The Of-Counsel Carousel
Some thoughts on the lateral market for "counsel," from Michael Allen of Lateral Link (sponsored post).
Ed. note: This is the latest installment in a new series of posts on lateral partner moves from Lateral Link’s team of expert contributors. Today’s post is written by Michael Allen, the Managing Principal of Lateral Link, who focuses exclusively on partner placements with Am Law 200 clients.
From Q3 2012 through Q2 2013, we have seen approximately 7,500 lateral moves at the top 200 law firms. Approximately 4,500 (60%) were associates; 1,900 (25%) were partners; and perhaps most surprisingly, 1,100 (15%) of the lateral movement consisted of “counsel” or “of counsel” positions.
To clarify, some firms promote their senior associates to a “counsel” position based on seniority, but even excluding this pool of associates, that still leaves a significant number of counsel-level laterals finding opportunities within new law firms. From April 2012 to the end of the second quarter this year, Gordon & Rees had the largest number of lateral counsel transitions, with 34 (in large part due to the fact they opened seven offices in 2012 alone). Seyfarth Shaw, Greenberg Traurig, and Wilson, Elser, Moskowitz, Edelman & Dicker followed closely with 26, 23, and 22 counsel placements, respectively. Notably, Quinn Emanuel Urquhart & Sullivan had 11 counsel transitions in that same timeframe, 8 of them from a group of more than 15 Skadden Arps product liability attorneys who followed colleagues Sheila Birnbaum and Mark Cheffo, two heavyweights in the product liability world….
The definition of the “counsel”/”of counsel” title has expanded to accommodate the changing practice of law. Traditionally, this title was given to aging partners and politicians — setting up a mutually beneficial relationship that allowed the firm to continue to benefit from the senior attorney’s thought leadership, while providing the lawyer with a graceful exit into retirement. Within the last decade, the position has broadened to allow firms to promote an attorney whose strength is in their technical ability as opposed to business development or rainmaking, or as an option to evaluate lateral hires before elevating them to partner.
One key difference between a counsel versus partner transition is that for a partner making a lateral transition, the hiring firm routinely requires that the partner bring a book of business, typically summed up as “portables.” But a law firm and the partner will not know what is actually portable until after a partner makes the transition. Since the firm hiring the lateral partner can’t dive too deeply into the financials that the partners disclose on their lateral partner questionnaires (this “LPQ” is basically the road map a firm uses to determine compensation for a partner), the firm may sometimes end up being underwhelmed with the new hire, unless the lateral partner exceeds expectations. Some homegrown partners (or senior counsel passed over for partnership) may also feel that resources were too generously allocated to bringing on lateral partners who did not meet expectations.
We often see partners making transitions more or less every three to five years after they make the first jump. Looking at DLA Piper, we have seen 87 lateral hires over the past year (including 11 senior or of counsel), offset by 83 departures (including 9 senior or of counsel). One such departure included Rich de Bodo, who recently took his top-notch IP litigation group to Bingham, after spending some time at Irell, then Hogan, then DLA Piper over the course of seven years. For partners with large books of business generated from a variety of clients, the benefits of size (including cross-selling opportunities, international platform, a full-service menu, and economies of scale) may become outweighed by the potential for conflicts. If having an office in Oman means creating a conflict for a potential new client stateside, partners may start to question whether bigger is always better.
Based on what we have seen in the market, approximately 50% of the laterals who have made transitions in the past several quarters are likely to make another transition within the next three years. Dipping into the counsel bucket, we predict that roughly 20% of current counsels will likely see partnership at their existing firms or comparable ones via another lateral transition.
The market for laterals remains robust, with 3,000 lateral partner and counsel moves over the last few quarters. Continuing with DLA Piper as an example, almost 25% of their senior and of counsel attorneys were hired within the last two years (with nearly as many departures), further demonstrating that it is not the first (or last) bite of the apple for many of them. We predict that more and more firms will hedge by hiring laterals at the counsel level unless they absolutely need to offer the partner title, which translates to less risk to the firm since titles, like prices, are sticky.
Disclosure: This series is sponsored by Lateral Link, which is an ATL advertiser.
Lateral Link LLP is one of the largest legal recruiting agencies in the world, with 13 offices in the United States and Asia. Lateral Link has been recognized by the Wall Street Journal, The American Lawyer, the ABA Journal, The Daily Journal, and the National Law Journal for its innovative approach to legal placement. Lateral Link recruiters are comprised of former practicing attorneys who have consistently succeeded in placing partners, associates, general and corporate counsel into some of the most reputable law firms and organizations in the world.
