For some lawyers – especially those with 30+ years of practice under their belt – succession sounds like business speak for “force me out”. And as the senior lawyers in a firm usually wield power, either because they are rainmakers or sit on the executive, they can keep succession off of the agenda until their last six months of work. But that’s dangerous for the firm, and not too smart for the retiring lawyer.
Last Minute Retirement is Dangerous
- A client relationship manager may feel they have the best interests of the client and the firm in mind when they remain the exclusive counsel to that client until retirement, but that’s wrong on both counts. First, we know that while clients have a degree of loyalty to a firm, their primary loyalty is to their lawyer. That trust can’t be replaced by a younger lawyer overnight. In fact, it can take up to two years to successfully transfer comfort and trust from one lawyer to another. It makes no difference if the “replacement lawyer” has done a few files for the client. That’s not the same as a trusted advisor relationship. Just because I’ve gone to the movies with a friend doesn’t mean that I’d marry them if anything happened to my spouse. And keep in mind that research shows even happy clients are willing to try another law firm 65% of the time. Loss of their primary lawyer is a pretty good reason to play the field, don’t you think?
- Departing Partners don’t just disappear after their retirement party. Their relationship continues with the firm over time as their capital accounts are bought out. Most smaller firms (2 – 40 lawyers) usually have a three to five-year arrangement in place for such buy-outs. In order for those payments to occur, the firm has to thrive. If the firm loses some of its biggest clients, it’s difficult to maintain payments to existing lawyers while simultaneously buying out retirees. And trust me: existing lawyers get paid first or there wouldn’t be a firm left to run.
It truly is in the best interests of a retiring Partner to ensure there is a lengthy and strong succession plan in place.
It’s More Than Lawyer Retirements
But succession is so much more than managing retirements. Firms need succession strategies for all lawyers – regardless of their year of call. Having a lawyer work at the same level year after year isn’t good for business. They should be doing very different work at year ten than they did at year three. In order to attract the higher level of work, they need a plan in place for their education, credibility (experience) and reputation (recognition in the marketplace). And in order to free them up for constantly higher-level work, they need people below them to whom they can delegate.
Further, practice groups/industry groups and client teams need succession strategies that reflect the changing experience levels and changing client needs within that group. There is no such thing as a static team: it is always shifting to align with the developing expertise of its members, shifts in the marketplace, and evolving client needs. Laterals come into play when a firm hasn’t sufficiently managed succession strategies at all levels within the firm.
How to Develop a Succession Strategy
Most firms start with the urgency of a retiring partner and a top client. If that’s your catalyst, better late than never. But ideally, firms would incorporate succession planning into their practice group management. Each group would develop a five-year succession plan, identifying how many lawyers they will need (and at which levels) in each year. This indicates when associates need to be hired, or laterals might need to be sought. It also takes into account any lawyers anticipating retirement within that time scale, and allows the group to have sufficient time to ramp up expertise, and transfer client trust from one lawyer to another.
Coupled with practice group succession planning, each individual lawyer should consider their own succession strategy. How will I anticipated evolving my practice? Who will I work with (above and below) to allow that evolution to occur?
Get Help if you Need It
Succession planning is a critical component of a strong business plan, but can also be an area fraught with politics. Having the Administrator oversee this process can help with paperwork, but won’t necessarily ensure full buy-in of the lawyers. It sometimes makes sense to engage an outside facilitator/planning to assist with this process. However, once a strategy and plan are in place, it must be up to the firm to see it through. Provided all members understand the upsides of doing this well and the downsides of doing this poorly, common sense should prevail.
Heather Gray-Grant is a business strategist, marketing expert and executive coach for law firms and lawyers. She can be reached at firstname.lastname@example.org