Lateral Hires Print
Key dates start with the first day
If work is transferred with the new joiner then your firm is likely to assume responsibility for any key dates applicable to that work, from the date of transfer. It may be prudent to require the lawyer to ensure that, prior to file transfer, all key dates are clearly identified. Resources should be made available to review these and ensure they are accurate, and correctly entered into departmental centralised diary systems on the first date of employment. This should be a high priority action.
We have seen instances of such key dates having been missed within the first few weeks of a lawyer joining the new firm, giving rise to potentially significant claims against the lawyer’s new firm.
Adaptation and Induction
New joiners should be trained on departmental systems and procedures promptly. This should never be left in abeyance.
Although certain senior lawyers will have their own preferred way of working, they should be required to comply with the department’s procedures. This should be made clear at interview and be an express condition of their employment.
New joiners may have helpful suggestions as to how working practices/procedures/systems could be improved, such feedback should be welcomed (whether at a follow up interview or at periodic departmental reviews). Consider asking them to make a note where working practices might be improved, but to adhere to existing procedures until any changes can be agreed or otherwise. Such changes should be co-ordinated at departmental level; the revised procedure should be agreed and approved for all fee earners, not applied on an ad-hoc basis.
Mentoring and Oversight
Remember, on rare occasions there may be a good reason why the lawyer’s previous firm did not fight harder to keep them.
Consider a period of oversight and mentoring by a senior colleague, peer review and/or a junior support lawyer to ensure the new lawyer’s work meets the firm’s expectations as to cultural approach, quality and process compliance. Explaining that this will happen at interview may assist.
Consider arranging informal introductions and get-togethers with lawyers from other departments. Giving lateral hires a wider role in the firm than purely their fee earning/departmental role can also be a useful step, e.g. as part of a multi-departmental working group. Such steps can be useful for client introductions and ‘cross-pollination’ of ideas with other departments, but also to assist in getting to know them and in obtaining a fresh perspective on the new jointer’s cultural ‘fit’ and their ability to adopt a collaborative approach from individuals who are not influenced by working with (or for) them day to day.
It may be prudent to audit a sample of files that have been transferred as part of the above process at an early stage, followed by a further audit after a few weeks of work to ascertain process compliance and identify areas for further training/discussion. It should be explained at interview (with the support of the sponsor of the lateral hire) that such audits are a standard requirement for all lateral hires to ensure a smooth transition of work.
Business Case Evaluation
Always recruit to a business plan. Be cautious in relation to over-optimistic assurances about the value of following work. Stress test the business case, evaluating and documenting the following scenarios (as well as monitoring performance):
- Worst case
- Realistic (perhaps divide the best case by two and see if it still makes sense)
- Best case
Consider who may be best placed to interview the lateral hire to assess the lawyer’s suitability and the viability of their business plan. Often this is the Managing Partner, but consider who else may be appropriate.
When promised work from former clients does not materialise but unexpected work streams become available, early dialogue with management should be encouraged. Otherwise, high risk ‘dabbling’ can occasionally emerge to ‘top up’ an unsuccessful business plan. Dabbling in new areas is to be discouraged. New work should first be assessed for a business plan and project managed and resourced appropriately.
Post recruitment, a meeting with the Head of Risk should be encouraged so as to introduce the new joiner to the risk culture of your firm and personalise their responsibility within that culture.
Not every client is right for your firm. All client following should be subject to client due diligence, conflict searches and objective challenge/questioning of ‘strategic fit’ with what your firm/department is aiming to achieve. We have seen rare occasions where the lateral hire was advised not to bring a certain ‘high risk’ client but did so anyway, with claims and complaints being the predictable result.
Restrictive covenants should be identified and honoured, not least to avoid harm to your firm’s reputation and litigation with the lawyer’s previous firm.
That said, a client is free to choose their own representation and on some occasions a client will insist that their work is transferred to the new firm, despite a restrictive covenant. A candid approach to the previous firm politely asking them to lift the covenant is sometimes met with a positive response; not least because there may of course be a reciprocal request, with time.
A Unique Risk?
Where the lateral hire is in a developing/niche area in which the firm has little or no existing expertise, it is crucial to have some means of oversight and in particular, support. Often this will mean recruiting more than one lawyer in a niche practice area. Consider who will be able to pick up their work in their absence, or provide support/peer to peer review. Consider early introduction to lawyers from other departments with a similar skill sets/specialism to see if certain responsibilities can be shared or back up provided (with appropriate training); it is best to avoid ‘one man bands’ and ‘silo working’ where possible.
In circumstances where this cannot be avoided, regular and informal meetings with the Head of Risk can be crucial to ascertain what safeguards can be put in place, and so the individual’s burden can be shared insofar as is possible. The meetings should be from a perspective of showing that the specialist lawyer is valued, and has the support and resource of the firm available to assist them as may be appropriate.
Checks and Measures
Prior to recruitment, the lawyer should be asked to provide details of:
- All claims made against them during the last [e.g. five] years.
- All complaints made against them during the last [e.g. five] years.
- Whether they have ever been refused a practising certificate or granted a conditional practising certificate; or been the subject of a costs or penalty order or reprimanded by the Disciplinary Tribunal; or been subject to an investigation by the SRA, the Law Society, the Legal Ombudsman or any other regulatory body.
It may be prudent to verify the responses with similar enquiries of the SRA/regulatory body (making use of web based searches of publically available records).
For foreign lateral hires, ensure that they have a valid certificate of good standing, and that certification provided is from the correct local bar.
It is not always cost efficient to undertake full background checks particularly if recruiting numerous lateral hires, but consider whether it may be sensible to undertake a limited sampling exercise of checking some records, if not all.
Conflict of interest / Confidentiality
Both prior to and at interview, care should be taken to remind the potential recruit not to disclose confidential client or employer information, whilst at the same time gaining as much non-confidential information as possible!
To the extent that is possible, identifying potential conflicts in advance of hiring the individual is of course preferable to an allegation levied after recruitment that the lawyer (and the firm) should not be acting in a particular matter.
Care should be taken to ensure that lawyers are not required to act on matters where they may have previously had access to another client’s confidential information relevant to the case. As such, lawyers should be encouraged to identify any such concerns at the earliest possible stage, so that appropriate measures can be taken to isolate them from the case (e.g. via information barriers and / or short term gardening leave as appropriate).
Conversely, if a potential recruit breaches client or employer confidentiality in the interview, consider carefully whether this person is a suitable recruit. Be mindful of your firm’s reputation and regulatory requirements. There is of course every likelihood that they might do the same when they decide to move on.
Clear guidance (perhaps in contracts of employment) should be given to employees as to what they can and cannot divulge to prospective employers/third parties. Carefully drafted restrictive covenants can also assist.
Consider whether a contractually enforced period of continued employment may be counterproductive. Will it simply afford them more time to gain access to commercially sensitive information, undermine morale and persuade others to ‘jump ship’?
Be mindful of the potential risk of holding unhappy employees to notice periods with full access to firms systems (including client databases and Intellectual Property). Question whether any or all of the following measures may be sensible in the particular circumstances:
- Gardening leave with immediate effect.
- Review of email communications.
- Monitoring which systems are being accessed.
- System privileges being withdrawn with immediate effect – this should include the remote wiping of any electronic devices not returned immediately.
- Security pass cancellation.
There should be a checklist available (usually held by and activated by the IT department) so as to ensure all appropriate steps are taken where appropriate.Since Libra Managers act as agents for professional indemnity underwriters, our comments are necessarily given from a professional liability and loss prevention perspective only. You may well consider it appropriate to obtain further views and advice on this subject either internally or externally.