Passing the baton
Succession planning for law firms
Although acknowledging the need to ensure that the firm has enough people with the right skills and leadership potential to step into business-critical positions at the right time, law firms often avoid the subject of succession.
Despite usually being highly intelligent and risk averse, many senior lawyers who have been instrumental in creating, growing, managing and leading their firm, assume the future will miraculously work out without the need for any proactive planning. They may avoid succession planning because they are still at the top of their game, and not yet receptive to discussing the phasing out of their role and responsibilities. They are still actively producing good levels of fee income and have strong established client relationships which they are reluctant to relinquish to junior and less experienced colleagues. They may be anxious about clients’ response to change, the potential failure to transition clients, and the resulting loss of revenue. They may perceive that winding down will make them less relevant in a culture where prestige and credibility is still attached to, and measured by fee performance.
Even where the need for succession planning is acknowledged; knowing and discussing is not the same as solving the problem. Many firms still deal with succession on an immediate ad hoc basis, when a senior lawyer has decided to leave or retire, rather than as part of a carefully considered succession strategy.
Complacency that “these things have a way of working themselves out” whilst senior lawyers are busy getting on with fee earning and running the firm, coupled with the apathy of junior partners, and the challenge of finding and retaining talented staff, are the three most common reasons cited to us about why firms are failing to prepare succession plans.
Sometimes law firm leaders haven`t clearly identified the next in line from the new generation of lawyers who may not yet have the same level of experience, breadth of knowledge or business acumen. Often, they have made optimistic assumptions and are flummoxed when junior partners with years of service at a firm declare that they are not prepared to assume the mantle of leadership, or the obligations and responsibilities that come with it.
Progressive law firms will identify the need for succession planning, and encompass the plan into a retirement agreement, which will vary firm by firm according to its own needs.
A succession plan should identify both the potential benefits as well as the consequences and risks of continued inertia and delay in tackling succession planning. Firms need to be proactive about the retirement process so that when the time comes the senior lawyer can leave, and valued clients will stay, but getting buy in from senior lawyers to begin the planning process can be tricky when many simply want to avoid the subject altogether.
Lawyers like evidence, so proving the need for succession planning is a good place to start.
A demographic analysis of the ages of lawyers in a firm, further broken down by office (if more than one) practice area and then fee income, will objectively demonstrate the need for succession planning and should bring home to reluctant partners the risk implications of failing to act on succession issues.
This analysis will provide a platform from which firms can start to make necessary decisions regarding succession planning such as nurturing young talented lawyers from the beginning of their traineeships to develop management and leadership skills, so that when the time comes to pass the baton, leaders can retire safe in the knowledge that their legacy is in safe hands.
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