Huse Quoted- GCs Losing Patience with Lateral Mania

GC's Losing Patience with Big Law's Lateral Mania By Gavin Broady Law360, New York (May 05, 2015, 6:47 PM ET) -- As more and more firms chase revenue through aggressive lateral recruitment, general counsels are growing increasingly wary of the disruptive impact revolving-door hiring can have on their law department’s bottom line.

The advantages of lateral-hire growth are obvious, from the chance to score battle-tested talent with a hefty book of business to the opportunity to bring over an entire practice team and establish new capabilities in one fell swoop.

Many law department leaders are nonetheless frustrated by BigLaw’s willingness to go all-in on lateral recruiting, arguing that the frequent departure of trusted counsel or the arrival of unfamiliar new faces often lead to the sort of disruption and increased risk that only make their jobs harder.....

And while it has long been a truism that clients hire individual lawyers rather than firms, many in-house counsels resent the assumption that they are automatically betrothed to a lateraling partner’s new firm, according to Society 54 LLC partner Jill Huse.

“In-house counsel may feel pressured into ‘following’ their relationship attorney to the next firm,” Huse said. “And often, the relationship attorney will promise the client to the new firm before they have an opportunity to speak with their client. This infuriates in-house counsel, presenting a great number of challenges.”

The downside of the lateral carousel goes beyond the departure of a key relationship, however, as the influx of new faces or mass exodus of firm talent can stir up trouble even when a GC’s favorite partner stays put.

And while the arrival of large groups of newcomers has the obvious advantage of improving a firm’s capabilities, it can also create financial pressure in the form of greater fixed costs and generate legitimate concerns over the continuity of firm culture.

“Laterals bring their own bias, thoughts and ideas to how the firm should run, thus upsetting the cultural dynamics of the firm,” Huse said. “Unless there is strong leadership and communication present, the firm’s culture could be in a perpetual chaotic state.”

Frequent acquisitions of big groups of laterals can also send a disastrous signal to risk-averse clients that a firm is attempting to grow too big too quickly.

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--Additional reporting by Andrew Strickler. Editing by John Quinn and Mark Lebetkin.