October 17, 2023 • 30 mins
Law firms need to hire business professionals as skilled and capable as the lawyers in their respective areas of focus. And yet, many firms still try to hire professional staff by relying on self-sourcing, agencies, or contingency recruiters. Steve explains why these results are often mixed at best. And what firms need to do to make sure they are recruiting the very best talent. Steve also shares his thoughts on some recent survey results regarding lateral partner financial performance. (Hint, multiples are not what they used to be if they ever really were.)
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Episode Transcript
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Unknown (00:00):
Murray, welcome to Steve's rules, periodic podcast
(00:10):
featuring Steve Nelson,executive principal at McCormick
group in the law and governmentaffairs practice. My name is
Murray Coffey, and I am theprincipal of Adam Coffey, a law
firm marketing and businessdevelopment Boutique. For more
information, please visit mywebsite at M coffey.net Steve
has been an executive recruiterfor nearly three decades, and
without naming names, he isready to spill the tea on best
(00:32):
practices, and maybe a few notso best practices by firms and
candidates that he has seenduring his career, recruiting
some of the most driven andsuccessful professional into
highly profitable and growingfirms. Steve is a former lawyer
and journalist and is a fellowof the college of law practice
management and a proud son ofWilkes Barre, Pennsylvania. Full
(00:52):
transparency here, Steve hashelped my career immensely
through the years and has becomesomething of a career shaman to
me and I know many others. Hey,Steve, how are you good to see
you? Hi, Murray. Been a littleHow are things with you and your
(01:14):
friends at McCormick
Steve (01:15):
group? Oh, it's great.
We're we're actually having ourretreat right now. So we're
getting everybody together,people from out of town, me
meeting some of them for thefirst time. So it's a great,
it's a great event, and we'reglad to be doing that. So it's,
it's exciting.
Unknown (01:32):
It's nice to be able to get together with in in person,
with people again, you know. Andyou know, with such a such a
people forward, kind of industrythat you're in, it's you got to
make these relationships Right,
Steve (01:44):
absolutely. So really beneficial.
Unknown (01:48):
Hey, before we jump into our topic today, I was, I
was doing my my usual review ofof my friends posts on LinkedIn,
and saw an interesting post thatyou flagged a story or maybe a
survey from that group decipher,maybe talking about who they
(02:11):
are, but, but, but you flaggedthat. I thought it was really
interesting, and it kind of tiesback to what we were talking
about in our last episode aboutevaluating a evaluating a
lateral partner in one of theelements being, you know, book.
So talk a little bit about that,because I think it's really
interesting. And the way youposition it was, was fascinating
(02:33):
as well, right? So
Steve (02:35):
decipher. It's probably been around for more than five
years. It's, it's a company thatreally has its major product is
in the due diligence area.
Others, they'll, they willconduct certain due diligence
background checks on variouspartners in the market for for
(02:57):
firms, you know, that contractwith them, it's not something
we're really involved in. We'renot, certainly not anything that
we have any involvement with,but, but they do put out a lot
of good data and a lot of goodsurveys. And I saw a recent
survey that they did which had alot of data about, you know
(03:18):
what's been going on in themarket. But what's interesting
to me was they had been doingstudies of the book of business,
which we talked about lastright? And what's interesting
was that they came up in 2023the book of business, the
percentage of the the ratiobetween compensation and book of
(03:40):
business is over 60% so forexample, if you've got a partner
who claims to have a milliondollar book of business, the
average comp for that partner issix over 600,000 which is kind
of out of line with the generalthinking And the general ways
that firms approach it. And I,and I don't believe that that's
(04:03):
related at all to sort ofdiscounting the book of
business. I think that's whatwhat the lateral is claiming to
have. So, so it's really a highnumber, and I think part of that
is there are a fair number ofwhat we would call succession
hires, where you're hiringsomebody at a partner level with
(04:23):
little or no business, becauseyou've got some retiring
partners who are riding offsunset. So So to some degree
that will, you know, that willskew the numbers. But still,
that surprised me, since wereally we tend to be thinking of
35 to 40% as the kind of ratioin market, right? So I think
(04:43):
that's interesting, but it alsoillustrates that, you know, if
you, if you adhere to a, youknow, a very strict, formulaic
approach to the so called bookof business, you're probably
going to run into trouble, andyou're probably not going to. At
many valuable items that way, ifyou're, if you're discounting
too much, and you're and you'reskipping on the compensation,
(05:05):
yeah,
Unknown (05:07):
and, you know, I just saw an article again in
LinkedIn. It popped up in one ofmy feeds. Thompson Reuters just
put out a report on realization,which is something you and I
talked about as well last, last,last week. I'm just remembering
this now. And and our, some ofour firms, are struggling with
(05:29):
keeping those realization rateswhere they need them to be. And
so if you start talking about,you know, a million dollar book
of business with a realizationrate of, let's say, 80% that's
suddenly an $800,000 book ofbusiness, and you're paying
$600,000 to buy $800,000 worthof business. You know, there's
the I'm not I have no head fornumbers. But something tells me
(05:52):
it doesn't quite add up. So sointeresting and interesting to
see how this, all this stuff is,is converging and and how one
thing impacts another. And, youknow, typically on these
podcasts, and thus far, we'vetalked about recruiting as it
relates to lateral partnerrecruiting or lateral attorney
(06:14):
recruiting, but I think we'regoing to switch gears a little
bit today and talk about theprofessional staff side, the C
suite folks, even some of thesenior director folks. And those
are those, are those. Those havealways been tricky positions to
fill, but it does seem likethey're harder to fill these
(06:37):
days. And when you go even tothe layer below that, to the
manager and all level. It'sreally hard, but, but we won't
talk a little bit today aboutwhat those what the reason for
some of those struggles mightbe, and as firms are thinking
about how they engagerecruiters, what they need to do
(07:00):
to evaluate the recruiter thatthey're talking to and what kind
of relationship they need withthat recruiter. So, you know, I
think it would be good for us tomaybe do a little bit of a
recruiting 101, here, Steve, andtalk about the difference
between retained and contingencysearch. So maybe we start there.
