Data-Driven Hiring: Five Critical Mistakes Law Firms Make

By Decipher Investigative Intelligence

Lawyer recruitment and retention is now the No. 1 perceived threat to future profitability, according to Thomson Reuters’ latest Law Firm Business Leaders Report.


Indeed, 51 percent of law firm finance and operations professionals said lawyer hiring was a high risk to profitability, while 35 percent rated it a medium risk. The “war for talent” is now existential - viewed as a larger threat than poaching, underperforming lawyers and fee competition.


It’s no wonder, then, that many law firms are considering a new approach to talent – one based on quantitative data instead of qualitative anecdotes. As law firms have seen the return on investment from a more data-driven approach to pricing, they are beginning to look at how to replicate this success with lateral recruitment.


This is an important evolution for the profession, but it is one that can be mired in pitfalls for the unwary. The application of data to lateral hiring is both an art and a science, and one that must be done strategically and comprehensively; the human subjects are host to myriad variables that do not conveniently map to a simple spreadsheet.


A flawed approach to talent data can suggest apocryphal trends; lead to false conclusions; and ultimately, not only fail to protect the firm from bad hires but render it unable to capitalize on significant growth opportunities. To ensure results and ROI – and to minimize potential rancor from your more adversarial partners – work to avoid these five major missteps:


Data without strategy. Before taking any action, you must address two questions: What are the firm’s actual objectives for its lateral hiring, and what data points are required to assess a candidate’s ability to accomplish these objectives? What is the firm actually trying to accomplish?


While specific strategies will vary, the talent strategy must objectively address key growth-related questions, among them:

  • Geography: What markets will the firm enter/expand?

  • Services: What practice areas will the firm enter/expand?

  • Client Focus: Where should the firm expand to grow existing clients and take market share?

  • Demographics: Where does the firm need succession planning or more bench strength? What are the firm’s recruiting goals for diverse candidates? What skill-sets are critical for sustained growth?

Having a written, ratified and widely shared talent strategy will not only save the firm from whims and “opportunistic hires,” it will save time and effort on the front end. Candidates that will not help the firm meet its goals can be disqualified fast; those that meet objective criteria will advance for further analysis. Clear objectives are the first concrete steps isolating meaningful data points.


Poor process. Data must be integrated thoughtfully into the hiring process, from the initial lateral partner questionnaire (LPQ) to due diligence to onboarding.


Consider the LPQ. This document should be your first line of defense in lateral hiring and could be your first great opportunity to meaningfully assess your pipeline data: It is exchanged before the firm becomes overly invested in candidates, and it also requires candidates to self-report, making it a solid litmus test of candor.


Unfortunately, too many law firms leave themselves vulnerable by starting with an incomplete LPQ or failing to insist on thorough completion. In a review of more than 1,000 LPQs by Decipher Investigative Intelligence, a full one-third neglected to answer the basic question, “What is your billing rate?”

Other areas of concern:

  • 21 percent of candidates failed to adequately complete the client section of the LPQ;

  • 25 percent of LPQs did not ask or require recent billable hours;

  • 55 percent of LPQs did not ask or require billing history beyond the current year; and

  • 60 percent of candidates did not disclose references when requested.

To successfully incorporate data into hiring, you need….data. Incomplete LPQs cripple the process from the very beginning. Firms must insist on their prompt and thorough completion.


(Wondering what to ask for? You can download Decipher’s sample LPQ here.)

Minuscule sample size. Small sample sizes can lead to incorrect conclusions, and most firms simply do not have a large enough pipeline to meaningfully identify patterns and predictors. For a meaningful comparison, you need apples-to-apples data across practice groups, location, experience levels, and more. Working with data professionals can often act as a “force multiplier” to rectify these challenges.


Reverse engineering. Here is a dangerous but common scenario: To start its data analytics program, a law firm chooses 12 lawyers deemed to be “successful” lateral hires and looks for common threads.


This is problematic for many reasons. Many success metrics are not objective, and it’s difficult to gauge intangibles like drive, chemistry, and plain luck. Many success metrics are not static and are dependent on other factors, such as location and practice area. Many suggested success metrics – especially in a small sample size – are misleading: If all 12 successful hires do not have Twitter, does that mean you would reject someone who does?


Simply trying to replicate what seems to have worked before – without strategy or a true understanding of causation and correlation – will inevitably lead to ill-informed decisions.


Violating laws and regulations. A meaningful pre-hire due diligence and data program will collect information that can be subject to various rules and regulations, and even well-meaning violations of these laws can carry consequences. For instance, failure to comply with the Fair Credit Reporting Act can subject your firm to statutory damages of up to $1,000 per violation (as well as some major embarrassment). The ever-growing and ever-evolving web of privacy laws further complicate this issue, as what might be allowed in Connecticut will not be permissible in California.


This becomes even more complex when screening laterals in multiple countries. It is imperative to structure a screening program to be above board, and it is easy to unknowingly misstep.


Law firms are to be applauded for starting to take a data-driven approach to hiring, and for starting to engage business professionals to aid in this pursuit. As pricing professionals transformed their discipline within the profession, so will individuals who can smartly deploy data to win the talent war: They simply need a purposeful and well-thought-out approach.


LVN Members can watch the April 13 webinar “Talent is the New Pricing,” on-demand. This session shares the best ways to use available data to improve your firm’s hiring program to focus on your ideal candidates. Login to view.


Michael Ellenhorn is the founder and CEO of Decipher Investigative Intelligence; Greg Hamman is the Director of Business insights. Last year, the Decipher team completed 6,125 source interviews to investigate lateral hire candidates on five continents. They can be reached at mellenhorn@decipherglobal.com.

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