Stat Of The Week: Dubious ROI In A Booming Lateral Partner Market

There is increasing doubt about the efficacy of a law firm growth strategy based on lateral partner acquisitions.

stat imageAccording to a survey conducted by ALM Legal Intelligence, the Biglaw lateral partner market is booming. Lateral partner movement increased 5.6 percent over 2014, and is up about 43.5 percent compared to the post-recession low of 2010. However, despite the fact that adding lateral partners and their books of business remains the main law firm growth strategy, there is increasing doubt about its efficacy. Respondents to the survey reported that 30 percent of lateral partner candidates delivered less than half their expected book of business, while about one-fifth percent realized only between 51 percent and 75 percent of expected billings. A mere 28 percent exceeded expectations. Furthermore, as Steven Harper notes, “The cultural impact of aggressive inorganic growth is not susceptible to measurement, so it gets ignored in the prevailing law-firm-as-a-business model. But there are plenty of recent examples of the potentially catastrophic costs. Just look at Howrey, Dewey, and Bingham McCutchen — three recent collapses on the heels of stunning lateral growth spurts.”

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