Steve (07:20):
Absolutely, that's exactly the way to start,
because I think law firms areadhering to a very much of a two
tier system for the C level,CEOs, CMOs, CFOs, any C, most C
level positions, the firms willmany firms, most firms will use
(07:40):
a retained search firm to handlethat, that search. And there
are, there are some of thenational, what are known as the
Shrek firms, which is, you knowHeidrick and you know Russell
Reynolds and court fair and soforth. And then, then, of
course, there are others thatare focused on the legal
(08:00):
profession, several of thosethat anybody who's who's
familiar, who's involved in thatwill know who those people are.
Those are working the C level.
When you get down, even at thedirector level, more common,
even at the manager and belowlevel, the firms are likely to
use contingency recruiters oragencies, and in that case, what
(08:21):
they're what they like to do,most often, not always, but most
often, if they can't fill itthemselves. That's always the
first, the first line ofdefense. Let's see if we can
fill ourselves, the therecruiting people within the
firm, within the HR departmentwill usually reach out to a fair
(08:42):
number of contingency firms andlet them know about the opening
and have them try to find peoplefor for those openings. And so
there's in those situations,most often it's multiple,
multiple firms, contingencyfirms, agencies actually
(09:07):
searching for those peopleconcurrently. Correct. So I mean
and that, and we'll get into it,that raises a bunch of problems.
Yeah,
Unknown (09:18):
and I've got some thoughts on that as well, but
please, yeah, all
Steve (09:22):
right. So, um, let's start. Let's start with the the
search firm, the the C levels. Ithink we should start with them
and talk about the the sort ofadvantages. I mean, you do have
several dominant search firms inthe in the legal industry, and
sometimes those do include thelarge firms that I mentioned
before, and they're dominant,and there is an attitude among
(09:49):
the leading firms, it's almostwhat we call the Cravath
syndrome, where we're going touse this reliable, well known
search firm. To handle oursearch, because if it goes
wrong, nobody's going to secondguess me as to why I hired X
firm, right? And and so thosefirms tend to get the work over
(10:13):
and over again. Now, you know,most of those firms are, you
know, I mean, they are, youknow, they're staffed by some
really good people. There are alot of good search executives
out there at those firms, butthere are a couple of weaknesses
that I think, you know, I thinkthat people point out. One is
(10:34):
conflict space. So if you'reusing one of the dominant firms,
there's a good chance thatthey've placed, over the last
number of years, X number ofpeople at Next, number of firms
and and certainly within thelast year or two, if they've
placed somebody at firm X, theycan't recruit either that person
(10:58):
they place. They certainlyshould not. Should Never recruit
that person directly, or beanybody else at the C level at
that firm. I mean, they have aclient relationship. They don't,
they don't. They're not supposedto recruit for clients. So at
best, you're dealing with asomewhat reduced percentage of
(11:19):
the market that they canactually even reach out to
second point that I want tomention is I think there's a
tendency at some of the of thelarge search firms to recycle
the same candidates over andover again. They may not be
people they place, but they'resort of, they have their list of
(11:39):
what they deem to be qualifiedcandidates, and they'll keep
running those people over andover again, because it's a
little bit of shooting fish in abarrel. You know, they don't
really reach out to more peoplebecause they feel they can find,
you know, one of their, youknow, tried and true people will
take a job, and thereforethey're not. They're not pushing
(12:03):
the envelope, I think in manycases of so much as they should
be. Another point is the they'revery tiered organizations, so
the people who are making theinitial contacts and even the
secondary contacts with thecandidates are often not very
(12:24):
sophisticated about the market.
Don't understand the law firmmarket. I really don't
understand what really even whatthey're looking for. What are
the attributes that that reallyseparate the contenders from the
pretenders in terms of aparticular search. So it's
really, it's very difficult,because sometimes they lose
(12:45):
candidates along the way who whobasically come out and say, you
know, I got contacted by x, andthe person was so unprofessional
that I just decided, I justsaid, I'm not moving forward
with it. So you may be missingout on people because you're not
using your top people earlyenough in the process.
Unknown (13:07):
Talk about that. Yeah, yeah. So, so I do, because as
somebody who's hired a lot ofpeople and a lot of different
levels, as you know, thecandidate experience during the
recruiting process is isessential, and I think it's
(13:30):
something that gets lost andforgotten. Sometimes, you know,
working with you and your teamcan't, you know, always, always
a great experience. It, butthere's not a lot of levels at
your organization that said, youknow when you're when you get
that call from that juniorperson and they they really
(13:55):
can't answer questions. They'vegot a they've got a list of of
questions that you clearly knowthey're just checking off the
answers to once they get them.
That's not helpful. That's nothelpful as a candidate, and
that's not helpful for mycandidates who I want to bring
in to feel great about, about,about taking that call, because
the people who you want usuallyare people who can take a lot of
(14:15):
different calls. And so youknow, out, you know, there's,
there's a the, I think the, Ithink the firms that are not
educating their junior staff alittle bit more fully on on the
on the position and on themarket, what's going on in the
market, are losing anopportunity there. I mean, I
(14:37):
understand why you've got tohave the juniors making that
first round of calls. I get it,the larger the organization is,
the you know, harder it's goingto be for the senior people to
make those, those initial calls.
