The Art of the Deal: The Transformation of the Lateral Recruiting Industry
The headhunting industry has changed in lockstep with the legal profession, as advancing technology and changing law firm needs influence the way laterals get placed.
February 05, 2020 at 03:22 PM
8 minute read
Ron Jordan, who runs the recruiting firm Carter-White & Shaw, had just two things on his desk when he started his legal headhunting career in San Francisco in 1991: a Martindale-Hubbell directory and a rotary phone. He found lawyers easier to deal with than the chief financial officers he'd been placing, whose first act would often be to renegotiate their own placement fee.
By the time Billy Nason, a budding legal recruiter, threw himself into the profession in June 2019, however, the game had changed. Nason, 35, an ex-firefighter and the son of a prominent California legal recruiter, has law firm job openings pushed to his phone three times a day from LinkedIn, ALM Intelligence, Leopard Solutions and other sources. He says he often has two phones ringing at a time, and he's in constant contact with lateral associate candidates by phone, email and text.
"On a good day, I'll put down around 200 cold calls," he says. "On a bad day, I'll put down 45."
Like most of the economy, permanent legal placement has been transformed by technology and changing workplace norms. Some law firm partners, once thought to be impossible to budge, now take new jobs every few years. Meanwhile, databases that recruiters purchase or compile themselves offer quick access to facts about firms' financials, practices, offices and people—even the career histories and compensation details of individual lawyers. And it's all helping the recruiting industry prosper.
Still, some things haven't changed about the recruiting profession over the years. The cornerstone of the business model has long been a contingent fee equal to 25% of the first-year base pay, paid by a firm, though the number varies. A recruiter's reputation and network are key to long-term success. And cold-calling has always been a big part of the job, supplemented these days with emails and LinkedIn messages—prompting some lawyers to complain about all the headhunter solicitations they get nowadays.
Laura Leopard, whose company sells law firm and lawyer databases, recalls that in the early 2000s, she was advised to focus her offering on associates.
"At the time, I was told to not even bother creating a partner database, because they don't move at all," she says.
Before long, though, the demand for partner data mounted.
The marketplace for lateral partners is busy, and recruiters sit at a critical nexus. Last year, more than 3,100 lateral partners moved between Am Law 200 firms, representing billions of dollars' worth of business. Over the past two decades, the number of lateral partner moves, tracked by The American Lawyer since 2000, has ranged from just above 2,000 to more than 3,000 a year in 2007 and 2008, when the economy was at its weakest.
Some 80% of partner candidates considered by law firms come from outside recruiters, according to people at two Am Law 100 firms.
The market for lateral associates is even more brisk. For those joining law firms whose previous firm could be determined by ALM's Legal Compass tool, there were about 74% more associates than partners moving between Am Law 200 firms.
But there is a wide gulf in the money to be made placing partners compared with placing associates. Many associate listings are also widely publicized on firms' websites and on platforms like Laterally in ways that partnership opportunities are not, and some firms don't hire associates through recruiters at all.
It's hard to be sure whether the lucrative lateral market has increased competition among headhunters, though, or led more people to enter the field. The U.S. Census collects statistics on the employee placement industry broadly, but it doesn't have data specific to legal-industry hiring.
A few recruiting firms, like Major, Lindsey & Africa, have big teams committed to permanent placements, but there are also hundreds of one- and two-person recruiting shops across the country, many of which punch well above their weight. A lot of the smaller shops are part of the National Association of Legal Search Consultants, whose executive director, Stephanie Ankus, says its membership has risen by 22% since 2013.
Even if the number of legal recruiters isn't rising, changes in the profession have reduced the barriers to entry, and made it possible to apply quantitative methods to candidate searches and evaluation that would have been unthinkable 20 years ago. At least two database tools used by recruiters and law firms, Leopard Solutions and Firm Prospects, even assess the likelihood that a lawyer will move firms.
The ease with which people can call themselves recruiters gets on the nerves of some of the more established headhunters, who dismiss frequent cold-calling as "dialing for dollars."
Mark Rosen, who leads Mark Bruce International and says all his searches are done at the behest of a firm that has retained him, says building long-term relationships is key. "Monkeys with phones" could make calls all day in hopes of striking it rich, he says.
"People have a stereotype in their minds about recruiters—that we're all annoying, that we're like used car salesmen, that we're trying to cut a deal," says Julie Brush, a founding partner at the search firm Solutus, who runs an advice column called The Lawyer Whisperer. But, she says, "there are enough good recruiters out there to dispel that."
Nason, the new recruiter, says he doesn't view himself as the target of such criticisms. He works seven days a week and has had candidates praise his professionalism and industry knowledge, including one who hung up on a previous recruiter who could be heard shopping in the background.
Although he doesn't have a Juris Doctor, his father, Bill Nason (a co-founder of Watanabe Nason & Schwartz), has imparted lessons and introduced him to people at Am Law 100 firms, the younger Nason says. By the end of the year, Nason says, he'd placed four associates and begun to develop good relationships with several law firms.
"My dad told me he would be surprised if, by the end of the year, I had one," he says. "When I did my first one, he said, 'I didn't raise a one-hit-wonder.'"
Nason is planning to start placing law firm partners in 2020.
Amid all the technological changes and the lower barriers to entry, law firm partners are receiving a flood of messages from recruiters. From the perspective of practicing lawyers, some recruiters' solicitations are like junk mail. Jobs in distant cities or wholly different practice areas come advertised in cookie-cutter emails, and some recruiters come calling seemingly without having Googled the lawyer they're contacting.
Law firm partners say they receive anywhere from one to a dozen cold contacts per week, including one who says he got two calls on his first day at a new firm. One Big Law associate says she's contacted by recruiters 10 times a week, many of whom, she suspects, are pitching the same job.
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