Happy news for me and my editors: Based on the explosion of re-tweets, last month’s column, “The Talent Shortage Has Arrived,” was the most widely read in its current three-year run. I clearly touched a nerve when discussing the disconnect between demand for junior level attorneys (three to five years) and the supply of desirable candidates as law departments seek to staff at the bottom of their pyramids. Truth resonates.
At the end of last month’s column, I referenced the occasional use of recruiters among companies that are surprised to discover how challenging it is to hire at the staff level. Nonetheless, I wrote that the relationship between law departments and recruiters has become unsatisfying for both parties. In a nutshell, most companies are using a somewhat dysfunctional model for recruiting attorneys, and it’s frustrating the heck out of general counsel. Please bear with me while I take a few paragraphs to explain the problem, and then I’ll propose a solution that may yield some eye rolling within the legal search community. For readers who recall the movie about a sports agent starring Tom Cruise, this will be my “Jerry McGuire” moment.
At the vast majority of companies, internal human resources departments now handle the sourcing and initial vetting of attorneys. Outside recruiters are only used when Internet postings and word-of-mouth referrals fail to yield a winner. Usually the outside recruiter is brought in to help at the insistence of a general counsel who demands the expertise and access to candidates who require a proactive recruiting approach. When recruiters are permitted to participate in a search, they often are competing against the company’s continuing self-sourcing efforts. Therefore, the relationship between internal HR folks and outside recruiters is strained at best. Such an unhealthy scenario burdens the general counsel. I’ve been in this situation many times, and I am motivated by a desire to justify the GC’s lobbying effort to go outside.
Internal HR professionals readily acknowledge that using outside subject matter experts is the most effective and efficient way to recruit. Openings are filled more quickly and far less time is spent internally on interviewing. Yet, recruiters present a cost that HR is mandated to avoid when possible. After all, we are pretty expensive. Contingency fee pricing is still the dominant business model. Spending $1,000 for Internet postings sure looks better on the bottom line versus paying 25 or 30 percent of six-figure base salaries.
Therefore, many general counsel find themselves playing the role of recruiter, especially if their internal HR folks can’t tell the difference on a résumé between Kirkland & Ellis and Joe Schmoe & Associates. Once again, law departments are forced into a position of doing more with less.
Ok, it’s time to talk solution. Merely lowering the contingency percentage or switching to a fixed-fee model is not enough. Once a company decides that an opening requires an outside recruiter, cost sensitivity disappears. The selection of service provider is based primarily on track record and reputation. At present, it’s an all-or-nothing game. Saving a few grand on the backend is not a difference maker, and recruiters who try to compete for business based on price find themselves perceived as second-rate.
It’s really the nature of the relationship that needs to change. Serious recruiters want to partner with clients at the starting point of a new opening. We want to provide a holistic service, from proactive sourcing, to handling postings, to in-person screening, to managing expectations, while offering valuable consulting advice along the way. That’s the “old school” approach.
Collectively, however, recruiters have blown it. Too many in the business just want to hit large contingency fees and minimize the time spent on any given assignment. The dysfunctional law department recruiting model feeds right into that mindset. If you are going to wait for six months and come to us only after a self-sourcing effort has failed, then a typical “headhunter” will work hard for a couple of days to unearth the needle-in-haystack resume for you. Gladly. But that’s all the effort you are going to get, because your commitment to the recruiter is minimal and the engagement is viewed as a hit-or-miss proposition. In turn, companies become quickly dissatisfied with search firm service. You are getting the behavior that you are incentivizing.
I believe law departments would jump at the chance to immediately use a good outside recruiter and dispense with the prevailing self-sourcing approach. But the search firm business model is lazy, prehistoric and in need of an overhaul. The best practices solution is a combination of value-based pricing, additional service and trust.
Specifically, the right search fee consists of three components: a flat fee for handling posting and screening duties, a fixed-success fee based on closing the deal within a reasonable period of exclusivity, and a discretionary bonus if the client is happy with overall service quality. The critical discretionary bonus piece of the value-pricing model can consider factors such as the quality of vetting and the sourcing of candidates beyond posting responses.
Three stakeholders must be satisfied. Law departments must be thrilled with the service quality and results. Search firms must get a reasonable window of exclusivity that allows us to do our jobs thoroughly from the outset of an opening. The vice president of human resources must see value in a new, cost-to-fill equation that eliminates the need to allocate internal recruiter time to an attorney opening. No matter how reasonable and flexible the fee terms, I’m afraid that most internal HR folks will require arm twisting from a general counsel to “see the light.”
I believe the interests of law departments and legal recruiters are aligned. We want to work together. Yet, we collectively lost the keys to the car and human resources is doing the driving. The only way to get those keys back is to work together on a compelling, value-based engagement that overwhelms the alternative internal value proposition offered by the HR folks.