Steve's Rules with legendary executive recruiter Steve Nelson from the McCormick Group
Steve has been an executive recruiter for nearly three decades and without naming names, he is ready to spill the tea on best practices (and maybe a few not so best practices) by firms and candidates he has seen during his career placing some of law's most driven and successful professionals into highly profitable and growing enterprises across the legal sector. Steve is a former lawyer and journalist and is a Fellow of the College of Law Practice Management and a proud son of Wilkes-Barre PA. Master of Ceremonies for Steve's Rules is Murray Coffey Principal of M Coffey mcoffey.net
Steve's Rules with legendary executive recruiter Steve Nelson from the McCormick Group
Steve throws out the book
Murray, welcome to Steve's rules, periodic podcast featuring Steve Nelson, executive principal at McCormick group in the law and government affairs practice. My name is Murray Coffey, and I am the principal of Adam Coffey, a law firm marketing and business development Boutique. For more information, please visit my website at M coffey.net Steve has been an executive recruiter for nearly three decades, and without naming names, he is ready to spill the tea on best practices, and maybe a few not so best practices by firms and candidates that he has seen during his career, recruiting some of the most driven and successful professional into highly profitable and growing firms. Steve is a former lawyer and journalist and is a fellow of the college of law practice management and a proud son of Wilkes Barre, Pennsylvania. Full transparency here, Steve has helped my career immensely through the years and has become something of a career shaman to me and I know many others. Hey Steve, welcome back. We are at episode four. Are we in episode four? Is this episode four? Of Steve's rules? Sounds
Steve:like Star Wars. You know it's like, go backwards. You know we're
Unknown:gonna go backwards. Yeah, we're at, we're at episode three, but, but anyhow, we are it. We're cranking along here, which is great. How are you today?
Steve:Oh, good, good. It's, it's August, the end of August. So, yeah, you know, you would think that, you know, I'm just laying around the house, but it's been active. It's been
Unknown:active, yeah, yeah. And speaking of activity, you know, and we'll dive into our subject, which is one I am so interested in hearing your thoughts on, but, but let's talk for just a minute about a couple of bit of the marketplace intelligence that that McCormick Place is so great at known for just released a couple of key reports. I think we got the DC report, we got the Texas report. And, you know, for those listeners who remember our first episode, we talked a lot about the nature of recruitment out of the federal government, and kind of that niche that McCormick group and you have have built over the years. So what are you seeing? What's going on? What kind of trend are you picking up on? Right?
Steve:Well, definitely, I think it continues to be busy for the summer, surprisingly busy, particularly in DC, Texas has been more static, but the market is strong. There's a fair number of group moves. There's a total number of moves. You know, is high, higher than last year. And last year was a good year. And I and we saw in July, 14 moves from the federal government into firms in Washington, which is a pretty high number, and we expect it to increase, as we indicated earlier in one of our podcasts. This is the time for a lot of government people, for them to move, because once you get into 2024 they're going to be heavily, heavily demanded that they stay in the administration until the end. So I think we're we'll see a number of moves now and then we see, let, we'll see last next
Unknown:year, will they start to tighten down on some of these folks after the primaries, or after the generals? What's the timing of Yeah,
Steve:I think it's really towards the end of this year, once we get into November, December. I think then the the, you know, the agency heads and and the key political appointees, people in the White House, etc, they're going to get the word out that you can't leave us in that in a in an election, because we won't be able to replace you. I mean, who's going to come in in, you know, may of 2024 for what could be
Unknown:a six month period, right? Or so, right, right? So I guess the message for for the for the folks out there who are thinking of making a move is you better get on it. Right? You should already
Steve:be in the process of doing it. You should be in the process. And if you're not, if you're not, it'll take you to the end of the year to find the find the right job.