But I'll tell you somethingwhen, when I get a call and
it's, it's the senior person atthe at the recruiting firm, I
(14:58):
I'm it. I'm kind of. Interestedin having that conversation.
That's a more, you know, thatthat's a that's a door. I'm more
interested in in walkingthrough. And I'm not looking to
walk you through any doors,folks. I'm doing great happy
here, but, but, but I do wantto. I do want that. You know,
the idea of the candidateexperience is, is, boy, is that
(15:20):
is that key, right?
Steve (15:23):
Okay, yeah. And that's what I wanted to, you know, talk
about a little more, because Idefinitely, I have talked to any
number of candidates at the Clevel position and their
experience with a couple of theleading search firms in the
legal market is, I mean, theyare very critical about how they
(15:48):
were treated. Never you know,kept in mind. Never you know,
never contacted about theirstatus within the process, never
given good reasons for feedback.
And so there is a lot of chatterin the market about the quality
of some of the search firms.
Unknown (16:08):
So, yeah, yeah, yeah, absolutely right, yeah. It's Go
ahead, please. Yeah.
Steve (16:17):
So then I wanted to switch it and talk about the
about the other positions, youknow, the particularly manager
positions, directors. To somedegree, some firms will use the
big search terms for Director.
Sometimes they don't. In fact, alot of director positions, to be
fair, are often he are the onesthat are best recruited by the
firms themselves, because theyknow them. You know the C
(16:41):
levels. Your CMOS going to knowlots of directors out there,
just because they've worked withthem before. They see them at
events. So they kind of knowthat field. They don't know the
manager level and below nearlyas well. But at the manager
level, I mean, you're talkingabout, in most cases, very savvy
professionals, people with a lotof expertise in a practice area,
(17:02):
whether it's practice groupmanagement, pricing, lpm,
information technology, HR, uh,Marketing, BD, um, they're
they're very qualified peopleand and often, while there is
some movement, of course,they're not the easiest to
(17:26):
dislodge from their firms andand so, but the approach where
you know, you use one of thesecontingency firms to go look for
those people, I Think it, whatit leads to, in many cases, is
the contingency firms, they havea method of doing business.
Their method of doing businessis basically, let's get these
(17:49):
candidates really fast. Let'shave a good database so we know
that people are out there, youknow, who's reached out to us
recently? Let's get to ourcandidates really fast, get them
in the door, because we'recompeting with somebody else,
and, you know, and move on. Andif we can't place them in a
couple of weeks, we're moving onto the next job. So you're
(18:10):
getting kind of this sort ofhalf a market. You're really
only focused on people who arealready sort of motivated to
leave a lot of times you wantto. You know, a search firm
really wins its plaudits bygoing out and finding people who
are reasonably happy in theirjobs, sometimes quite happy in
(18:32):
their jobs, but but if you offerthem an opportunity that you
know, that really, you know,moves them up a level, whether
it's leveling firm or whetherlevel of responsibility,
sometimes level of compensation,that may change their view, and
they may throw their hat intothe ring. If you use this sort
of tried and true or tried andfalse, I would say formula, or
(18:56):
using multiple recruiting firmsat the same time, I think
there's a good chance you'regoing to miss out.
Unknown (19:06):
And I think the quality of the candidates, my experience
has been, and I, you know, I'vehad good experience with
contingencies, you know,contingency, recruit,
recruitment. But by and large,my preference is always to go
with a retained search all theway down to even for me, I was
(19:26):
even doing it at the specialistlevel because, because I there
just was so much competition outthere, and what I would find
with the with the agencies,especially the agencies, more so
even than the contingency feeshops, is you get, you get, you
(19:48):
get a bushel full of CDs, butthey're not on target. Sometimes
they're so off target that it'skind of hard for you to
understand how that even gotunder. Knows from this, from
this agency, you know, classicis looking for a marketing
manager. And, you know, if theword market appears in
(20:11):
somebody's CV, they, you know,I'm all of a sudden looking at
a, at a, you know, a CV forsomebody who's, who's, who's,
you know, who's the the, theprocurement chief for a
supermarket in in Poughkeepsie,right? And, and so it's, it's,
(20:31):
it's that too, because theydon't, the other part of is they
don't know, they don't know thethe field. They don't know it
well. And it's really hard withmarketing and BD folks to to
have a an agency or contingencyfolks, you know, recruiting
because they just, they don't,they don't, they don't
understand the nuances of thatparticular role. With an IT
(20:52):
role, you can say, Look, do youknow these languages? Are you
qualified in this kind oftechnology? Do you there's a
certain like you can, you canpretty quickly sift through the
qualifications that you need forsomebody on the IT side or even
the HR side, but it's, it's,it's, it's not as it's not as
cut and dried with with, youknow people you might hire from
(21:13):
recruiting, or people you mighthire from marketing or BD,
Steve (21:17):
yeah, I would, I would, I would add this that might you
know, a person who does our lawfirm technology recruiting would
disagree with you about thewords. I mean, there are, just
like with BD and marketing,there are separators, things
that people have done thataren't going to come through on
a word scan on a resume. So, Imean, I think this is really
(21:39):
across the board is the level ofdetail that have to do. Let me
just wait one other commentabout contingency firms, because
we're a hybrid firm, so we dowork on contingency. It's just
that the exclusivity you doing,exclusive contingency search is
(22:02):
often a really good benefit. Itdoes protect you, because at
least you know that that firmknows that if they do their job
right, and they find a person,they'll get paid, rather than
the situation where, in a in asort of straight competitive
contingency situation, they cando their job, right? Somebody
just beats them to the candidateand so, so I think that you can
(22:26):
get value without having to payor retain it's just, it's more
about, okay, what are, what is,what is this search firm? What
are they going to do? What'stheir methodology? How are they
finding candidates? How are theydelivering candidates that's
more important than, you know,the number of placements they've
(22:47):
made, or, you know, or you know,whatever. It's just, it really
is important, I think, for firmsto think about the particular
position and the level of detailthey need. Because those people
who are at the manager level,they can, they can make the
difference between successionfailure of your whole program.
