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PROLOGUE |
As
the economy has slowed, the demand by law firms to expand
or shore up their ranks with rainmakers and groups has
become increasingly important. Indeed, the terrible tragedies
of September 11, 2001 have created a climate of fear in
the business world with a resulting increased slow-down
of business. The result for law firms - the need to increase
their business by adding lateral rainmakers and groups
of attorneys.
In
this atmosphere, it becomes vital for law firms to work
hand in hand with attorney search firms to meet the law
firms' needs. This article is intended to help law firms
understand the various relationships available to work
with attorney search firms, and which is the most suitable
for their needs.
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| I.
How Attorney Search Firms Work. |
Attorney
search firms work and are compensated in several different
ways. In order to decide when and how to work with attorney
search firms for a law firm's needs, it is important to
understand the different working relationships and compensation
options for attorney search firms and how the relationship
chosen will impact the speed, effectiveness and likelihood
of success in any specific search at a law firm.
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| II.
Retained
Search v. Contingency Search |
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A.
Retained Search
In a
retained search, a law firm pays an attorney search firm
a portion of a placement fee in advance to conduct a specific
search. The retainer fee is deducted from the final placement
fee once a candidate is hired; however, it is nonrefundable
-- the attorney search firm will keep the retainer even
if no placement is made.
1.
Advantages: Firm is paying the retainer for the
attorney search firm's time and effort. Attorney search
firm prioritizes and agrees to devote a set amount of
time to the search and present qualified candidates to
the firm for consideration and is accountable to the firm.
Good for difficult and very important searches where candidates/groups
are hard to find. Greatly increases likelihood of effective
and successful search. It also demonstrates the seriousness
of the search to potential candidates. Creates a close
bond between law firm and attorney search firm.
2.
Disadvantages: Firm is paying up front and out
of pocket for cost of attorney search firm, without guarantee
that attorney will be hired. It is therefore critical
to choose an attorney search firm that understands and
can promote the law firm's culture and values.
B.
Contingency Search
Law
firm provides job search information to a number of attorney
search firms and will only pay the attorney search firm
from whom a candidate is hired.
1.
Advantages: No up front cost to law firm. A number
of attorney search firms may choose to work on search,
if very attractive position. Most commonly found in associate
searches.
2.
Disadvantages: Attorney search firm will not spend
significant (and often no) time on search because competing
attorney search firms are involved and therefore, the
attorney search firm's chance for successful completion
is reduced. Makes attorney search firms be more candidate
driven, rather than client/firm driven. Search firm will
not promote law firm over other contingency law firms.
No long-term relationship created with attorney search
firm.
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| III.
Exclusive v. Non-Exclusive Search |
A.
Exclusive Search
Law
firm agrees to work with only one attorney search firm
to conduct search for candidate. In a true exclusive,
the attorney search firm is guaranteed a fee for placement,
regardless of source of candidate. Exclusive searches
can be set up to allow the law firm or company to hire
a candidate without paying a fee to the attorney search
firm, if that candidate independently contacts the law
firm or company directly with no direct or indirect knowledge
of the search through the attorney search firm's activity.
Can be used in either retained or contingency search format.
1.
Advantages: Attorney search firm has more incentive
to work search because it is more likely that attorney
search firm will earn a fee from the search (even if
not retained search) since competition from other search
firms is eliminated.
2.
Disadvantages: Law firm only has one attorney
search firm working on the search. Depending on the
attractiveness of the position, may be advantage or
disadvantage to grant exclusive search to one attorney
search firm.
B.
Non-Exclusive Search
Law
firm will accept candidates submitted by multiple search
firms and will only pay fee to search firm who successfully
places candidate. Can be used in either retained or contingency
search format.
1.
Advantages: Law firm ostensibly has numerous
search firms working on its search. There is arguably
greater potential for a larger candidate pool.
2.
Disadvantages: Depending on the position, attorney
search firms may be less inclined to devote time and
resources to the law firm's job listing because of the
lesser likelihood that the search firm will have the
successful candidate for the job. Often, the search
firm will not pursue any active search for the law firm
and will only send candidates who are interested in
the law firm or the specific position.
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IV.
