Lateral Moves for Attorneys: What You Need to Know

By: Hilary Gerzhoy, Amy Richardson, HWG LLP, and Lauren Snyder SAS

THIS ARTICLE PROVIDES GUIDANCE FOR AN attorney relocating to another firm, and covers topics such as what to consider when considering a lateral move; how to navigate your ethical responsibilities; and practical tips for associates, counsel, and partners.

The days of staying at the same firm for the duration of one’s career are mostly a thing of the past. From junior associates to senior partners, lateral moves are commonplace. There are, however, a number of obstacles to a successful move. While this article provides high-level guidance, anyone considering making a lateral transfer should consider consulting counsel to understand any unique requirements, jurisdictional, or otherwise.

What to Consider in Making a Lateral Transfer

If you are considering making a lateral move, you should consider the following four topics:

• The new firm’s structure
• The new firm’s benefits and your proposed role
• The new firm’s compensation structure
• If applicable, the new firm’s partnership agreement and engagement agreement

You should also consider whether the founders of the firm are still present. If they are, that means the firm has yet to undergo the generational transition to new leadership and, if you join, you may become part of that transition, which can be difficult.

Beyond looking at the website to determine basic information about the firm’s structure, you should inquire about the financial health of the firm. For example, ask how much debt the firm has, and try to learn how much turnover occurs at the firm by asking how long various attorneys have been there.

Regarding benefits, beyond asking about basic benefits like health insurance and 401(k) matching, you should ask if there is a defined benefit pension plan that is unfunded and closed to new entrants. If the plan is not closed, ask if you will have enough years of service to qualify at a reasonable age if you stay.

If you are planning to bring others with you, particularly if they are essential to your practice, you should discuss how the firm will pay and promote those people. Also consider whether you will need the help of other lawyers already at the firm to support your practice. If so, figure out who will be able to assist you. If you are instead supplementing an existing practice at the firm, consider carefully how you will fit in.

In terms of compensation, you should ask how it is determined and who makes that determination. For the first year or two, the firm may guarantee a certain level of compensation and, if you are a partner, consider how much business you need to bring in to be paid that amount, both in those first couple of years and going forward. Also ask about the capital contribution and the ways to pay it. You may be expected to pay it immediately or, as is often the case, you may be able to borrow a portion of it and repay it over time. Also be sure to negotiate your billable rate at your new firm to help make the transition easier for existing clients.

Finally, review a partnership agreement carefully. Look at the section regarding withdrawing partners, in particular, to see how the firm handles withdrawal and other issues that may arise when a partner withdraws. You should also ask to review the firm’s standard engagement letter and compare it to your existing agreements with clients to see if there are significant differences that might impact your relationship with your clients. Broad advance waivers, for example, could create tension with existing clients.

Practical Tips for Associates and Counsel

There are certain core considerations that associates and counsel should make before making a lateral transfer. You should start by looking at the firm’s website to assess the firm’s structure. Determine the ratio of partners to associates and whether there are different types of partners (i.e., equity and non-equity partners). If you are a junior lawyer, be aware that firms with few partners or two-tiered partnerships may offer fewer advancement opportunities.

Note that it can be tempting to make a lateral transfer when you are having a difficult stretch at work. But be careful not to let this temptation cloud your judgment. Recruiters are paid to induce lawyers to move between firms. Pressure test the promises, such as:Is it really a firm that cares about work/life balance?

• What is the billable hour requirement and what counts towards it?
• Are you encouraged (or required) to do business development and will you get credit for the time you spend doing it?
• How much autonomy will you have in developing your practice?

Many firms place associates and counsel into designated practice groups. Find out if your potential practice group will have enough work to ensure that you will be able to meet your billable targets. If not, will you be allowed to get work from other practice groups?

You should also seek answers to the following questions:

• What percentage of associates and counsel were bonus-eligible in years past?
• In a multi-office firm, can you work with partners in different offices?
• What does the path to partnership look like?

If you’re moving as counsel, you’ll want to know:

• What targets do you need to meet to be considered for partnership?
• How many counsel make partner in a typical year?
• If associates are given a pay bump or mid-year bonus, will counsel be given an equivalent bonus?

It’s important to know the answers to these questions before making a move. Once you secure an offer, ask to speak to senior associates and counsel in the office to ask these questions.

For additional guidance including tips for partners, and responsibilities related to current clients, files, notice, and conflicts, please follow this link to read the complte article in Practical Guidance.

Not yet a Practical Guidance subscriber? Sign up for a free trial here to read the complete article.

Hilary Gerzhoy is a partner at HWG LLP and Vice Chair of the firm’s Legal Ethics and Malpractice group. She represents lawyers and firms in disciplinary investigations, prosecutions, and malpractice matters. Hilary counsels lawyers regarding conflicts, advertising, fee disputes, the unauthorized practice of law, partner admissions, and law firm formations and dissolutions to avoid problems before they arise.

Amy Richardson, a partner at HWG LLP, is managing partner of the firm’s Raleigh office and Chair of the firm’s Legal Ethics and Malpractice group. Her practice focuses on legal ethics and professional responsibility matters, white collar defense, and complex commercial litigation. Amy counsels and advises lawyers and law firms in partner admissions and departures and law firm dissolutions.

Lauren Snyder is a former partner at HWG LLP. She now serves as legal counsel at SAS.

To find this article in Practical Guidance, follow this research path:

RESEARCH PATH: Civil Litigation > General Litigation > Practice Notes

Related Content