In the MeToo Era, Lateral Candidates Are Going Under the Microscope

In the MeToo Era, Lateral Candidates Are Going Under the Microscope

Credit: Val Bochkov

When assessing a prospective lateral partner candidate, those in charge of hiring at a law firm tend to consider a few common factors—ongoing work and client relationships and whether the candidate’s personality and approach will fit within the firm’s culture. But these days, in light of the MeToo movement that has called attention to workplace sexual harassment and misconduct, there are a few more questions that hiring partners might want answered before inviting a lateral on board, according to industry experts.

The lateral hiring landscape, as it traditionally operates, doesn’t always allow for the kind of vetting that might uncover a potential problem.

“Law firms are beginning to take MeToo seriously. And they are very cognizant of the fact that they have both internal and external stakeholders that are very concerned about the issues that exist inside law firms and professional services firms,” says Michael Ellenhorn, co-founder and general counsel of Decipher, a human resources and market intelligence business focused on the legal industry.

The issues facing law firms in the MeToo era are not just academic. In the recent past, several reports have emerged about lawyers who switched firms, only to be dogged by sexual misconduct allegations soon after.

James Tanenbaum, a capital markets lawyer, resigned from Mayer Brown last year, about a week after he joined the firm from Morrison & Foerster. His resignation came amid reports that Morrison & Foerster had investigated allegations of sexual misconduct made against him. Tanenbaum has forcefully denied accusations that he acted inappropriately toward female colleagues.

While Tanenbaum and others like him might make headlines, it’s unclear how common it is for a lateral hire to leave a new firm in the wake of a harassment or misconduct allegation. According to a recent survey of 50 firms by ALM Intelligence, 8 percent of respondents said that within the past five years they have had a lateral hire leave the firm because of actions the firm thought were unethical. A larger number, 40 percent, said they had lateral hires leave because of “behavioral issues” involving staff or junior lawyers at the firm.

Industry observers say even a single instance of mishandled misconduct could damage a firm, specifically when it comes to its reputation among prospective partner hires and others in the market. But even as firms have quickly recognized the risk of bringing on a lateral hire with a history of inappropriate behavior, they haven’t yet learned how to root out those issues in the hiring process.

“This is hitting them so fast,” Ellenhorn says. “They’re trying to navigate this in the best way they can.”

Hiring lateral partners is a critical way for firms to grow practice areas or expand geographically, and a new hire can bring business in the form of client relationships that open up work opportunities for lawyers throughout the firm. But adding a lateral partner is a risky endeavor, with so much that can go wrong, according to industry experts.

“In the professional liability space there has been, for a long time, a conventional wisdom that laterals present significant risk,” says Dan Donnelly, head of claims at ALAS, a malpractice insurer to large law firms. He cautions, however, against making too sweeping a conclusion—at least in the context of professional liability insurance costs—from that conventional wisdom. “It’s one of those things that is on the radar as a problem, but I would say statistically it hasn’t borne out to be any kind of crazy problem.”

In one common failed lateral scenario, either a partner or a legal recruiter might inflate the size of the business the lawyer can realistically bring to a new firm. Or perhaps the lawyer has a pending malpractice claim related to previous work, or maybe they’re just a chore to work alongside, with a tendency to put off fellow employees. In the ALM Intelligence survey, those types of issues stand out as key reasons for a lateral partner to leave. Ninety-two percent of firms said they have had a lateral leave within the past five years because he or she failed to bring the expected book of business, while 80 percent of firms pointed to an inability to form new client relationships as an issue that drove away laterals. Seventy-four percent of surveyed firms said they have had laterals leave because of issues fitting in with other partners.

Howard Rosenberg, co-founder & CEO of Decipher.

Ellenhorn and Decipher co-founder Howard Rosenberg break lateral hiring risk into four categories that tend to overlap: legal risks, such as conflicts or malpractice claims; business risks, such as an anemic book of business; cultural risk, in which a lateral doesn’t fit within the new firm’s work culture; and reputational risks, in which issues with a lateral hire are effectively imputed…

Original Article Source…

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