Unknown:So, and at that point, and the firms have probably, you know, the firms are probably full up on the amount of people they're going to take out of government at some point, you know, they say, Okay, no more. No because, as we've talked. About coming out of government has its own set of issues and all kind of somewhat, you know, related to the topic of today's podcast episode, which is the myth of the portable business. And this is somebody in my role who, you know, worked on helping to evaluate the candidates that were coming into the firm that I was working at. The first thing on everybody's lips was portable business. And, you know, always turning to that end of the end of the LPQ, again, something that we talked about before, to look at, look at at those, those numbers. And as rosy as those numbers always looked, the reality was often not quite as rosy and had implications for the firm. So you know, Steve, talk about, right? But let's go in. Let's go, let's go into levels of detail here. But talk about the the myth, and why it's a myth of portable business,
Steve:right? Well, um, first of all, I wanted, I'd like to point out that in any other industry, any other you know, company recruiting for major positions in corporate America, you know, you, they don't ask these kinds of questions. In other words, you're hiring a CFO. They're not going to ask them, okay? I want to see your balance sheets for your companies the last four years and tell me where you are, where you save money, right? So this is unique among the legal industry, maybe other professional services, certainly big for consulting. There is some of that as well. But so that's the starting point. Second thing is, you're right. It's, it's a preoccupation, and it's, and there's, it's a myth, really, on both sides. Number one is, as you know, very you know, the percentage of of business that actually comes in based on what is, what is projected, is usually somewhere in the 50 to 60% range as an average. So it's not reliable number one and number two, it's it's a misleading, misleading statistic based on what really the law firm is looking for. Law Firm is, in most cases, you're trying to you're trying to recruit talent, people who will be your leaders in the future, people who will develop practices, people will be the go to lawyers for either firm clients or new clients. What they did last year or what they did two years ago, it's only part of the story, and it's probably a pretty small part of the story, because five years down the line, even in the best cases, most of those clients will not be there. They'll get acquired new leadership, new general counsels. And so you're looking at this small snapshot and making judgment calls about how what that means to the value of the individual, and just jumping off one more point on this is what we see often, is that the values that the firm has, oh, that in most firms that they, that they advocate, the values that they want, are the ability to not just bring in business, but to be able to be a resource, if you're the, If you're the, you know, the go to person for ERISA, for example, you you, they want you to be able to be available for their key clients. Plus, if you're, you know, if you're a great corporate lawyer, they want you to actually send work to other lawyers in the firm, maybe to other people who have expertise, and so forth. And so for many of the people who are at other firms, their their originations, or their value to their current firm, it doesn't translate to a portable number that's anywhere close to that. And so all this, you've got a person who's incredibly valuable to their firm and is making their compensation is based on that value, which is based on the actual metrics that the firms use, which relates to managing work and relates to doing the work. It relates to originations. Originations does not always mean portable. And so you're you've got this number that's just like, totally off kilter. And invariably, I think first tend to be so conservative, they'll go with the person with the most reliable portables. And in many cases, that's somebody who doesn't share. Is the IS THE. Called lone wolf. That's the easiest thing, you know that the business is coming, or at least you think it's coming, and that person comes over, and they stay for a few years, and then they find out, you know, they get another offer to go somewhere else for more money, and they'll leave, and they don't give you any value,
Unknown:yeah. And, and in in their wake, they may have left some, you know, some, some destruction behind. I mean, the cultural damage that can be done to a firm by, you know, a lone wolf who decides it's time to eat all the sheep. Is, is, you know, is, is can be significant. And you know the other thing. And you know in conversations with with in house counsel. They don't believe themselves to be at quite as portable as the partners who are saying they're portable are. You know, they may be very supportive of a partner moving from Firm A to firm B for any number of reasons, but if you haven't had that conversation, lateral partner with your with your client, your good client, who you're counting on coming over, about sort of what you're planning on doing, don't expect that to be portable business. And I, you know, and I never, in the time that I was working on this stuff, I never heard an inquiry toward the lateral partner, asking them whether they had spent any time with these key clients talking about the move. Now, sometimes they volunteered it, which is great, but it wasn't an inquiry. There wasn't, you know, wasn't on the LPQ, right? Well,
Steve:there is, there is an ethical question that complicates that issue. And there is even a difference of opinion among legal ethics experts on this. I have heard, I mean, I've heard two different sort of viewpoints. One is the sort of strict viewpoint, which is, you're not allowed, since you're not allowed to solicit clients, that's clear, right, yep, but that has been interpreted by many as you're not even allowed to ask them about to go to a client said, you know, I'm thinking of making a move. I'm thinking of going to x firm. You know, what's your thoughts? That is not directly solicitation, certainly, but sort of hints at it, sure. But some people, some some lawyers, view that as remote. Yeah, there are other lawyers who believe, not only is that permissible, but that, since it is a an event that is has implications for the client, that you actually owe the client, the the responsibility to actually tell them what your plans are. And so there's, it's very unclear. I think that generally, I think because