And why would you use adifferent approach for them as
(23:12):
you would for your CMO? Youwouldn't. You would never run
your cmo through a contingencysearch firm situation. Maybe
I've heard of
Unknown (23:20):
it. Actually think that? You think that, but, yeah,
no, I you're
Steve (23:23):
right because that we know one search firm that does
it that way, but, but it's not,it's, it's, it's frowned upon.
Let's put it that way. Yeah,
Unknown (23:31):
yeah, no, no, no, question about it. Before we
wrap here, I wanted to just geta sense from you of what you're
seeing right now in terms ofnumber of available candidates
out there, because we're, youknow, this, we've got this,
we've got this economy that'sseems weird. And we have some
(23:56):
law firms are doing, you know,pretty significant layoffs. And,
you know, other law firms arereally, you know, kind of
playing everything very close tothe vest right now. How is that
impacting the number ofcandidates, or the quality of
the
Steve (24:11):
candidates up? Yeah. So 2022, was a wild, you know, wild
west market for for the lawfirms in the on the professional
side, there were a lot ofopenings. People were looking
for people, you know, they hadcome through the pandemic. They
cut during the pandemic, all ofa sudden, Business was booming
and and so there was a lot ofhiring going on. And there were,
(24:35):
you know, a fair number ofpeople in the market. I think
one of the things with regard tothe talent side, is that, and
we, you know, we've heard allabout, you know, the millennials
and Generation Z and so forthand so on. But there's, there's
definitely a lot of people inthe market that were using this
(24:57):
as an opportunity to increasetheir pay and. And their status,
and so those people were prettyheavy market. So you had, at
that point, you had a marketwith lots of jobs and a fair
number of candidates. The numberof jobs have been cut
significantly in the last year,and you've seen a lot of firms
lay off people on the on thestaff side. So I think that's
(25:19):
the case. Still a fair number ofpeople are in the market. I
think, you know, we're seeing,it's still a pretty active
market for people to move, butwe do have to be careful about
the motivations of the peoplewho are moving, because you
just, you get a lot of, I mean,you know, we never used to have
an issue with people takingcounter offers. And now it's,
(25:42):
you know, you know, we talksometimes about a joke. And one
of my, you know, one of thethings I do on my comedy routine
sometimes, is, I, you know, oneof the things I talk about is
the secret language ofcandidates. And one of the
things that the secret languageof candidates is when you when
you present them with a joboffer. You know, the response
(26:03):
from them is, you know, got thisjob. Are you ready to accept it
and say, Well, I've got to gotalk to my significant other
about this before I but whatthat really means is, I'm going
to go out get a counteroffer ifI can. And so that's what's in
the market right now. People arevery much that way. And the
whole there's been in for years,there's been a lot said in the
(26:27):
marketplace about theinadvisability of accepting
account offer. You know thatit's not you know. You know your
your loyalties. Now question,they're not really going to
solve your real problems. Allthey're doing is throwing money
at you, etc, etc. But candidatebase isn't thinking that way.
They're saying this. And if Ican get, you know, and get
(26:47):
another $25,000 I'll take it,then I'll move on, whenever I
move on. So it's a tough marketwith regard to that, but still,
overall, good market for talent,but but part of it is you have
to sell opportunity, right? Youhave to have a good story to
tell, and I'll sell you the jobdescriptions. We could do
(27:09):
another, another program on jobdescriptions about that. And so
part of it is you have to beable to sell the opportunity,
and you have to have our partnerif you're going to go that
route, you're gonna have to havea partner. That's, you know,
that's that you can rely on togo get the best possible person
in the market at any one time.
Yeah,
Unknown (27:32):
yeah, yeah, absolutely.
And, and it's a thatcounteroffer business. I, you
know, I, I have friends,colleagues who will call me
until I got a counter. I mean,don't do it, but don't, don't do
it. Here's, here's, what's goingto happen. And you know,
inevitably it does happen. Imean, once you've
(27:52):
psychologically walked out thedoor, you it's, you're not
really walking back in, right?
You're just, you're always onthat threshold at both from your
employer side and from yourside, you're always on the
threshold. And let me tell you,when things get rough, that
person who got the counteroffer,you're the first one out the
(28:14):
door.
Steve (28:16):
All right. So anyway, before we wrap up, I just want
to mention my team that works inthe and the professional side. I
want to give kudos to the peopleI work with. Obviously, I'm
involved in the professionalstaff. But I also want to talk
about Cassie battle, who's beenwith us for years. You've worked
with her, Wiz and the marketing,BD, pricing, lpm area. Deborah
(28:41):
page is a Senior VP with us. IsAll Things technology. She works
both legal market and non thenon legal market. And she knows
all the CIOs, and she can getthem, you know, she can get them
to call back, you know, snapcrackle, pop. And then Mandisa
Marshall is is with us. She's abit newer with us, but she's a
(29:06):
she's a crack recruiter. Reallyunderstands technology, really
understands social media, soshe's a star in the making. And
then there's a newer guy, evenby the name of reed Weston, who
are very, very excited about soit's a good team. So obviously I
want to let everyone know thatyou know that we do this work.
We got a good team to do it, and
Unknown (29:27):
you do and I know that.
