Edge International


Risk Insurance for Laterals

Risk Insurance for Laterals

Suppose your firm’s longtime insurance advisor came to you and said:

“You have a substantial investment that we know will have a one-in-four failure rate over three years and about one-in-two failure rate over five years.* Would you like to insure against the risk of that happening?”

We have all kinds of insurance for our legal businesses – beyond professional liability. We have business interruption insurance. We insure and back up our IT investment. Some firms hold life insurance on key revenue generators. But precious few insure against the loss of a recently hired lateral.

The risk is real. Look at this recent table of partners who were in the market to move or have moved in the period 2010-2017. If you’re a firm leader in Atlanta or Chicago, look over your shoulder – over half the partners are looking to move!

And that insurance policy? You can’t buy it from a broker. You have to build the insurance from within.

We advise firms regularly on lateral integration programs – to create the glue that will keep them keep their laterals. Here are some of the things we’ve learned (Note: Here I am only addressing keeping your acquired laterals, not the risk of other partners leaving):

These practices, and many more, are the pieces of a “policy” that you need to insure against the significant risk of lateral departure. When we look at your integration practices, we may find ways to reduce risk – or we may advise you that the best lateral decision may be not to proceed.

*It’s Time to Overhaul the Lateral Hiring ProcessThe American Lawyer, January 29, 2019

David Cruickshank

Edge Principal advises firms on growth strategies and lateral integration programs. In addition to being a lawyer with a master’s from Harvard Law School and an LLB from the University of Western Ontario, he is a trained mediator who has taught at the Straus Institute for Dispute Resolution at Pepperdine Law School. He frequently trains partners and associates on management skills like delegation, feedback, managing up and career development.  His interactive courses are now online.