A recent report by Decipher Investigative Intelligence, a provider of prehire due diligence for law firms, revealed that nearly one-third of all lateral candidates in 2022 raised “red flags” during the hiring process. These red flags included undisclosed business affiliations, cultural incompatibility, and inflated books of business. While this figure represents a slight decrease from 2020 and 2021, where 34% and 32% of candidates respectively had red flags, it is still higher than the 21% reported in 2019.
The increase in candidates with warning signs is attributed to the busy and predominantly virtual hiring environment brought about by the COVID-19 pandemic. Greg Hamman, the chief data officer at Decipher Investigative Intelligence, emphasized the risk that law firms face when hiring and stated that transparency regarding potential issues is crucial in the prehire phase rather than discovering them post-hire.
The American Lawyer, a reputable legal publication, covered the findings from Decipher Investigative Intelligence’s report. Hamman further explained that the surge in red flags can be attributed to the growing number of lateral hires in the legal market. This expansion of the talent pool has resulted in a higher concentration of candidates with potential issues.
Brian Levinson, the founder and managing partner of Alevistar Legal Search, a legal search and staffing firm, concurred with this assessment. He noted that large law firms have stringent hiring practices in normal circumstances. However, broadening their candidate pool increases the likelihood of encountering candidates with red flags.
The report from Decipher Investigative Intelligence also highlighted the significant increase in first-quarter lateral moves for both associates and lawyers. From 2020 to 2021 and 2022, first-quarter associate lateral moves rose by more than 80%, while lateral moves for all lawyers increased by over 75% during the same period. This surge in lateral moves further contributes to the higher number of red flags encountered during the hiring process.
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Consultants in the legal industry also pointed out that candidates often have expectations of compensation based on their books of business, which can sometimes be overly optimistic. Additionally, cultural compatibility may only become apparent as lawyers return to the office after an extended period of remote work.
The findings of the report serve as a reminder to law firms to exercise caution and conduct thorough due diligence when considering lateral candidates. While red flags may not necessarily disqualify a candidate, having access to this information during the prehire phase allows firms to make informed decisions and mitigate potential risks.
Decipher Investigative Intelligence’s report sheds light on the prevalence of red flags among lateral candidates in the legal industry. Despite a slight decrease from previous years, the percentage of candidates with warning signs remains higher than in the past. The rapid increase in lateral moves and the broadening of the candidate pool are cited as contributing factors. It is crucial for law firms to prioritize transparency and perform comprehensive due diligence to minimize potential risks associated with hiring lateral candidates.