Risk Update

Lateral Hiring — Recruiter Conflicts, Intrigue, Interesting Data & News

Not ethical conflicts (well, not in the sense we typically think about and cover them) but interesting developments and insights into the lateral market that caught my eye and I thought worth sharing:

Headhunter’s Case Against Freshfields Over Lateral Hire Narrowed” —

  • “Headhunting agency Boston Executive Search Associates Inc.’s case against Freshfields Bruckhaus Deringer US LLP over the law firm’s lateral hiring of a partner will be narrowed, but not dismissed entirely, a Massachusetts federal court said.”
  • “The international law firm contacted the headhunter in August of 2018 to discuss potential help in recruiting for one of its practice groups, according to the complaint. The agency sent the firm a copy of its standard agreement for recruiting services, but Freshfields didn’t sign it. Instead the firm sent back its own contingency fee agreement which differed materially from the agency’s, including by imposing a fee cap. Boston Executive countered with its standard agreement again, but Freshfields still didn’t sign.”
  • “While these negotiations were ongoing, Boston Executive contacted Ethan Klingsberg, a partner at Cleary Gottlieb Steen & Hamilton, who responded positively to the possibility of joining Freshfields, the agency said. When told of this, Freshfields allegedly expressed great interest in recruiting Klingsberg, but soon after asked the agency to hold off its recruiting efforts.”
  • “In October 2019 Freshfields announced it had hired Klingsberg and three associates from Cleary. Freshfields reportedly told Boston Executive the agency had played no role in the introduction or placement of Klingsberg and wasn’t owed any compensation.”

Headhunter Lawsuits Shed Light On Fierce Lateral Market” —

  • “And because of the slowdown caused by the COVID-19 pandemic, D’Amore and recruiters in other markets said they are expecting the competition for these partner candidates to be even greater, especially now that a number of law firms are putting a pause on recruiting associates.”
  • “‘So, people who can bring revenue, particularly in tough times like this, are in very high demand,’ D’Amore said. ‘Firms often will pay a premium, even in difficult times, because of how important revenues are [to the firms] now.'”
  • “Because law firms are private entities, it allows the attorneys to keep their compensation figures under wraps. Recruiters, however, have access to that information. Therefore, the lawsuits they file often provide a glimpse of some lawyers’ compensation.”
  • “ESA is seeking 25% of Klingsberg’s first-year compensation, which is reportedly $10 million. The recruiting firm also claims it should get 25% of the first-year compensation for each member of the team Klingsberg brought with him, which included three other attorneys from Cleary Gottlieb.”

I was curious about general trends in lateral movement, and a quick search found note of one such “spree”: “Cozen O’Connor, on Lateral Hiring Spree, Adds New Corporate Governance, Securities Chair From Ballard Spahr” —

  • “In an effort to grow its corporate practice, which it cites as a generator of business and client relationships across the firm, Cozen O’Connor has brought on a new practice group leader from a fellow Philadelphia-based law firm… There are about 10 attorneys in the group, and the firm has plans to grow it. Cozen O’Connor’s strategy is to grow its corporate group, with about 70 attorneys to date.”
  • “Cozen O’Connor has brought on 13 corporate attorneys in the last month, 10 of whom are based in Philadelphia, including Jaffari’s hire and its acquisition of nine-lawyer tech and corporate boutique Baer Crossey McDemus. The firm also announced last week that it added a five-lawyer group of litigators from Akin Gump Strauss Hauer & Feld, also in Philadelphia.”