By: Bill Myers

April 18, 2005, Chicago Daily Law Bulletin

Chicago law firms used to cultivate talent.

Now they poach it.

Between 1998 and 2003, Chicago law firms made 3,301 lateral hires, according to the National Association of Law Placement, a Washington, D.C., nonprofit that tracks employment trends in the legal profession.

The pace of lateral hiring over that period has not been consistent, but experts say that the upward trend is unmistakable.

"Just eyeballing the data, you could see that it's growing at a very, very fast rate," said Brian Uzzi, a Northwestern University sociologist who studies the legal profession.

Uzzi and Northwestern doctoral candidate Ryon Lancaster are at work on a paper on lateral hiring in the legal profession, which they hope to publish by the fall.

But NALP's figures support Uzzi's provisional conclusion. According to NALP's most recent report, issued at the end of March, lateral hiring in the Chicago market was projected to have jumped nearly 34 percent from 2002 to 2003.

Chicago's firms made 530 lateral hires in 2002 and were projected to have made 709 lateral hires in 2003, NALP reported.

"Frankly, the way to judge a firm's success is by how well they've been able to attract significant laterals, not just in their overall growth," said Gary M. Wolfson, a partner in the consulting firm of Blackman, Kallick who specializes in legal recruiting.

Uzzi said that lateral hiring makes good business sense.

"You reach a limit of the number of associates that a partner can keep busy. You hit a ceiling by just getting new kids out of school. But if you get lateral hires, they bring business with them. They pay their own freight," he said.

Uzzi said that the emphasis on lateral hiring is yet another sign of what he calls the corporatization of the legal market.

"The norms of the business have changed somewhat. It used to be frowned upon to cherry-pick. It's now become something like just normal business," he said.

In earlier research Uzzi and Lancaster have found support for the claim that law firms are becoming more like corporations.

Firms have brought in business managers, centralized hiring authority, farmed out secondary functions like marketing to outside professionals and, in many cases, abandoned the relatively informal partnership business model for the relatively formal corporate business model.

Under the corporate model, lawyers at law firms are treated like staff attorneys at in-house departments of big businesses -- they work for a flat salary, at reduced hours, with the understanding that partnership is out of the question.

Lateral hiring complements that trend, Uzzi said.

The disadvantage of making lateral hires under the partnership model is that "you don't have the benefit of having watched them grow up from within the firm," Uzzi said.

"But what you can do now is to make lateral hirings of staff attorneys. These lateral hires can be brought in -- but not with the same guarantee of permanent employment that a partner would have," Uzzi said.

Wolfson, the legal recruiter, agrees. He said his own career is proof of the legal profession's shift to the corporate model.

Wolfson spent the first three decades in business as a corporate recruiter. But in 1989, Arnstein & Lehr LLP hired him to find new partners.

Other firms followed. Within five years, Wolfson's legal recruiting business had grown so much that he dropped corporate recruiting altogether.

"That's all I do, is move partners from law firm to law firm. I have people in my group that specialize in associates and even paralegals," Wolfson said.

All of the foregoing is great news for recruiters like Wolfson, but it leaves some lawyers worried that the legal profession is sacrificing professionalism for profit.

"The problem that has to be analyzed is, whose interests are served when one considers these lateral moves? If it's the lawyer's interests we're looking at, the question has to be, what are the implications for that lawyer's clients?" said Robert P. Cummins, name partner of Cummins & Cronin LLP and a former member of the Attorney Registration and Disciplinary Commission Review Board.

When lawyers can jump from firm to firm, it widens the exposure to damage from ethical lapses, Cummins said.

"It can be a little like chicken pox -- you kind of spread the virus," he said.

But proponents of lateral hiring say that the individual attention to a single candidate gives a law firm a better chance to vet lawyers than a merger does.

Some law firms grow exclusively by lateral hires.

"My life these days is lateral recruiting," said Keith J. Shapiro, co-managing shareholder of the Chicago office of Greenberg, Traurig LLP.

Shapiro says that, over the last decade, Greenberg, Traurig has become one of the U.S.' largest law firms -- without a single merger.

Lateral hiring actually increases a lawyer's loyalty to the new firm, Shapiro said.

"When you do a merger, you run the risk that people are coming because the firm is coming, rather than because they want to be part of the culture," Shapiro said.

In fact, some head-hunting law firms see mergers as opportunities to swoop in and swipe top talent, said Raymond J. Werner, chairman of the executive committee of Arnstein & Lehr LLP.

Of Arnstein's 32 equity partners, 20 were lateral hires -- including Werner himself.

Werner says that mergers often create two waves of defections.

"Before the merger, there's some people who don't want to merge. After the merger, people see that their expectations are frustrated," Werner said.

One example of the latter group was found last month, when Arnstein hired four partners away from Michael, Best & Friedrich LLP.

The four defectors had worked together at Schwartz & Freeman, which Michael, Best absorbed four years ago.

The four lawyers attributed their leaving to a clash of cultures since the merger.

The day after the four partners' defections to Arnstein were announced, Thomas E. Obenberger -- Michael, Best's Milwaukee-based managing partner -- came to Chicago.

Why?

"We've got interviews scheduled with laterals," he said.