I know that from personalexperience. So alright, see,
well, why don't we go ahead andwrap it? We'll, we will, we'll,
we will explore some other areasin our in our subsequent
podcasts, and enjoy yourretreat, getting together with
your your colleagues and youknow, having a good time. Great.
(29:47):
All right, talk to you soon.
Steve (29:53):
All right. Take care.
You.
Murray, welcome to Steve's rules, periodic podcast
(00:10):
featuring Steve Nelson,executive principal at McCormick
group in the law and governmentaffairs practice. My name is
Murray Coffey, and I am theprincipal of Adam Coffey, a law
firm marketing and businessdevelopment Boutique. For more
information, please visit mywebsite at M coffey.net Steve
has been an executive recruiterfor nearly three decades, and
without naming names, he isready to spill the tea on best
(00:32):
practices, and maybe a few notso best practices by firms and
candidates that he has seenduring his career, recruiting
some of the most driven andsuccessful professional into
highly profitable and growingfirms. Steve is a former lawyer
and journalist and is a fellowof the college of law practice
management and a proud son ofWilkes Barre, Pennsylvania. Full
(00:52):
transparency here, Steve hashelped my career immensely
through the years and has becomesomething of a career shaman to
me and I know many others. Hey,Steve, how are you good to see
you? Hi, Murray. Been a littleHow are things with you and your
(01:14):
friends at McCormick
Steve (01:15):
group? Oh, it's great.
We're we're actually having ourretreat right now. So we're
getting everybody together,people from out of town, me
meeting some of them for thefirst time. So it's a great,
it's a great event, and we'reglad to be doing that. So it's,
it's exciting.
Unknown (01:32):
It's nice to be able to get together with in in person,
with people again, you know. Andyou know, with such a such a
people forward, kind of industrythat you're in, it's you got to
make these relationships Right,
Steve (01:44):
absolutely. So really beneficial.
Unknown (01:48):
Hey, before we jump into our topic today, I was, I
was doing my my usual review ofof my friends posts on LinkedIn,
and saw an interesting post thatyou flagged a story or maybe a
survey from that group decipher,maybe talking about who they
(02:11):
are, but, but, but you flaggedthat. I thought it was really
interesting, and it kind of tiesback to what we were talking
about in our last episode aboutevaluating a evaluating a
lateral partner in one of theelements being, you know, book.
So talk a little bit about that,because I think it's really
interesting. And the way youposition it was, was fascinating
(02:33):
as well, right? So
Steve (02:35):
decipher. It's probably been around for more than five
years. It's, it's a company thatreally has its major product is
in the due diligence area.
Others, they'll, they willconduct certain due diligence
background checks on variouspartners in the market for for
(02:57):
firms, you know, that contractwith them, it's not something
we're really involved in. We'renot, certainly not anything that
we have any involvement with,but, but they do put out a lot
of good data and a lot of goodsurveys. And I saw a recent
survey that they did which had alot of data about, you know
(03:18):
what's been going on in themarket. But what's interesting
to me was they had been doingstudies of the book of business,
which we talked about lastright? And what's interesting
was that they came up in 2023the book of business, the
percentage of the the ratiobetween compensation and book of
(03:40):
business is over 60% so forexample, if you've got a partner
who claims to have a milliondollar book of business, the
average comp for that partner issix over 600,000 which is kind
of out of line with the generalthinking And the general ways
that firms approach it. And I,and I don't believe that that's
(04:03):
related at all to sort ofdiscounting the book of
business. I think that's whatwhat the lateral is claiming to
have. So, so it's really a highnumber, and I think part of that
is there are a fair number ofwhat we would call succession
hires, where you're hiringsomebody at a partner level with
(04:23):
little or no business, becauseyou've got some retiring
partners who are riding offsunset. So So to some degree
that will, you know, that willskew the numbers. But still,
that surprised me, since wereally we tend to be thinking of
35 to 40% as the kind of ratioin market, right? So I think
(04:43):
that's interesting, but it alsoillustrates that, you know, if
you, if you adhere to a, youknow, a very strict, formulaic
approach to the so called bookof business, you're probably
going to run into trouble, andyou're probably not going to. At
many valuable items that way, ifyou're, if you're discounting
too much, and you're and you'reskipping on the compensation,
(05:05):
yeah,
Unknown (05:07):
and, you know, I just saw an article again in
LinkedIn. It popped up in one ofmy feeds. Thompson Reuters just
put out a report on realization,which is something you and I
talked about as well last, last,last week. I'm just remembering
this now. And and our, some ofour firms, are struggling with
(05:29):
keeping those realization rateswhere they need them to be. And
so if you start talking about,you know, a million dollar book
of business with a realizationrate of, let's say, 80% that's
suddenly an $800,000 book ofbusiness, and you're paying
$600,000 to buy $800,000 worthof business. You know, there's
the I'm not I have no head fornumbers. But something tells me
(05:52):
it doesn't quite add up. So sointeresting and interesting to
see how this, all this stuff is,is converging and and how one
thing impacts another. And, youknow, typically on these
podcasts, and thus far, we'vetalked about recruiting as it
relates to lateral partnerrecruiting or lateral attorney
(06:14):
recruiting, but I think we'regoing to switch gears a little
bit today and talk about theprofessional staff side, the C
suite folks, even some of thesenior director folks. And those
are those, are those. Those havealways been tricky positions to
fill, but it does seem likethey're harder to fill these
(06:37):
days. And when you go even tothe layer below that, to the
manager and all level. It'sreally hard, but, but we won't
talk a little bit today aboutwhat those what the reason for
some of those struggles mightbe, and as firms are thinking
about how they engagerecruiters, what they need to do
(07:00):
to evaluate the recruiter thatthey're talking to and what kind
of relationship they need withthat recruiter. So, you know, I
think it would be good for us tomaybe do a little bit of a
recruiting 101, here, Steve, andtalk about the difference
between retained and contingencysearch. So maybe we start there.
