Boutique Law Firms, Small Law Firms

Beyond Biglaw: Growing Strong

Growth through lateral hiring creates excitement, according to columnist Gaston Kroub -- but law firms, especially small law firms, must be careful and smart about growing.

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Every law firm, no matter its size, needs to have a growth plan, or at least have the ability to formulate one quickly to take advantage of unexpected opportunities. Even a solo practitioner could one day be asked by a client whether they want to take over a lucrative bit of work, albeit work that would require the solo to expand their firm and hire other lawyers to service the firm’s existing clients, or to concentrate on the new work coming in. Likewise, a larger firm could have an immediate need to expand a practice group, or even build one from scratch in response to an unanticipated client opportunity.

The smaller the firm, the more important it is for the firm to manage their expansion well. Because there is less margin for error from a resource perspective for smaller firms, decisions about how to grow can be of critical importance to the long-term viability of the firm. At the same, every firm, no matter how large, has an interest in smart growth, and avoiding mistakes in terms of bringing on lateral hires. No firm can afford the business disruption and “soft costs” (e.g., hit to morale, stress of replacing the failed lateral, etc.) of bringing on laterals who don’t pan out, even if the “hard costs” (e.g., recruiter fees and attorney compensation) are easily managed by the firm.

When a law firm seeks to grow, it should be with the objective of getting stronger, whether in terms of additional revenue, or better capability of servicing clients. In Game of Thrones, “growing strong” is the house motto of House Tyrell — which happens to be the richest and most populous “team” in the game. It so happens that House Tyrell can afford to follow the lead of the more ambitious clans because of their resource advantages, but I doubt that many law firms enjoy the same cushion. In today’s competitive environment, the mantra seems to be “grow or die.” Yet it seems like the strongest firms have the easiest time getting even stronger, much like the Tyrells.

In fact, rather than growing stronger, we have seen many other firms actually grow weaker in their pursuit of “growth at all costs.” There are many reasons for that phenomenon, but one that can’t be ignored is the outsized attraction of lateral hires as the tool of choice for law firms looking to capture new revenue. The weaker the starting position of the firm, the riskier lateral hires can be. That is not to say that lateral hiring does not have its place, for law firms of all sizes. Rather, there is an increased emphasis on making sure that lateral hiring is done responsibly, in a measured way that is cognizant of the psychological biases that predispose us to view people on the outside in a favorable light.

For one, growth through lateral hiring creates excitement. The firm is growing, adding new pieces, doing something to compete. Organic growth, in contrast, can be boring. Waiting for current attorneys to develop the necessary seasoning to contribute to the bottom line can become tedious, especially in the face of current opportunities that might go begging if left unaddressed. Another advantage that laterals have over current employees is that with the latter you already (hopefully) know their weaknesses, and may have resigned yourself to the fact that improvement will never come. Whether that is true or not can depend on the employee, but when it comes to evaluating laterals against incumbents, awareness of the incumbent’s weaknesses can put laterals in an advantageous position.

Laterals have other advantages as well. When you evaluate a former partner from another firm, for example, it is easy to think that “they thought this person was good enough to make partner” or apply similar presumptions about how the candidate has already been “endorsed” by others. Likewise, there can be a tendency to rationalize away the potential weaknesses of laterals, thinking that all they need to become perfect lawyers is the “unique platform” that only your firm can provide. “So what that this candidate has never brought in a stitch of business. With our marketing savvy behind them they will be be rolling in clients within months” — such malarkey can be very costly if it leads to a mistaken hire. But in the pursuit of growth, firms seem prepared to believe a lot of silly things.

As an owner of a small firm, it is important to be honest about our ability to grow at any given moment, while being flexible enough to seize on opportunities to do so when they will be of benefit to our clients, and by extension, our firm. I concede that it can be easier to “bring in” lawyers to fill positions that require high levels of skill than to develop those abilities in-house, but it is also important to remember that there are costs to engaging in lateral hiring that extend beyond the actual dollars spent on recruiters and new salaries. At the same time, I can easily see a situation developing in very short order that will require us to consider immediate growth, and force us to admit that we would be missing out on a broader opportunity if we fail to bulk up.

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I think for a small firm, the time to consider adding people is just after an immediate need arises, and the firm has spent some time trying to meet that need with existing resources. If that is still not enough, I know that there are excellent legal recruiters out there who can be of timely and effective assistance in bringing forward quality candidates for consideration. We have not reached that point, but are fortunately in a position where that need could arise on a moment’s notice. When it does, I am sure we will approach it responsibly, with a focus on improving our firm’s ability to provide the kind of client service we strive for. Growth can be exciting, or scary, but the only time to consider it is when you know it will make your firm stronger.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique. The firm’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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