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In this slowing economy, lateral associate hiring is down while the desire for lateral partners with portable books of business is thriving. The key phrase here is "portable books of business" -- meaning billable work that the partner will be able to bring from the old firm to the new one.
Yet almost all lawyers squirm at the thought of answering, "What are your portables?" during a lateral job search. It's difficult to boil your practice down to one number. But there is an easy solution for those of you facing this dreaded four-word question -- and those of you trying to get a useful response out of that squirming interviewee.
YOU CAN'T SAY
As an attorney search consultant, I've had so many conversations with partners worried about the implications of estimating their book of business. They raise a host of reasons why they can't put a concrete figure on it. Here are just some of the most common concerns I hear:
I'll lose either way: "If I'm too conservative, I'm underselling myself and falling short of the prospective firm's minimum portable requirements. If I'm too optimistic, I risk setting the bar too high and will walk into the firm with a target on my back, and the firm will end up thinking I was dishonest." (This is by far the most common response.)
The past does not equal the future: "I collected $2 million from Client X last year, but they just settled a big case so I don't know how much work they'll have next year."
They are not just MY clients: "My clients really like me and say they are pleased, but I don't want to promise they'll come with me. They do work for a few other partners as well so it's tough to say."
Another variation: "I'm not sure how many clients will actually come with me, and I don't want to risk asking them, either, since they'll know I'm looking to leave and may resist sending me further business, even if I don't."
It all depends: "My book of business will depend on which firm I move to, whether there are conflicts, their billing rates, their reputation, their platform, etc."
I refuse to guesstimate: "It's too tough to predict with any accuracy, so I don't want to offer a figure at this time."
These are all very understandable and very valid concerns. But there is one basic fact that many lawyers looking for a new home don't seem to fully appreciate: Books of business are, by their very nature, inherently speculative. No one -- not just you -- can set an exact figure on future billings.
No matter how hard you try, predicting what, if anything, your current clients will ask you to do once you shift firms is as precise an exercise as predicting the weather. There are too many moving pieces outside your zone of control to say for certain where the rain will fall.
Yet most lawyers, whose careers are based on being precise and accurate and in control, get thrown for a bit of a loop when they have to try to specify an inherently speculative figure. (Self-worth and pride also get thrown into the mix.)
THREE SCENARIOS
So instead of getting caught up with calculating one perfect number, make it much easier on yourself. Provide three different numbers.
The first is your optimistic scenario -- what your book of business will be if all the chips fall in your favor. All of the clients you were hoping to bring with you actually end up following you to your new firm, your cross-selling and business development efforts succeed handsomely and your practice blossoms in the most favorable way. This is the future through rose-colored glasses.
The second figure is your conservative scenario -- or, more accurately, your worst-case scenario. All the clients who you believed would join you at your new firm decide not to follow you. Maybe unforeseen conflicts arise -- not only conflicts from a legal ethics standpoint but historical tensions that developed years ago between a particular client and your new firm. Perhaps the new firm is not on the client's "approved law firm" list, and it's not clear whether the new firm would be able to get on that list once you join. Maybe the client declines to work with a different billing structure or has unanticipated and deeper loyalties to your prior firm.
The third is your realistic scenario -- which is simply the average of the optimistic and conservative scenarios. Do not, however, use an average if you have one major client that accounts for most or all of your business. In that case, your book of business is more of an all-or-nothing proposition.
I have worked with partners who had a very wide spread, ranging from $2.5 million on the optimistic end to $300,000 on the conservative end. If you do have that one dominant client, your optimistic-to-conservative spread might be several million dollars to zero. That is why firms often prefer to hire a lateral partner with a $3 million book that consists of 10 smaller clients over a lateral partner with a $3 million book containing one really big client.
JUST AN ESTIMATE
Firms that are hiring understand that predicting a book of business is hardly an exact science, much as they would like it to be. They also understand that books of business can be subject to exaggeration. On a number of occasions, I've had firms say, "Well, if this guy says the book of business is $2.5 million, it's probably realistically around $1.5 million." When firms are calculating starting compensation for new lateral partners, I can assure you that the chief financial officers are not relying on the optimistic scenario.
The wish not to sign on excessively optimistic laterals is also why, later in the process, most firms require potential hires to fill out due diligence questionnaires that drill deep into the lawyer's practice. To gain a much more accurate understanding of your business, firms will ask for specifics such as your total billings for each of the past three years, your collections for each of the past three years, your realization rate, your billing rates (and whether they differ for certain clients), descriptions of your clients, the length of those relationships and your billings thus far in the current year.
Unfortunately, the pressure of having to set a number on their book of business (and the fear of getting it wrong) can unnecessarily paralyze partners from considering other options. It doesn't need to be that way. The three-scenario approach to explaining books of business offers you the best of all worlds.
Instead of playing hide the number, you can express your optimistic goals without the fear that you are being misleading or one-sided. The hiring firm hears that you are both realistic and positive about the future. With that balance, the conversation between partner looking and firm hiring is bound to go more smoothly.
Dan Binstock is managing director of the Washington, D.C., office of BCG Attorney Search, where he handles partner, practice group and associate placements. Prior to legal recruiting, he practiced in a large D.C. firm.