Steve (07:20):
Absolutely, that's exactly the way to start,
because I think law firms areadhering to a very much of a two
tier system for the C level,CEOs, CMOs, CFOs, any C, most C
level positions, the firms willmany firms, most firms will use
(07:40):
a retained search firm to handlethat, that search. And there
are, there are some of thenational, what are known as the
Shrek firms, which is, you knowHeidrick and you know Russell
Reynolds and court fair and soforth. And then, then, of
course, there are others thatare focused on the legal
(08:00):
profession, several of thosethat anybody who's who's
familiar, who's involved in thatwill know who those people are.
Those are working the C level.
When you get down, even at thedirector level, more common,
even at the manager and belowlevel, the firms are likely to
use contingency recruiters oragencies, and in that case, what
(08:21):
they're what they like to do,most often, not always, but most
often, if they can't fill itthemselves. That's always the
first, the first line ofdefense. Let's see if we can
fill ourselves, the therecruiting people within the
firm, within the HR departmentwill usually reach out to a fair
(08:42):
number of contingency firms andlet them know about the opening
and have them try to find peoplefor for those openings. And so
there's in those situations,most often it's multiple,
multiple firms, contingencyfirms, agencies actually
(09:07):
searching for those peopleconcurrently. Correct. So I mean
and that, and we'll get into it,that raises a bunch of problems.
Yeah,
Unknown (09:18):
and I've got some thoughts on that as well, but
please, yeah, all
Steve (09:22):
right. So, um, let's start. Let's start with the the
search firm, the the C levels. Ithink we should start with them
and talk about the the sort ofadvantages. I mean, you do have
several dominant search firms inthe in the legal industry, and
sometimes those do include thelarge firms that I mentioned
before, and they're dominant,and there is an attitude among
(09:49):
the leading firms, it's almostwhat we call the Cravath
syndrome, where we're going touse this reliable, well known
search firm. To handle oursearch, because if it goes
wrong, nobody's going to secondguess me as to why I hired X
firm, right? And and so thosefirms tend to get the work over
(10:13):
and over again. Now, you know,most of those firms are, you
know, I mean, they are, youknow, they're staffed by some
really good people. There are alot of good search executives
out there at those firms, butthere are a couple of weaknesses
that I think, you know, I thinkthat people point out. One is
(10:34):
conflict space. So if you'reusing one of the dominant firms,
there's a good chance thatthey've placed, over the last
number of years, X number ofpeople at Next, number of firms
and and certainly within thelast year or two, if they've
placed somebody at firm X, theycan't recruit either that person
(10:58):
they place. They certainlyshould not. Should Never recruit
that person directly, or beanybody else at the C level at
that firm. I mean, they have aclient relationship. They don't,
they don't. They're not supposedto recruit for clients. So at
best, you're dealing with asomewhat reduced percentage of
(11:19):
the market that they canactually even reach out to
second point that I want tomention is I think there's a
tendency at some of the of thelarge search firms to recycle
the same candidates over andover again. They may not be
people they place, but they'resort of, they have their list of
(11:39):
what they deem to be qualifiedcandidates, and they'll keep
running those people over andover again, because it's a
little bit of shooting fish in abarrel. You know, they don't
really reach out to more peoplebecause they feel they can find,
you know, one of their, youknow, tried and true people will
take a job, and thereforethey're not. They're not pushing
(12:03):
the envelope, I think in manycases of so much as they should
be. Another point is the they'revery tiered organizations, so
the people who are making theinitial contacts and even the
secondary contacts with thecandidates are often not very
(12:24):
sophisticated about the market.
Don't understand the law firmmarket. I really don't
understand what really even whatthey're looking for. What are
the attributes that that reallyseparate the contenders from the
pretenders in terms of aparticular search. So it's
really, it's very difficult,because sometimes they lose
(12:45):
candidates along the way who whobasically come out and say, you
know, I got contacted by x, andthe person was so unprofessional
that I just decided, I justsaid, I'm not moving forward
with it. So you may be missingout on people because you're not
using your top people earlyenough in the process.
Unknown (13:07):
Talk about that. Yeah, yeah. So, so I do, because as
somebody who's hired a lot ofpeople and a lot of different
levels, as you know, thecandidate experience during the
recruiting process is isessential, and I think it's
(13:30):
something that gets lost andforgotten. Sometimes, you know,
working with you and your teamcan't, you know, always, always
a great experience. It, butthere's not a lot of levels at
your organization that said, youknow when you're when you get
that call from that juniorperson and they they really
(13:55):
can't answer questions. They'vegot a they've got a list of of
questions that you clearly knowthey're just checking off the
answers to once they get them.
That's not helpful. That's nothelpful as a candidate, and
that's not helpful for mycandidates who I want to bring
in to feel great about, about,about taking that call, because
the people who you want usuallyare people who can take a lot of
(14:15):
different calls. And so youknow, out, you know, there's,
there's a the, I think the, Ithink the firms that are not
educating their junior staff alittle bit more fully on on the
on the position and on themarket, what's going on in the
market, are losing anopportunity there. I mean, I
(14:37):
understand why you've got tohave the juniors making that
first round of calls. I get it,the larger the organization is,
the you know, harder it's goingto be for the senior people to
make those, those initial calls.
But I'll tell you somethingwhen, when I get a call and
it's, it's the senior person atthe at the recruiting firm, I
(14:58):
I'm it. I'm kind of. Interestedin having that conversation.
