TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 7, 2016

Law Firms Increasingly Use 'Moneyball' Analytics In Lateral Partner Hiring

MoneyballThe American Lawyer, How to Hire a Home-Run Lateral? Look at Their Stats:

Recruiting lateral partners is starting to look more like scouting for Major League Baseball.

Law firms are beginning to use statistical analysis similar to the "sabermetrics" methods used to evaluate ballplayers and made famous by the book and film "Moneyball." Using performance-oriented data, firms try to create profiles of the types of lawyers they need to hire to help boost profits, then search for candidates who fit the profile. They may also use the tools to estimate whether a certain candidate would help the firm's bottom line. More than 20 percent of Am Law 200 firms are starting to use these techniques, according to recruiters and software providers.

There's certainly room for improvement in the hiring process. An ALM Legal Intelligence lateral hiring report with Group Dewey Consulting released last fall found that 30 percent of lateral partners returned less than 30 percent of their expected book of business.

Zev Eigen, global director of data analytics at international labor and employment law firm Littler Mendelson, says that his firm is working on improving lateral hiring and retention using data analytical methods in a newly launched project. Artificial intelligence, he says, "is fantastic for eliminating biases," although he adds that such data analytics should be used to augment judgment and intuition.

Amanda Brady, global practice leader for law firm management at legal search firm Major Lindsey & Africa, estimates that about a quarter of Am Law 200 firms are using metrics in hiring. It's a trend that started two or three years ago, she says. "They are using data metrics more and more to determine who they are going to go after and how much they are going to pay for them," she says. Brady says some savvy lateral partner prospects are also using competitive intelligence tools to analyze whether a firm would be a good fit in terms of their overall strategy and finances. ...

About 34 percent of Am Law 200 firms use products offered by Aderant Holdings Inc., including its recently released Spotlight Analytics tool, says Derek Schutz, product manager for business intelligence at the legal software company headquartered in Atlanta. Spotlight Analytics tracks more than 200 key performance indicators for timekeepers, allowing firms to determine whether lateral hires and practice groups have met expectations for billing, revenue and even collections. They can use the data to create a profile of the most successful hires, and to determine whether the firm needs more rainmakers—or more nonequity partners and associates to get the work done.

“We look for characteristics and we look for markers,” says Schutz. “It is almost like a Moneyball approach.”

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Comments

If they're so clever, why are so many of them failing?

Posted by: mike livingston | Apr 7, 2016 3:53:15 AM

This is the end game of "eat what you kill." Building firm value is so last century.

I wonder what the clients would think about working with a "Moneyball" partner who gets paid based on how well he can pick my pocket.

Posted by: Dale Spradling | Apr 7, 2016 6:23:57 AM