Peer to Peer Magazine

www.iltanet.org 60 Peer to Peer Avoiding Risk in Lateral Transfers: Lessons Learned M any have heard some version of the "boiling frog" anecdote: A scientist drops a live frog into a beaker of room temperature water and then starts to heat the water slowly. Due to the gradual temperature change, the credulous amphibian does not know that it is in mortal danger. With sympathy for our fictitious, lily pad-loving friend, this cautionary tale illustrates the peril lurking beneath the surface when an unsuspecting firm, crunching the numbers on a lateral's portable book of business, does not guard against the risks inherent with the transfer of new lateral attorneys. Three months after I assumed the role of records manager, our firm transferred in a large number of lawyers from a national firm that had suffered a cataclysmic dissolution. We had been through mergers and acquisitions before, but somehow this was different. The timeframe was very tight –– one week for IT and the records staff to have everything ready. The goal was for new attorneys to hit the ground billing on day one. There was no workflow, so the days became a blur of frenzied, seat-of-the-pants actions and decisions that today are leading to formal policy and procedure. We were the frog in the beaker, and the water was starting to boil. Let's see what we learned from that experience. Collaborate for Success To make the new lateral onboard experience a success, there are many moving parts, disparate processes and invested roles that must conflate. The number of people will vary depending on the size of the firm, but the contributing roles are the same. Your firm should expect to engage partners, recruiting, human resources, conflicts, marketing, records, IT, accounting, services and secretaries. They must collaborate to execute a transfer that adheres to ethical standards and mitigates risk. The key word is workflow. There is a necessary veil of secrecy for the sake of client confidentiality that overshadows the recruiting aspect of the process. We discovered that without a predefined process, risk and potential conflicts of interest loomed. Workflow must define tasks that identify resources and planned handoffs so that deliverables can be set and expectations met. Otherwise there is a close precipice shrouded in dense fog. There is a point, however, at which the veil must be lifted for certain risk managers, and it should be as early as ethically possible. Once the discussions have reached the point where interest is determined, the responsibility must shift to those whose primary role is to minimize the firm's exposure. The first level of risk management is the conflicts department. They must be engaged even before the offer is made, as they vet the attorney's client and matter list for potential conflicts. This exercise cannot be avoided if you choose to ethically transfer clients to your firm, and the report produced is the most important tool in this process. Just because the lateral has portable clients, though, does not mean the firm has satisfied its ethical burden. With proof that there is a viable client list, the partner's approval of the candidate, and the accepted offer, there must be a second and immediate handoff. The Gatekeeper We discovered that we needed someone to keep an eye on the information that was migrating into our systems. In our case, that was not an IT analyst or the secretaries to the new attorneys. We needed a gatekeeper whose primary role was to manage the information transfer regardless of media. In our firm, that was the records department. The records staff ensure that the only information to make its way into the firm is that which has been cleared of conflicts and authorized by the clients. The gatekeeper's first task is to collect a copy of the client transfer authorizations from the attorney. These may be in the form of a letter or an e-mail message. In our case, we reached out to the laterals and the records department at their former firm to identify which clients had indicated their willingness to transfer with their attorney. The second task is to validate the authorizations against the original conflicts report. This may seem redundant, but there are two reasons to complete this verification: (a) The first list may not be complete. In some cases, weeks or maybe months have passed between the initial conflicts check and the attorney's first day at the new office. Since new clients or matters may have been engaged during that time, it is best to complete this confirmation; (b) In the bustle of moving, something may have by Jerry Rugh

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