Bringing a lateral partner into a firm can be very advantageous, but it is equally bold. If not planned and executed well, it can be a very expensive and disruptive exercise for a firm.
When a firm invests in a senior lateral appointment, they often seek new clients, additional revenue and increased expertise. Unfortunately these benefits do not simply appear immediately after the person starts and without careful planning, they may never appear at all.
Bolstering the firm
Appointing a lateral partner or senior role can supercharge a group, or even a firm. An attractive lateral hire likely holds trusted relationships with prospective clients that the firm would love to have on it’s books.
MTo be effective, a lateral hire needs to bring either new clients, new work or both. If expecting new clients, then a firm needs to strategically consider it’s current relationship network, the relationship the new partner brings and most importantly, how they intersect.
The ‘Goldilocks’ zone
Too hot – If a lateral appointment holds the same relationships the firm already holds, then they may not necessarily be expanding the firm’s network, bringing new clients or new work.
Too cold – The lateral hire may have a network that is mostly foreign to the firm. The firm may share no or few relationships with the lateral hire and this may seem attractive. The problem is that if the firm doesn’t hold any supporting relationships, then the reality is that one person alone (however important, experienced or connected the lateral hire may be) they are very unlikely to lure a large client away from an incumbent firm. Large clients will often hold deep relationships with the firms they use, working with a range of people and often across a number of groups. The movement of even a senior individual when considered against the sum of the commercial relationship, may simply not be enough to warrant changing firms.
Just right – Just right – Ideally the lateral hire holds many strong relationships with those that are in the firm’s orbit, but not quite in the firm’s reach. Buy bolstering the firm’s relationships, those otherwise elusive clients may become obtainable and the senior appointment may be exactly what is required to tip the scales in favour of the firm.
One lateral hire alone should not be trying to break the firm into a new industry or area. They should be making your firm much more compelling to those ideal clients that would have considered you, but maybe never used the firm in the past.
Assessing your network for the right fit
Carefully assessing your firm’s relationship network will expose the relationship gaps that stand in the way of working with your ideal clients. With these gaps understood, you will have clarity on the relationships that would ideally be held by your lateral appointment.
No matter what the potential upside of the appointment is, most are aware that such appointments are sure to ruffle the feathers of aspiring partners / directors within the firm, meaning it simply needs to work.
Is it working, what are the signs?
Having brought the person in, now all you need to do is wait and hope for the best, right? No, not if this appointment is a very costly, strategic initiative that is linked to the firm’s growth targets. The reality is that there is no certainty that your new hire will be able to deliver on the promise of luring the clients you had identified.
While the promise of the new clients or increased work may take some time to eventuate, it is important to understand as soon as possible if there have at least been any in-roads. Too often, I have seen firms wait 6, 9 or even 12 months before they recognise that the lateral hire is not working and is not likely to bring those targeted clients across.
In many cases, a clear lack of contact with the individuals or companies that were identified as targets, would almost certainly have flagged this issue much earlier. While not completely impossible, the reality is that if the lateral partner has had little or no contact with these pursuits within the first 3 or 4 months, the likelihood of seeing those potential clients come across within 12 months is very slim.
Acquiring new relationships for a firm can be extremely powerful, however without the appropriate due diligence and clarity, there are significant risks. The appointment of a lateral hire can do wonders for a firm. However, without clearly identifying the strategic relationships and tracking progress, it is simply a case of hoping for the best, in a very costly way.