lawyers are risk averse, they tend not to do that, they feel like, well, if I do that, I might be, you know, I might be charged with ethical issues. But of course, it may also be that they're not really sure that the client's going to come, right? So it's kind of a combination of factors. I would say that most of the time, in my experience, most of the time, I think that the lawyers who are, you know, making a move are are pretty much they believe that the clients will come, that it isn't as if they're trying to misrepresent anything. It's more that they don't really understand all what's going on. They don't understand all the different relationships that a client has with a firm. They don't understand you know that it's not just one lawyer in the general counsel's office that that that makes a decision, but it's many, and there may have different relationships, and so therefore, moving that client is not as easy as the partner thinks it would be. And that's where a lot of times, that's where they you know, the disconnect comes what,
Unknown:what we would try to do, and I knocked on tails out of school, because I don't think this is, this is, you know, particularly insightful, but what we would try to do is determine level of stickiness for a for a client to their, to their, if a partner is coming from Firm A, clearly, there's been work that's been done by Firm A what's the level of stickiness to firm A for that client, regardless of what this lateral partner is Saying they can bring over. And so there's ways to look at relationships that this, that this particular client has within that firm and and in not necessarily specific lawyers, but tranches of work. So you know, if there, if it's a litigation client, but. They're also, you know, they're also working with them on labor and employment. They're also working with them on sec. They're also working with them on regulatory issues, all of which you can, you can, if you do enough digging around, you can find out if they've got a lot of if that firm has a lot of hooks in that client, no matter how great that relationship is. Dislodging them may just be literally impossible, that because you can't, you just can't pick up and move 10 years of SEC, representation, enforcement, representation, over to another firm. It's not. It doesn't, it doesn't move that well. So that, to me, was always a question about the level of stickiness that there was with the with the clients. So what do you think the mix of of considerations should be understanding that that you know, book is always going to be part of it, but sort of as you think about about the basket of considerations, how to, how do, how do you apportion? Maybe you don't apportion, but how do you look at that?
Steve:Well, I, I definitely agree that this idea of looking at the at the actual client, and the other relationships within the firm, and the history of that lawyer and so forth. I think firms don't, firms don't pursue those questions as aggressively as they could. I think that my view is that practicality wise, a partner needs to ensure that in their first year going to a new firm, they're going to keep, at least keep themselves mostly busy otherwise. And of course, it depends on the role a person plays and so forth. You know, if you have a lot of work that you're actually projecting to go to the new lawyer, that's a little different. But generally, I think you've got to, I think the firms have to, you know, it makes sense for them to be assured that this person's going to keep busy, because you're not busy. It's a real problem for a lot of reasons. So I think that's number one. I think it's where it really falls down is on the compensation side, because a good of many of these really strong laterals. And they were usually very honest with us when they they'll tell us, well, you know, I'm doing this. I mean, you know, this is my originations, but I can only take so much with me. I be if I'm a firm, I'm going to look more into Okay, where are these originations? What is the originalization? Where is the business coming from, who developed the business? Right? How much you know, how much cross selling is being done? How, what kind of citizen, corporate citizen, is this lawyer within the firm? And I think, and it's a tricky situation for a firm, particularly in an Oh, very open compensation system. But, I mean, I think a firm has to pay what the, you know, the market rate for these attorneys, and the market rate is the first thing to look at is, what are they being paid? Now, right? If a firm is valuing that and the and the metric supported to go, you know, you're going to have to go to your partnership and say, I know that the portables look like this, but three years down the road, this person could be a tremendous contributor to the firm. And of course, all the laterals know that if they don't produce within a couple of years, certainly with two or three, that'll have an impact on their compensation. But compensation is often a barrier. I mean, we've run into that you have two different candidates right now. We've run into that where the you know, the person has a leadership role in a firm is is responsible, not just for his or her his own work, but is also helping recruit people. Is helping develop the work, helping the cross selling of the work that goes to other people and and, you know, the first, just the immediate reaction is, what's the book of business? We can't afford, you know, we can't afford to pay, pay this person more than half of what is so called portable. And I just think you're missing the boat on that if you're really looking, if you're really looking to develop your talent, you've got to start looking at things a little
Unknown:differently. Yeah, yeah, I agree. And I think that, you know, one of the levels of inquiry that I rarely would see, and I would always try to delve into this a little bit is, what are they doing to develop the business that they are saying that they have, like, how did that business come in? Tell me the story of how that business came in. Because what you also want to know is, you know, did they grow it into. Institutional relationship, or did they grow relationship from a green shoot and and the the the business development acumen and the business development discipline that a that a partner, a lateral partner, can bring in, I think has to be part of the consideration, you know, building building, a book of business, is not just luck, but at the same time, you know, is, does this person follow a business development pattern and route that is that they can duplicate here at our firm, or that is acceptable within our firm? That's a big question. And you'll find out a lot about a candidate, if you if you find out how they develop their book of business. And you're also going to find out about some of those cultural intangibilities That we, we know are so important, but are hard to hard, to hard to surface in lpqs. And you know the 3535 partner interviews, where the partners are spending half their time on the email and half their time talking to the candidate, you know, and then they they send in the summary of the of the interview, saying, yeah, he seemed nice. I liked him,
