Here at Definitive Consulting we have facilitated numerous team moves in London, the UAE, China, South East Asia and Australia, so we know very well the value they can create for firms, and the teams themselves. For both parties, however, these big moves are not necessarily straightforward. Making them work requires a thoughtful approach, without which things can go wrong very easily.
In this series of two posts, we look at the potential pitfalls and how to avoid them, first from the point of view of the hiring firm.
It might seem strange, but the number one issue for firms is too great a focus on the, let’s face it, pretty obvious benefits of hiring in a whole team – the increased likelihood of client portability and the guaranteed fee income that comes with it. The problem is that tunnel vision around short term revenue gains ignores the long term picture. Making a team move stick, and then maximising value from what will be a significant investment, is all about integration.
The last thing a firm hiring a team wants is to see that same team move on – clients in tow – a few short years later. But that is exactly what happens when firms allow a ‘team within a team’ dynamic to develop – by setting the incoming team targets related purely to, for instance, two year fee income, and giving no thought to bigger picture issues like cross referral.
All this is why we insist our clients look beyond the short term when considering hiring a team. For example we ask them to consider how each individual’s practice ties into the firm’s existing client base, to identify ways to integrate new partners by introducing them to existing clients, and to think about breaking down team boundaries by including new hires in cross-team initiatives.
Of course, cultural integration is not the only potential pitfall, even if it is the biggest. Other issues to consider include:
- A lack of strategy – the majority of team hires are opportunistic so it is not uncommon to find under the surface a lack of strategic planning. Yes, the team may bring in additional revenue in the short term, but how will its overall focus and mix of expertise fit with the firm’s longer-term strategy?
- Compromising on quality – it is all too tempting for firms to hire individual partners as part of a team when they clearly would not have been offered a job purely on their own merits. This is particularly true of larger team moves and can prove to be a real issue down the road.
- Under utilised associates – if a firm hires associates as part of the deal and then the work doesn’t follow, the end result can be a number of expensive associates with nothing to do.
- Contractual restrictions on clients – it’s amazing how many partners are unaware of their own contractual restrictions and only begin to look at them towards the end of an interview process – and contractual restrictions can set limits on fee earning potential.
- Contractual restrictions on personnel – are the partners restricted from the solicitation of staff or other partners? These kinds of clauses come in all shapes and sizes and can kill a team move dead, leaving the hiring firm to deal with unexpected, and very much unwanted, legal disputes.
It’s important to point out at this stage that team moves can be extremely effective – but like any large investment, making it work, and maximising the return requires some careful planning.