That's a more, you know, thatthat's a that's a door. I'm more
interested in in walkingthrough. And I'm not looking to
walk you through any doors,folks. I'm doing great happy
here, but, but, but I do wantto. I do want that. You know,
the idea of the candidateexperience is, is, boy, is that
(15:20):
is that key, right?
Steve (15:23):
Okay, yeah. And that's what I wanted to, you know, talk
about a little more, because Idefinitely, I have talked to any
number of candidates at the Clevel position and their
experience with a couple of theleading search firms in the
legal market is, I mean, theyare very critical about how they
(15:48):
were treated. Never you know,kept in mind. Never you know,
never contacted about theirstatus within the process, never
given good reasons for feedback.
And so there is a lot of chatterin the market about the quality
of some of the search firms.
Unknown (16:08):
So, yeah, yeah, yeah, absolutely right, yeah. It's Go
ahead, please. Yeah.
Steve (16:17):
So then I wanted to switch it and talk about the
about the other positions, youknow, the particularly manager
positions, directors. To somedegree, some firms will use the
big search terms for Director.
Sometimes they don't. In fact, alot of director positions, to be
fair, are often he are the onesthat are best recruited by the
firms themselves, because theyknow them. You know the C
(16:41):
levels. Your CMOS going to knowlots of directors out there,
just because they've worked withthem before. They see them at
events. So they kind of knowthat field. They don't know the
manager level and below nearlyas well. But at the manager
level, I mean, you're talkingabout, in most cases, very savvy
professionals, people with a lotof expertise in a practice area,
(17:02):
whether it's practice groupmanagement, pricing, lpm,
information technology, HR, uh,Marketing, BD, um, they're
they're very qualified peopleand and often, while there is
some movement, of course,they're not the easiest to
(17:26):
dislodge from their firms andand so, but the approach where
you know, you use one of thesecontingency firms to go look for
those people, I Think it, whatit leads to, in many cases, is
the contingency firms, they havea method of doing business.
Their method of doing businessis basically, let's get these
(17:49):
candidates really fast. Let'shave a good database so we know
that people are out there, youknow, who's reached out to us
recently? Let's get to ourcandidates really fast, get them
in the door, because we'recompeting with somebody else,
and, you know, and move on. Andif we can't place them in a
couple of weeks, we're moving onto the next job. So you're
(18:10):
getting kind of this sort ofhalf a market. You're really
only focused on people who arealready sort of motivated to
leave a lot of times you wantto. You know, a search firm
really wins its plaudits bygoing out and finding people who
are reasonably happy in theirjobs, sometimes quite happy in
(18:32):
their jobs, but but if you offerthem an opportunity that you
know, that really, you know,moves them up a level, whether
it's leveling firm or whetherlevel of responsibility,
sometimes level of compensation,that may change their view, and
they may throw their hat intothe ring. If you use this sort
of tried and true or tried andfalse, I would say formula, or
(18:56):
using multiple recruiting firmsat the same time, I think
there's a good chance you'regoing to miss out.
Unknown (19:06):
And I think the quality of the candidates, my experience
has been, and I, you know, I'vehad good experience with
contingencies, you know,contingency, recruit,
recruitment. But by and large,my preference is always to go
with a retained search all theway down to even for me, I was
(19:26):
even doing it at the specialistlevel because, because I there
just was so much competition outthere, and what I would find
with the with the agencies,especially the agencies, more so
even than the contingency feeshops, is you get, you get, you
(19:48):
get a bushel full of CDs, butthey're not on target. Sometimes
they're so off target that it'skind of hard for you to
understand how that even gotunder. Knows from this, from
this agency, you know, classicis looking for a marketing
manager. And, you know, if theword market appears in
(20:11):
somebody's CV, they, you know,I'm all of a sudden looking at
a, at a, you know, a CV forsomebody who's, who's, who's,
you know, who's the the, theprocurement chief for a
supermarket in in Poughkeepsie,right? And, and so it's, it's,
(20:31):
it's that too, because theydon't, the other part of is they
don't know, they don't know thethe field. They don't know it
well. And it's really hard withmarketing and BD folks to to
have a an agency or contingencyfolks, you know, recruiting
because they just, they don't,they don't, they don't
understand the nuances of thatparticular role. With an IT
(20:52):
role, you can say, Look, do youknow these languages? Are you
qualified in this kind oftechnology? Do you there's a
certain like you can, you canpretty quickly sift through the
qualifications that you need forsomebody on the IT side or even
the HR side, but it's, it's,it's, it's not as it's not as
cut and dried with with, youknow people you might hire from
(21:13):
recruiting, or people you mighthire from marketing or BD,
Steve (21:17):
yeah, I would, I would, I would add this that might you
know, a person who does our lawfirm technology recruiting would
disagree with you about thewords. I mean, there are, just
like with BD and marketing,there are separators, things
that people have done thataren't going to come through on
a word scan on a resume. So, Imean, I think this is really
(21:39):
across the board is the level ofdetail that have to do. Let me
just wait one other commentabout contingency firms, because
we're a hybrid firm, so we dowork on contingency. It's just
that the exclusivity you doing,exclusive contingency search is
(22:02):
often a really good benefit. Itdoes protect you, because at
least you know that that firmknows that if they do their job
right, and they find a person,they'll get paid, rather than
the situation where, in a in asort of straight competitive
contingency situation, they cando their job, right? Somebody
just beats them to the candidateand so, so I think that you can
(22:26):
get value without having to payor retain it's just, it's more
about, okay, what are, what is,what is this search firm? What
are they going to do? What'stheir methodology? How are they
finding candidates? How are theydelivering candidates that's
more important than, you know,the number of placements they've
(22:47):
made, or, you know, or you know,whatever. It's just, it really
is important, I think, for firmsto think about the particular
position and the level of detailthey need. Because those people
who are at the manager level,they can, they can make the
difference between successionfailure of your whole program.
