The Aspiring Lateral: The Business Side

To ask lawyers to administer the business operations of a firm is courting disaster. Here's why...

Ed. note: The Aspiring Lateral, a new series from Levenfeld Pearlstein, will analyze a variety of issues surrounding lateral moves, drawing on the firm’s experience in the lateral market as well as the individual experiences of LP attorneys. Today’s post is written by Brian Kozminski, a partner in LP’s Real Estate practice.

For those thinking about switching firms, one of the most important things to consider about any prospective new firm is the way in which it is managed. Preferably efficiently, transparently, and in a business-like manner. But because you are in the legal profession, that is likely not the case. Sound harsh? Let me explain.

In order to understand how fully stacked the decks are against good management in law firms, it’s instructive to step back and compare how management choices are made in law firms with other industries.

If you owned a restaurant, for instance, you probably would not assume that your best chef would also make the best restaurant manager. If you owned a movie studio, you probably would not assume that your best director would also make the best CFO. If you owned a basketball team, you probably would not assume that a great point guard would also make a great coach and president of your team. (Or you would, then regret it later.)

The restaurant, movie studio, and basketball team owners (with the exception of the Knicks) understand that the skills of their top producers — however impressive — are not necessarily transferable to executive positions. Law firms are only learning this lesson now. Following a historic practice that continues to this day, many firms are run by the lawyers with the biggest books of business.

It does not go too far to call this practice absurd. Certainly, yes, at any law firm it makes sense to place lawyers in the leadership positions of, for instance, managing partner and chairman. And there may be some overlap between the qualities needed to succeed in those positions — charisma being one — and those helpful in becoming a rainmaker. But to ask those lawyers to also make the trains run on time — to administer the business operations of the firm — is courting disaster, for any number of reasons…

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First, just as the ability to sear a nice scallop has little relevance to running the business of a restaurant, there is scant reason to believe a rainmaking partner has the ability or appetite to oversee the nitty gritty of firm business: collections, making IT choices, and managing the firm’s credit line, among hundreds of other issues. Second, and worse, vesting complete managerial authority in a single partner (or small group of partners) can lead to dysfunction. Many lawyers will be familiar with power-drunk partners creating fiefdoms that stymie the overall productivity of their firm, or simply feeling it is acceptable to treat others with disrespect.

The lateral candidate should be on the watch for this type of dysfunction. To avoid it, my law firm has instituted and enforces a “No-Asshole Rule” (I would ask if I can use that term in Above the Law, but I know better), and equally importantly, like some other firms, hired a non-lawyer executive to manage the operations of the firm. Largely due to the presence of our Executive Director, our firm is run like a business, with appropriate professional attention devoted to the many business issues discussed above, including in particular collections (which lawyers, due to their sensitivities to clients, are not best suited to handle). All other things being equal, lateral candidates should prefer a firm with this kind of executive management.

Separate from the question of who manages the firm, lateral candidates should also be sensitive to the degree to which the firm’s business operations are transparent to its lawyers. In some ways, transparency is more easily achieved at smaller firms, where the people making decisions affecting you are likely to be close colleagues, if not in the next office. But even at boutiques, a small subset of partners may be deciding everything behind closed doors, withholding information on compensation decisions and other matters. And even larger firms are perfectly able to provide information that keeps business transparent, such as the reports on individual attorney hours worked, client payments, and other financial information that my own department makes available in real time via our intranet.

For laterals, in addition to the concerns about management addressed above, the critical question to ask is whether they are going to feel that they are informed about the business of the firm they are considering. Here are three more specific questions for lateral candidates to ask themselves:

  • Do you know the present state of the firm’s financials? A transparent firm will give this information over, and it is critical information for any lawyer that doesn’t want to be conducting yet another job search in six months because the firm she moved to went under.
  • Does the firm have debt and unfunded obligations? I’m a refugee from a firm that went under. It’s incredibly important not just to request financials for your target firm but to study them as well. Clients don’t want surprises and you shouldn’t either.
  • Have you looked at the documents that govern the operation of the firm? No lawyer would counsel a client to accept a position in a partnership without reviewing materials such as the partnership agreement, its credit arrangements, lease obligations, and loan documents. The lawyer shouldn’t either.
  • What type of non-lawyer staff does the firm have in place? The presence of non-lawyer executives can ensure that lawyers are left to the thing they do best — lawyering — while the professionals handle the rest.

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Disclosure: This series is sponsored by Levenfeld Pearlstein, which is an ATL advertiser.


Chicago-based Levenfeld Pearlstein (LP) was born of the desire to create a different kind of law firm. While many firms promote a “value proposition” of high quality work, responsiveness, efficiency and reasonable fees, to LP, those are just the basics of doing good work for clients. LP’s focus is building business relationships with clients as trusted strategic advisors who understand their clients’ business and industry inside and out, seeking legal solutions that support the client’s long-term business strategy as well as short-term needs. LP’s top talent and entrepreneurial setting translate into the sophisticated skills and resources of a big law firm in a more manageable environment.