Steve:right? Exactly. Yeah. No, I think it's absolutely right, the approach that you've laid out. And I would add that a good business plan should be, should be required for just about any any lateral. I want to see what the practice description is like, the way they describe their practice, and what, you know, what they what they normally do to to develop clients of what they plan to do, go into all of the different things, relating to social media, relating to, you know, being out there, speaking and writing and just going to visit clients, etc, and organizations that you're members of. So I think that's important. And to be honest, most firms just never do it. They never ask for them. I think most, most of the candidates, if they're serious about a firm, they'll do it. They'll do it because they may be doing it themselves. Anything
Unknown:that's exactly right, that's exactly right. And if they're not doing it, that should be a question. That's a question too. The two things about I'll add about, about my from my perspective, about how lateral partner needs to come into a firm. One is when you're coming in to the firm and you're about to get that engagement letter strong. I strongly recommend that if you know that you need $50,000 to do your BD in the course of a year, get that put into the engagement letter. I can't tell you how many times I saw the standard operating procedure. You know, engagement letter with no, sort of nothing in there, in there with a signature on it that, yeah, we're gonna, we're gonna commit $30,000 to you for business development in the first year. Do that get it done? I've seen a few partners who did it, and it really helps. And the other thing I would say to the firms out there is, and this is coming from me, trying to manage budgets. Build a build a build a contingency budget that's just for lateral partner marketing purposes. So if you have a practice, and they've put in their their your yearly annual practice budget, and they're going to start to do some serious lateral recruiting, or there's a serious lateral recruitment opportunity, and that person comes in and it can just knock your budget out of the water. Now you can try to go back to the firm and say, Boy, we need to expand the budget for my, for my department, but that's hard, that's, that's portion of rock up a steep hill, if, if you're, if you're able to say to, and I was in charge of that budget, that was in my budget as a Cmo, they could the, practice head could come to me and say, Yeah, so I know we said it was going to be $100,000 budget this year. This new person is coming in. They need$20,000 to get out of the box. Do we have another 20,000 in the budget? And I would be able to go into this fund, and as long as I could tag it to to a to a specific lateral I didn't have to go through all the mountains of oks and reviews to get that, to get that cleared. Now, that requires management to trust you as a CMO and management, there's a lot of trust involved in that, but it can really. Can really keep things moving along so people don't get caught, you know, just stuck in the mud trying to get some money for for their, their their business development, and they're going to have higher business development expenses in year one and year two than they'll have in year three. It's just how it's going to be that they're just, they're just going to have
Steve:to be spending it. Yeah, at a related point is, I think we're, we're seeing more candidates indicate that a reason for their looking at new opportunities, or reason for leaving their firm, is that they don't feel they're getting the business development support at their current firm. And sometimes, sometimes that can be you, if you've got a really good program that's running that could actually help you land the lateral. And so part of that is to find out what they're, how they're how they're using the business development staff. That's right. I mean, if, I mean, if you're getting, if you get an answer that says, Well, I really don't use them at all because I have like, relationships. That's a little bit of a red flag, right? You're not really, you're not really doing it. Now you might get the answer that you said, I'm trying to use the business development staff, but there's doesn't seem like they're they're particularly supportive of my practice. But that could be a good reason, because maybe, maybe your environmental practice is not favored currently at your at your firm, and therefore you support so I think that's a good line of inquiry for the firms, as well as as for the candidates, to talk about what the business development support is. Because I tell you, I I've talked to some laterals after they've gotten to their firm, and the and the thing they they swear that the business development support they've got has made a huge difference.
Unknown:Yeah, and we would hear that regularly too. We'd get laterals coming in, and after the first six months, and said, Oh my gosh, I can't believe the level of support I can get here. And to me, it was just, this is how we do our business. Is that we got to know what you do. We got to know why you're doing it and how we can help you. And that's another, you know, that's another. The the firms don't seem to be planning for the planning integration part of of this out. They're kind of like, they get them in, and then it's, then it's sort of like, okay, go, go play with the puppies. And doesn't always work that way. I mean, there's, there has to be some integration plan. And I will say, my former firm, they got around to the point where they had, they had developed a pretty, pretty, pretty decent integration plan that helped, you know, keep people, keep people from get, especially during the pandemic, from getting too isolated. You know, so well. What else do you want to cover with this? Steve, and we've got, this is a, this is a wide ranging area, and I think that, I think that there's a there's a lot of ways that that firms can be evaluating that get outside of the portables. But where else do you think we need to we need to be touching on here, right?
