Recently, I’ve been spending a lot of time with law firm clients helping them with Succession Planning. To put it bluntly, it appears that succession planning for law firms is an “issue” for the industry. This shouldn’t come as a surprise to anyone since the youngest of the Baby Boomers will be passing the age of 50 in 2015 (and the oldest will turn 69). The pressures of succession planning at a law firm can be felt on the shoulders of senior management and they are trying to find solutions – fast.
But are they looking for solutions in all the rights places? I’ve been included in a lot of discussions about factors that need to be considered when considering succession planning for law firms such as timing, compensation, gaps in lawyer ranks and desire to work past retirement while addressing succession plans. Unfortunately, some firms seem to be forgetting about one key element, an element that I would argue is the most important one in the equation. The client.
A situation I experienced perfectly illustrates this point. As part of a Client Feedback Program I had recently implemented, I was with the Managing Partner (MP) of a large regional firm meeting the CEO of a client. The current relationship partner was a couple of years away from 65 (that firm’s mandatory retirement age) and the firm had been grooming a junior partner to take over the relationship. The individual had worked on the relationship since he was an associate and was well known by the client.
Now this was a very key client of the firm and to cut a long story short, I brought up the issue of succession planning. The MP was visibly taken aback when the client said that he had been wondering about the issue and asked who was going to take the lead on the relationship. The MP responded indicating that Junior Partner would be the successor at which point the CEO balked. He said that although he liked Junior Partner very much, and he thought he was a fine lawyer, he was not what they were looking for in a relationship lead. They were moving into a major growth phase and needed a lawyer who was aggressive and would aggressive for them. That is, not the Junior Partner, who the firm had been grooming to take over the relationship for a couple of years without ever speaking to the client about what they wanted in a Successor. See the error of their ways?
It seems so simple and yet most firms don’t speak to their clients early enough in the succession planning process (or at all – “Hi I’m your New Relationship Lawyer!”.)
So here’s my advice when thinking about succession planning for law firms, no matter what the individual circumstances may be.
- Instill a Client Focused culture in your firm. It should be about what’s best for the client – the rest are all internal issues that can be addressed internally.
- Incorporate Client Feedback into your succession planning. Discuss the idea of transitioning the relationship with the client before it even becomes an issue wherever possible and don’t presume that just because you would like a practice to be assumed by one lawyer that your client feels the same way. This way the transition should be a smooth one and revenue shouldn’t be impacted.
- Succession isn’t only an issue for law firms. If your client contact is coming up to retirement age, you want to allow for that conversation, and their successor, in your plan. You’ll be less likely to see the new guy bring in his “own lawyer” if you are part of the client’s transition plan.
- Put a policy in place that states that all partners need to have a succession plan. The plans may vary in depth and content based on the seniority (and age) of the lawyer involved but it should be a mandatory part of the individual partner planning process. Ensure that the culture of your firm reflects that client relationships should be transitioned at retirement and that it is the role of the senior partner to mentor their replacement.
- Ensure that compensation related to succession is tailored to the lawyer involved. Some partners may feel that retirement means just that – retirement. They want to transition their clients and leave to relax in peace. To others it may mean transitioning to an Associate Counsel role where they continue with client work as if they had never “retired” from the partnership. Others still may want to move into an ‘elder statesman” role becoming a part-time face of the firm. Whatever choice is made “for the good of the firm”, the client should still be considered.
If you consider these factors into your succession planning process, you’ll have the opportunity to make choices that work for your client as well as your firm. If you don’t, well maybe your client will simply take those choices out of your hands entirely.
This article first appeared on slaw.com, May 22nd, 2015
Photo by stockimages.