Ok, I have to confess, here in Dallas we are still distraught over being one pitch away two times from winning the first World Series in franchise history. I couldn’t sleep after game 6 and I couldn’t watch game 7. But, our disappointment cannot be close to the the disappointment the Red Sox fans must be experiencing.
If you are not a baseball fan, you may not know the story. The 2011 Boston Red Sox entered September with a 9 game lead and were thought to be a “sure thing” for the American League playoffs. Then the Red Sox managed to lose 18 of their last 24 games and were eliminated from the playoffs the last game of the season.
In a Harvard Business School article titled: Chasing Stars: Why the Mighty Red Sox Struck Out, Carmen Nobel refers to the Red Sox demise as: “one of the biggest flameouts in baseball history.” The Red Sox had gone out and acquired superstar players from other teams and had the third highest payroll in the league. According to Nobel: “Fans and observers hailed the 2011 Red Sox as potentially one of the greatest teams of all time.”
Isn’t this what frequently happens when law firms go out and acquire lateral partners? My firm grew dramatically by luring lateral partners from other firms. I was a lateral partner. When I was asked, I purposely underestimated the revenue I thought I would generate. At the end of my first year, I exceeded the estimate by $750,000. During the time I was with the firm, I don’t remember many other lateral partners who exceeded what they represented they would generate.
In the Harvard Business School article, Nobel references Chasing Stars: The Myth of Talent and the Portability of Performance by Harvard professor Boris Groysberg, who with colleagues studied the issue in a variety of competitive businesses. They found:
After examining the careers of more than 1,000 Wall Street analysts, for instance, they found that analysts who were star performers at any given investment bank tended to underperform after being lured to a new bank—foundering not only at the start of the new job, but for years afterward.
I can’t speak for lateral partners in other firms. I can only speak to what I observed in my old firm. Almost every lateral partner underperformed. It might be worth reading Groysberg’s book to get a sense of why that happened.