following.

Relationship with other Partners and Firm Score based on candidate’s historical track record of helping fellow partners and investing in junior lawyers and firm.

Motivation for Leaving Current Employer Score based on business logic of move and quality of fit at new firm. © 2015 Lawyer Metrics

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INTERCONNECTIONS WITH OTHER LAWYERS F

D

C

B

A

0

1

2

3

4

The candidate claims the ability to port a large book of business but contemplates departing the firm without any of the other partners or senior counsel who support the practice or share the core clients.

Explains interrelationships with other lawyers at the firm; realistically assesses probability that others would move with lawyer.

Internal Drivers

Score based on personal and professional drivers as evidenced by pattern of past behaviors and accomplishments.

DEVELOPMENT OF OTHERS F

0

D C Practice Management

1

2

B

A

3

4

Score based on a candidate’s demonstrated develop a Candidate specifically ability shows a to pattern of assisting fellow partners in developing practice strategy, build teams,for effectively utilize firm resources. Example of Scorecard One Factor intheir own practice, as well as a pattern of advancing

Candidate has no demonstrated history of advancing the practice development (including business development) of fellow partners, nor of advancing associate colleagues to partner or promotion within their organization.

Management Clients Practice and Business Development

associate colleagues to partnership promotion within their organization.

or

Score based on candidate’s demonstrated historical ability to D C B A grow client relationships aand build new client following.

FUTURE STRATEGIC PRACTICE EXPANSION F

0

1

2

Looking to leave a firm when candidate’s current firm is growing by size, reach and financial metrics -- can be an indication that the candidate’s own performance is going in a different direction.

3

4

Current firm is slow growing or not a market firm lacks complementarity with candidate’s practice area.

Relationship with other Partners Firmcurrent leader; and alternatively,

Score based on candidate’s historical track record of helping fellow partners and investing in junior lawyers and firm.

BIG PICTURE FOCUS F

0

B MotivationD for Leaving CCurrent Employer

1

2

3

A

4

Score based on business logic of move and quality of fit at new Candidate focuses more on compensation Candidate is able to articulate a concrete and claimed firm. success at his/her present firm strategy for growing his/her practice within the without seriously attempting to explain how new firm. Candidate evinces passion / vision as the candidate’s practice can be strengthened© 2015 Lawyer Metrics at to why and how the deal would work. your firm.

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Internal Drivers Score based on personal and professional drivers as evidenced by pattern of past behaviors and accomplishments.

Practice Management Score based on a candidate’s demonstrated ability to develop a practice strategy, build teams, effectively utilize firm resources.

Clients and Business Development Score based on candidate’s demonstrated historical ability to grow client relationships and build new client following.

Relationship with other Partners and Firm Score based on candidate’s historical track record of helping fellow partners and investing in junior lawyers and firm.

Motivation for Leaving Current Employer Score based on business logic of move and quality of fit at new firm. © 2015 Lawyer Metrics

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Internal Drivers Score based on personal and professional drivers as evidenced by pattern of past behaviors and accomplishments.

Practice Management

ExampleScore of One in Relationships with Othera basedFactor on a candidate’s demonstrated ability to develop practice strategy, build teams, Partners andeffectively Firm utilize firm resources. Clients and Business Development

INTERCONNECTIONS WITH OTHER LAWYERS F

0

D C B Score based on candidate’s demonstrated historicalAability to 4 grow client 1relationships 2and build new3 client following.

The candidate claims the ability to port a large book of business but contemplates departing the firm without any of the other partners or senior counsel who support the practice or share the core clients.

Explains interrelationships with other lawyers at the firm; realistically assesses probability that others would move with lawyer.

Relationship with other Partners and Firm

Score based on candidate’s historical track record of helping fellow partners and investing in junior lawyers and firm. DEVELOPMENT OF OTHERS F

0

D

C

B

3 Motivation1 for Leaving 2Current Employer

A

4

Candidate has no demonstrated history of Candidate specifically shows a pattern of advancing the practice development (including assisting fellow partners in developing their business development) of fellow partners, nor own practice, as well as a pattern of advancing of advancing associate colleagues to partner or associate colleagues to partnership or promotion within their organization. promotion within their organization. © 2015 Lawyer Metrics

Score based on business logic of move and quality of fit at new firm. 31


Example of How to Score Each Candidate Consensus Scorecard

Candidate Name Date

Success Factors

1

2

3

Consensus

Internal Drivers

Practice Management

Clients and Business Development

Relationship with other Partners and Firm

Motivation for Leaving Current Employer

Overall Interview Add all scores and divide by 5

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Lots of change. Is it worth it?

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Law Firm Expectations of Lateral Partners versus Actual Results

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What is the cost of firing a partner?

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Lawyer Metrics Can Help With Each Step 1. 2. 3. 4. 5. 6. 7.

Quantify the Problem Educate the Stakeholders Know Firm Strategy Build Scorecard and Questionnaire Select and Train Interviewer Interview and Score Candidate Analyze Results of Process

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Lateral Partner Hiring - September 2014  

With law firms attempting to strengthen themselves through partner hiring, this webinar describes a method for distinguishing between “A” an...

Lateral Partner Hiring - September 2014  

With law firms attempting to strengthen themselves through partner hiring, this webinar describes a method for distinguishing between “A” an...