Three quarters of clients do not follow laterals
New Acritas research report has discovered that only 27% of clients leave the original firm and follow the lateral to their new firm.
This new research reveals the challenges in making the heavy cost of investing in laterals pay back. If, on average, a lateral partner only brings 27% of their book, a firm will have to support the partner in rebuilding the other 73% if they have a chance of reaching the same levels of success they experienced at their prior firm.
Looking at the statistics from the perspective of the firm losing the partner, the results would indicate that, on average, only a quarter of clients will be lost, showing the increasing prevalence of institutional, rather than one-to-one, relationships.
Acritas, in their annual Sharplegal study of senior in-house legal buyers, asked 877 clients if they had experienced a partner leaving in the last 12 months. One in five clients had experienced this happening. Those clients were then asked if they had followed the partner and the reasons why.
The results revealed there are certain characteristics in client relationships which increase the likelihood of the client following the partner and conversely, of the client staying with the firm. Acritas has produced a free report on the research, including two ‘five step guides’, firstly from the perspective of firms evaluating laterals and secondly, in order to minimize client losses as a result of losing a partner to another firm.
Lisa Hart Shepherd, CEO of Acritas commented, “These findings have many implications for law firms, in terms of taking proactive steps to protect client relationships and in evaluating the real chances of success when hiring a lateral. The results also raise the importance of conducting annual, independent feedback with Partners and their teams, as well as clients, to ensure they are still engaged with the vision and direction of the firm and gaining the support they need to deliver an optimal client experience. By minimizing the chances of Partners leaving in the first place, you are minimising the likelihood of client loss at the very first stage.”
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