And why would you use adifferent approach for them as
(23:12):
you would for your CMO? Youwouldn't. You would never run
your cmo through a contingencysearch firm situation. Maybe
I've heard of
Unknown (23:20):
it. Actually think that? You think that, but, yeah,
no, I you're
Steve (23:23):
right because that we know one search firm that does
it that way, but, but it's not,it's, it's, it's frowned upon.
Let's put it that way. Yeah,
Unknown (23:31):
yeah, no, no, no, question about it. Before we
wrap here, I wanted to just geta sense from you of what you're
seeing right now in terms ofnumber of available candidates
out there, because we're, youknow, this, we've got this,
we've got this economy that'sseems weird. And we have some
(23:56):
law firms are doing, you know,pretty significant layoffs. And,
you know, other law firms arereally, you know, kind of
playing everything very close tothe vest right now. How is that
impacting the number ofcandidates, or the quality of
the
Steve (24:11):
candidates up? Yeah. So 2022, was a wild, you know, wild
west market for for the lawfirms in the on the professional
side, there were a lot ofopenings. People were looking
for people, you know, they hadcome through the pandemic. They
cut during the pandemic, all ofa sudden, Business was booming
and and so there was a lot ofhiring going on. And there were,
(24:35):
you know, a fair number ofpeople in the market. I think
one of the things with regard tothe talent side, is that, and
we, you know, we've heard allabout, you know, the millennials
and Generation Z and so forthand so on. But there's, there's
definitely a lot of people inthe market that were using this
(24:57):
as an opportunity to increasetheir pay and. And their status,
and so those people were prettyheavy market. So you had, at
that point, you had a marketwith lots of jobs and a fair
number of candidates. The numberof jobs have been cut
significantly in the last year,and you've seen a lot of firms
lay off people on the on thestaff side. So I think that's
(25:19):
the case. Still a fair number ofpeople are in the market. I
think, you know, we're seeing,it's still a pretty active
market for people to move, butwe do have to be careful about
the motivations of the peoplewho are moving, because you
just, you get a lot of, I mean,you know, we never used to have
an issue with people takingcounter offers. And now it's,
(25:42):
you know, you know, we talksometimes about a joke. And one
of my, you know, one of thethings I do on my comedy routine
sometimes, is, I, you know, oneof the things I talk about is
the secret language ofcandidates. And one of the
things that the secret languageof candidates is when you when
you present them with a joboffer. You know, the response
(26:03):
from them is, you know, got thisjob. Are you ready to accept it
and say, Well, I've got to gotalk to my significant other
about this before I but whatthat really means is, I'm going
to go out get a counteroffer ifI can. And so that's what's in
the market right now. People arevery much that way. And the
whole there's been in for years,there's been a lot said in the
(26:27):
marketplace about theinadvisability of accepting
account offer. You know thatit's not you know. You know your
your loyalties. Now question,they're not really going to
solve your real problems. Allthey're doing is throwing money
at you, etc, etc. But candidatebase isn't thinking that way.
They're saying this. And if Ican get, you know, and get
(26:47):
another $25,000 I'll take it,then I'll move on, whenever I
move on. So it's a tough marketwith regard to that, but still,
overall, good market for talent,but but part of it is you have
to sell opportunity, right? Youhave to have a good story to
tell, and I'll sell you the jobdescriptions. We could do
(27:09):
another, another program on jobdescriptions about that. And so
part of it is you have to beable to sell the opportunity,
and you have to have our partnerif you're going to go that
route, you're gonna have to havea partner. That's, you know,
that's that you can rely on togo get the best possible person
in the market at any one time.
Yeah,
Unknown (27:32):
yeah, yeah, absolutely.
And, and it's a thatcounteroffer business. I, you
know, I, I have friends,colleagues who will call me
until I got a counter. I mean,don't do it, but don't, don't do
it. Here's, here's, what's goingto happen. And you know,
inevitably it does happen. Imean, once you've
(27:52):
psychologically walked out thedoor, you it's, you're not
really walking back in, right?
You're just, you're always onthat threshold at both from your
employer side and from yourside, you're always on the
threshold. And let me tell you,when things get rough, that
person who got the counteroffer,you're the first one out the
(28:14):
door.
Steve (28:16):
All right. So anyway, before we wrap up, I just want
to mention my team that works inthe and the professional side. I
want to give kudos to the peopleI work with. Obviously, I'm
involved in the professionalstaff. But I also want to talk
about Cassie battle, who's beenwith us for years. You've worked
with her, Wiz and the marketing,BD, pricing, lpm area. Deborah
(28:41):
page is a Senior VP with us. IsAll Things technology. She works
both legal market and non thenon legal market. And she knows
all the CIOs, and she can getthem, you know, she can get them
to call back, you know, snapcrackle, pop. And then Mandisa
Marshall is is with us. She's abit newer with us, but she's a
(29:06):
she's a crack recruiter. Reallyunderstands technology, really
understands social media, soshe's a star in the making. And
then there's a newer guy, evenby the name of reed Weston, who
are very, very excited about soit's a good team. So obviously I
want to let everyone know thatyou know that we do this work.
We got a good team to do it, and
Unknown (29:27):
you do and I know that.
I know that from personalexperience. So alright, see,
well, why don't we go ahead andwrap it? We'll, we will, we'll,
we will explore some other areasin our in our subsequent
podcasts, and enjoy yourretreat, getting together with
your your colleagues and youknow, having a good time. Great.
(29:47):
All right, talk to you soon.
Steve (29:53):
All right. Take care.
You.
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