When a partner retires or leaves, your firm must maintain seamless client service and ongoing peak performance. That’s why ensuring continuity is vital for law firms of any size, even in the best times. These days, however, strong succession planning is more important than ever before.
Here are two of the biggest factors right now: Baby Boomers and lateral moves.
As droves of older lawyers who entered the field in the ’70s and ’80s eye the farmhouses or beachside bungalows of their retirement dreams (especially since the pandemic), lateral moves also continue to accelerate throughout Big Law.
That means more and more firms are facing the prospect of losing the knowledge, goodwill, and reputational value that a departing rainmaker represents. Yet, far too many law firms are not adequately prepared to maintain stability when this inevitably happens.
In fact, the numbers are surprising: only 37% of law firms have an established succession plan at all!
Is it any wonder that only about 30% of firms make it beyond their first generation of senior partners?
To help you avoid loss of business, gaps in management, and perhaps even the eventual failure of your firm, let’s dive deeper into some key succession planning strategies.
Why Is Succession Planning So Difficult for Law Firms?
There are plenty of reasons why law firms fail to establish good succession plans, from outdated compensation models to management not taking the issue seriously enough.
However, even firms that recognize a partner transition’s high stakes and risks often need help to get it right.
It’s understandable…like most important things, the best succession planning strategies are NOT EASY to develop and implement — let alone institutionalize as part of your firm’s operations.
Avoiding confusion and disruption during a specific transition requires careful management. Still, many of the biggest pitfalls occur long before any retirement or lateral move is even in the equation.
For example, succession planning requires a firm to identify and assess potential leaders well in advance. Training and developing those future rainmakers takes time and resources and can be costly.
Moreover, a good succession planning strategy demands that the firm dedicate time and attention to crafting a thorough plan long before it’s needed.
Finally, the firm must constantly assess and adjust the plan to ensure that it remains relevant — once again, this takes regular time and attention.
The benefits of good succession planning are hard to overstate: a pipeline of talented individuals ready to rise into leadership roles without missing a step, and structured ways for departing rainmakers to pass on their knowledge and experience, thereby sustaining a firm’s culture, values, quality of service, and success.
Likewise, the risks of getting it wrong are high.
Fortunately, there are some concrete steps you can take to start the process of developing a solid succession plan today.
What Are the 5 Steps in Succession Planning?
The most important thing to remember when approaching this question is that succession is not an event — it’s a process. Just as succession planning is essential to the long-term future of your firm, so is the development of your leadership and knowledge pipeline, a long-term investment of time, energy, attention, and resources. That’s why you should…
1.) Start the Succession Process at Recruiting
I see it all the time: Firms hire people for supportive roles based on their ability to fulfill that specific role. Then, when it comes time to identify and groom future leaders, they have already limited their options to a pool of lawyers that, while likely knowledgeable and talented, may not be the best fit for growth.
Technical expertise can undoubtedly be a pathway to leadership. But as any top rainmakers will no doubt agree, there is much more to it than subject knowledge or skill.
You can get ahead of the curve by keeping the succession process in mind from the beginning rather than recruiting based on aptitude for a given role alone.
And once you’ve found that perfect candidate, remember to…
2.) Prioritize Communication for Improved Leadership Development
If given the right atmosphere and opportunity, potential future leaders with the right characteristics will often self-identify — but that doesn’t mean they’re ready to step into that role overnight.
They will need time, responsibility, and room to make and learn from mistakes to expand their abilities, attitudes, and effectiveness. In my experience, this often comes down to communication.
Are you communicating openly and honestly with individuals about future opportunities, their potential as you see it, and how you can best support them in their growth?
Are you helping guide them as they expand their capabilities? Are you allowing them opportunities for experiential learning and providing constructive feedback about their mistakes?
Speaking of communication, it is also a core component to keep in mind when it’s time to…
3.) Transition Clients to Qualified Partners
Transitioning clients smoothly requires finding the right partner to transition to, and personalized attention and communication through the process.
It is also necessary to communicate openly with the client about the plan and give them plenty of time to gain confidence and trust in the new lawyer.
Ideally, the senior lawyer and their successor work with the client over an extended period, 2-3 years, to keep the transition seamless. This is one reason why you want to prepare early.
Of course, just because a senior partner is retiring, that doesn’t mean their relationship with the firm has to end entirely. In fact, it’s a very good idea to…
4.) Establish Ongoing Post-Partnership Roles
One of the biggest challenges in succession is losing the departing partner’s knowledge and experience.
You can mitigate this by offering retired partners permanent roles as advisers, mentors, or ambassadors.
Discuss these roles’ exact criteria or nature with the outgoing partner, and be flexible. Remember, the goal is to maintain access to their valuable insight and input in whatever way works best.
Finally, even the best succession plan can quickly become outdated. That’s why it’s integral that after developing your plan, you also…
5.) Continuously Monitor and Adjust
Times change, and your succession plan needs to keep up. Evaluate the effectiveness of your process with every transition.
Were all business records, client details, and sensitive data passed along securely and properly? Were all ethical obligations honored, and were all regulations fulfilled? Was client service uninterrupted, and was the client able to build a relationship with the new lawyer over time? Is your compensation structure appropriate?
Critically, is the new partner ready to step into a rainmaking leadership role after years of nurtured growth within your firm’s culture?
Success depends on all these questions, but perhaps none as much as the final one — which may also be the hardest to answer definitively.
Succession planning is never easy…but ensuring that it is part of your routine culture and day-to-day operations can go a long way toward ensuring the future prosperity of your firm.
Do Small to Midsize Law Firms Really Need Succession Planning?
In a single, very emphatic word: YES!
Small to midsize law firm partners may not have mind-blowing books of business to rival those in higher-profile firms. Still, rainmakers are the leadership and lifeblood of any size firm, and their departure may even have a more significant impact on a smaller team.
Additionally, smaller firms (particularly first-generation firms) are the firms most at risk of not surviving a senior partner’s retirement or other departure. Small or midsize firms often rely heavily on their rainmakers and may lack generational spread in their partnership structure. Meanwhile, they often hire lawyers for supportive positions who may not have the same leadership and marketing skills as the rainmaking senior partners.
Finally, for smaller firms, the surprise departure of a senior partner who produces a large percentage of the firm’s revenue can seriously threaten that firm’s financial stability.
For these reasons and more, succession planning is not just for Big Law…it is equally essential for small to midsize firms to develop, implement, and maintain the strongest possible succession planning strategies.
Ready to Get Started?
If your firm doesn’t currently have a succession plan in place, the best time to make this a priority was yesterday. Even if you do have one, however, but you feel that it could be improved or better maintained, or if you are a rainmaker considering leaving your firm, Gillman Strategic Group can help.
Let’s set up a call to discuss the future.