When it comes to the practice of law, there’s no such thing as overthinking. Attorneys are taught to consider every possible scenario when working on a case so they can prepare well in advance for any potential outcomes. It would serve law firms well to apply this same principle to the business of law – especially in regards to the management of personnel.
The baby boomer generation is rapidly retiring – leaving a large void in the leadership of law firms that did not plan ahead for this eventuality. Given the potential business impact of losing clients when an attorney retires, you would think that firms would invest tremendous effort into succession planning. But in most cases, that thinking would be incorrect.
In my work as a business of law consultant, I often hear about succession planning problems within the first 15 minutes of meeting with a managing partner or COO. In fact, for some firms, their entire existence hangs in the balance solely because of exposure resulting from the shifting demographics within the firm’s leadership. Exposure is the key term here. In a business environment where we speak endlessly about pricing, alternative fees, and new ways of doing business to drive revenue, there are literally billions of dollars in legal work at risk of coming to an end as partners retire. Without proper planning, the partner’s book of business may follow the partner right out of the firm.
Let’s take a closer look at how this might play out with a client. Say your client is a corporate counselor that’s been working with a particular partner at your firm for over 20 years and that partner is ready to retire. If the client has not become comfortable with a second, third, or fourth in command at the firm, what are the chances that the client will stay with the firm once the lead partner leaves? It benefits the client and the firm to solidify relationships with multiple partners and multiple successors long before retirement.
Through my work, I’ve heard many reasons as to why firms have not addressed this issue head on. It appears that a combination of inhibitors has prevented the implementation of a proper succession plan:
- There are other pending needs and potentially upsetting a successful book of business is not at the top of management’s list
- The topic is avoided to not upset the partner, who has a lot of power in the firm
- Clear successors are not apparent so there is a reluctance to initiate the conversation
- Junior attorneys don’t appear to have the required skillset and there is concern that it sends the wrong message to bring them in on senior-level business
- The systems and processes in place do not encourage proper succession planning (retention, culture, compensation, origination or billable hour focus, lack of mentorship, etc.)
When giving in to these inhibitors, inaction becomes the action of choice and therefore the problem is exacerbated.
There are other reasons that can contribute to the succession crisis that the legal profession is facing, such as a change in need between generations, the impact of the Great Recession, and the lateral glut. Nevertheless, each day that passes is another day of procrastination and another day of increased exposure.
It’s true that lawyers and people, in general, are living longer and many are working well into their 70s – but that’s not an excuse to avoid succession planning. The mortality rate of lawyers is 100%. Until the magic cure of everlasting life is found, it will remain that way, so succession planning is a must.
Over the next several months, I will continue to address this topic through a multi-part series that focuses on best practices and ways firms can tackle succession needs. I welcome your comments and considerations to help explore this vital issue.