Muzio: Some firms tend to panic
Hiring ‘star’ or elite commercial lawyers often reduces the quality of the teams they join, an academic study has found.
Daniel Muzio, professor of management at York University, said some large law firms tended to “panic” that they would lose big clients unless they had “big names” to offer as lawyers.
Professor Muzio said the research, carried out with Professor Claudia Gabbioneta, chair in accounting and management at York University and John Mawdsley, associate professor of strategy and business policy at HEC Paris, studied the performance of the top 100 UK firms between 2000 and 2017.
Quality was measured by applying mathematical formulae to information from the annual Chambers & Partners UK directories.
Professor Muzio said the tendency for law firms to make elite lateral hires had grown strongly over the period of the study.
The research, which will go through the peer review process before being published, found that recruiting an elite professional into a team was associated with clients “rating the quality of service lower relative to teams who did not make an elite hire”.
The negative effect was weaker when the average quality of the team joined by the elite lawyer was better, but stronger when the law firm had a higher number of high-quality teams.
Professor Muzio said it was “possible that the perceived legitimacy and resilience of the established team” limited negative behaviour from existing elite lawyers and enhanced the effectiveness of elite additions to the group.
“On the other hand, the number of other high-quality teams in the organisation strengthens the negative impact of hiring an elite professional, possibly by upsetting the established inter-team balance of power and triggering competitive dynamics and uncooperative types of behaviours within the organisation.”
The professor said follow-up interviews with a number of partners involved in management confirmed the study’s findings and provided a “fascinating insight” into their motivations.
One of them was that “some firms tend to panic that they might not be able to attract or retain big clients for the big deals if they don’t have the big names on their books”.
Other law firms felt they were “undersized for the market opportunities that exist and there is pressure on them to be bigger to survive”.
A further argument was that the law firm was “going to get it right this time”, though there was no evidence to back this up.
There were some firms that wanted to recruit an elite lawyer from another practice “just to disrupt things”.
Professor Muzio said the findings highlighted how important it was for firms to create environments that helped to “socialise and integrate new high-calibre talents, who can be particularly disruptive due to their greater industry visibility, higher external reputation, and ability to control scarce resources”.
Quickly creating a common culture and shared identity within the team made it less likely that existing members would “engage in defensive moves to nullify any perceived threat of encroachment by the new colleague” and, more generally, help promote integration.
“Overall, the socialisation and integration of an incoming elite professional, either at the team or organisational level, appears to be paramount for achieving positive team outcomes.”
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