Steve:I really think it really relates to how, how they have developed their clients, what's been their strategy, what's their approach? Part of it is, I think that many lawyers that they were not trained in business development in law school, right? That was not a course, and so a lot of them are need, need the sort of blocking and tackling help and so sometimes you can see, I think, in the process, you might be able to see that this person has got some skill set, maybe has a little bit of developmental you know, has shown Some some increases and some some growth patterns. But is, you know, is just needs, needs to be trained, needs to be coached. Um, so I think that if you see that sometimes something that might look like a negative, because they don't, they don't really know, can turn into a positive, because you can, you can see, we can, you know, we can hire this person. We're just going to have to invest in the time and effort and money to to make him or her successful, yeah. And so I think that's part of the the equation is to take a look, really a 360 degree look. I mean, part of it is also just straight, sort of personality assessment. I want to get into assessment testing right now, but that's come. You know, it's becoming a more popular strategy for firms. But to evaluate, you know, how this person seems to to share, share business, because in the end, you. Uh, being a good colleague is 50% of the is certainly 50% of the equation.
Unknown:And and you know, there are, and there are some methodologies, and we could talk about this at a different point, but there are methodologies for evaluating the the the relative business development strength, or strengths, I should say, of a of a particular individual or candidate. And there's, there's organizations out there that can, that can help you with this, this testing, and we did some of that testing, and it was really interesting, because what it really comes down to is that there's a continuum of business done. There's a business development continuum, and everybody can fit into one or more of the points on the continuum. So it's not, you know, just just, just going out and getting new business is not is only one part of the continuum. There's, there's different points in the continuum. And if you're really thinking strategically, and there's some firms out there that do this very, very well, thinking strategically about what they need, what where they're where, when they look at that continuum, what do they need, that helps them make some really strategic decisions, about laterals, about promoting people into partner, about where to put their resources. And I, you know, to those, to those managing partners out there who might be listening, I strongly suggest that you, you invest in some understanding of how to assess business development strengths, because there are, there there's, there's ways to do it, And they're darned accurate, from what? From my perspective, and it really helps make, really helps make some decisions surface faster and get you to a decision point quicker.
Steve:Yeah, I'd also say, of course, a lot of this depends on the role that you're expecting, the lateral play at your firm, correct? So, if you're, if you're in a succession situation where you've got a retiring partner, you're bringing in someone. There's probably enough business on the table that you don't have to worry so much about what's portable, right? Then the, then the, the really inquiry goes to, you know, how does this person deal with clients? So in that situation, you want to see evidence of, tell me some clients that have come to your firm you've been assigned the management of particular responsibilities, and tell us whether there's been more business that that has been developed because of your skill set and abilities.
Unknown:Yeah, yeah, yeah. Well, Steve, I think the clock on the wall is telling us that we're we're getting a little bit close on time here we like to keep these things at 2025, minutes. Any other closing thoughts, you want to make sure that we're aware of and make sure that we were factoring into this, this, this is a, been a pretty rich discussion, especially for those people who are trying to evaluate candidates. Yeah, we could. We
Steve:could probably go for an hour on this more, but sure, I think we've hit most of the high points, and we'd be, I'd be interested in hearing from people out there about their thoughts, you know what, what their you know, what their views are. Certainly interested in having a dialog and and also, just remember that if you want any of our reports, our lateral reports for either Texas or DC, or anything else that we're doing right now. Please, you know, send us a note
Unknown:and well, well, you know, Steve's talking about Texas and DC. I know McCormick group is, is, you know, coast to coast, and have gathered a lot of information. Steve and I have had conversations the past about a whole variety of jurisdictions around the around the country, and there's, you know, that's his heat, Steve and his team really keep an eye on what's going on across the across the horizon. So Well, Steve, thank you as always, a pleasure and an honor, and we will come back with episode five at some point or another. It'll be, we'll have, we'll say goodbye to the summer and hello to hopefully some decent fall weather, at least here in in Dallas, Texas, it is just been brutal. Yeah.
Steve:All right. Thank you again, Murray, take care. Good as always. You.