Hiring a Lateral Attorney: A Great Idea or Your Biggest Mistake?

Lateral attorneys have a failure rate as high as 50%.¹ What is causing this?  Read on to discover some common issues.

Lateral hires come to a new firm already molded with prior professional and personal experiences.  Firms hire laterals for their experience and oftentimes for their clients or specialization in a certain area of practice.  For many firms, however, a lateral's experience also brings a culture clash.  A lateral may not get along with support staff or other colleagues, or the amount of staffing might be less than the lateral's prior firm. 

Many firms, therefore, discover that it is often more difficult to unlearn something than to learn it.  It is many times incredibly challenging for an attorney to join a new firm and assimilate into the new firm's culture.  For example, every firm has a different management style.  Partners have often worked together for years and have a certain way of working together.  Sometimes a lateral hire might be too aggressive (or not aggressive enough) for their new firm.  A lateral may also have difficulty repeating past successes at a new firm.

Hiring a lateral is often a clandestine endeavor.  Potential lateral hires will make it clear that it is imperative that their current firm not be alerted prematurely.  Law firms, often desperate for the lateral to bring their book of business, are often too willing to keep those negotiations under lock and key.  Management, staff, and of course clients, are all necessarily in the dark during negotiations.  Certainly, those are the very people who could likely provide insight into the lateral candidate.

While 50% of laterals fail, interestingly, one in three laterals have a red flag that is apparently overlooked by the hiring committee.  Potential red flags include the following:

• an overstated book of business;
• questionable legal skills;
• exaggerated credentials;
• conflicts and outside business interests;
• unethical behavior;
• malpractice claims; and
• significant tax liens or bankruptcies.

Let's face it- hiring a lateral attorney can be expensive.  What is the new attorney's realistic long-term growth?  Do they end up with only one client that follows them?  Will their actions negatively impact your firm's reputation?  Keep in mind that the percentage of firms that experience a claim stemming from a lateral is 35%.¹

According to a 2023 survey by Ames & Gogh of legal malpractice insurers, including Swiss Re Corporate Solutions, the leading cause of legal malpractice claims are conflicts of interest. Ensure that your firm performs conflicts checks of any potential hire prior to hiring them.  This allows you to weigh the cost of being conflicted out of a case with the advantages of hiring that individual.

Be concerned with a lateral who:

• has an unusual business plan; 
• guarantees either fast growth or that the clients will follow him or her to the new firm;
• minimizes conflict issues;
• disparages a former firm or former colleagues;
• does not take responsibility for their actions;
• has made more than one lateral move;
• has a background check reflecting bad credit, driver's license issues, foreclosure issues, a criminal background or other warning signs;
• is involved in a lawyers professional liability claim that is “not their fault”.

Identifying any warning signs in the hiring process is the first step in ensuring that your new lateral hire is a good fit for your firm.  Once the individual is hired, be prepared to step in if any issues arise.  Acquaint the new hire with your staff, like taking them out to lunch or dinner.  Assign a mentor within your firm to provide support to the lateral attorney.  Set up the new hire's office with items that they will need.  Train them on your firm's procedures, and closely monitor their work and billings.  If any issues arise, address them early and professionally, and provide constructive feedback.  Taking these steps will help minimize lateral hire failures and avoid risk to your firm.  Remember, some things take time and continue to try to work through any issues as appropriate.

¹ According to a 2021 survey by Decipher Investigative Intelligence and ALM Intelligence.

² According to Decipher Investigative Intelligence.

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