Recruiting Relationships, Compensation and Effect on Attorney
Search Firms' Allocation
of Time and Resources
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|
A.
Attorney Search Firms Allocate Time and Resources
Based Upon A Business Model
Attorney
search firms differ, but there are several rules that hold
true for all search firms. Recruiting is a service business.
Accordingly, attorney search firms are more inclined to
devote time and resources to "good" clients with whom they
have a close relationship (law firms or companies that have
hired from the attorney search firm in the past, dealt with
the search firm in a fair and equitable manner regarding
compensation and/or have given them a retainer or exclusive
search). It just makes good business sense for a attorney
search firm to devote time and resources and service those
good clients. Conversely, law firms that have not given
a attorney search firm a retained search, or an exclusive
search, or who have been unwilling to pay market rates for
attorney search services are not likely to get the attention,
time or resources of a reputable attorney search firm.
B.
Advantages of Using Attorney Search Firms.
There
are many different reasons why a law firm should consider
using an attorney search firm for some or all of its hiring
needs. Attorney search firms can save time for a law firm
by only submitting qualified candidates for positions and
the firm does not have to review and consider large numbers
of unqualified candidates. In addition, attorney search
companies have the ability to solicit qualified candidates
for positions, thereby potentially delivering the perfect
candidate for the job, even where the candidate was not
actively searching for new employment. This is especially
useful in areas of law that are in high demand and where
there are limited numbers of qualified candidates. Especially
in today's market, with high demand for a number of limited
rainmakers and groups, search firms will typically be vital
to a law firm's success in lateral hiring.
C.
Expense of Using Attorney Search Companies.
Most
law firms are aware of the services and value provided by
attorney search firms and believe that their fees are justified.
Most search firms charge 25% of the first year guaranteed
compensation for associates. For individual partners, compensation
is typically 25% of the total first year compensation. Billing
is typically done in two phases - initial invoice based
on estimated compensation and second invoice after one year
for adjustments. For groups, the fees are negotiable, but
search firms generally charge at least 25% of total compensation
paid for the 3 highest paid lawyers in the group.
Clients
sometimes operate under the mistaken assumption that search
firms do little more than send in a resume and collect a
fee. If that were the case, then objections to the fees
would be somewhat justified. However, clients do not understand
nor appreciate the time and effort that goes into finding
qualified candidates, submitting them to the firm, preparing
the candidate for interviews, facilitating the interview
process and assisting in salary negotiations. Search firms
help expedite the attorney search process, review and reject
unqualified candidates and can fill critical hiring needs
in a short period of time, saving clients both time and
money.
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V.
Services that Full-Service Search Firm Should Provide to Law
Firm Clients.
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|
A.
Candidate and Client Profiling
A full-service
search firm should work closely with the client law firm
to ensure that clear objectives and expectations are established.
Search firm should clearly outline the potential career
opportunity, should ascertain the corporate culture of the
firm and should determine the specific responsibilities
of the position.
B.
Research and Screening
A full-service
search firm should identify all potential candidates for
a job search using many different resources. These should
include an in-house database of candidates and contacts,
personal contacts and knowledge of the search firm and in-depth
research.
C.
Candidate and Client Preparation
A full-service
search firm should spend time with qualified candidates,
providing continuous advice, counsel and coordination required
during the interview process. The search firm should ensure
that candidate and client have the appropriate information
and briefing materials. A search firm should effectively
manage the process for both candidate and client.
D.
Retention Support and Counsel
A full-service
search firm should believe in a value-added relationship
with clients. There should be ongoing contact between the
search firm and the client regarding their satisfaction
and ongoing employment needs. A search firm can also be
a valuable resource and provide special counsel to clients
on human resource management issues. A search firm should
also be able to assist a client with its outplacement needs
when they arise.
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| DISCLAIMER:
This discussion is general in nature and is not intended to and does not create
a lawyer/client relationship. This discussion should in no way be relied upon
or construed as legal advice, particularly since most legal outcomes are highly
dependent on the facts of a particular case or situation. This discussion is provided
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information by someone who has not entered into a written retainer agreement with
the lawyer providing the discussion information is at the reader's or recipient's
own risk. |
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