Practice Innovations: Using succession planning to ensure your law firm’s sustainable future

In the previous article in this series, we discussed the looming problem of lawyer retirements, why lawyers are so resistant, and how law firms can help their lawyers prepare for that critical life transition. However, the importance of attorney retirement extends well beyond simply helping lawyers transition out of the practice of law.

Just as they tend avoid planning for lawyer retirement, many law firm partners and leaders resist conducting cohesive succession planning. W. Scott Schulten, of Schulten Ward Turner & Weiss, explains that just about every firm sees the succession planning process as “hard and fraught with potential conflicts.” And Roger Burton, Managing Partner of Barton, concurs, stating many firms avoid the subject “because of the difficult dynamic in addressing the transfer of client relationships and concerns around how it will play out.”

Indeed, John E. Harrity of Harrity & Harrity is more blunt, saying: “Quite frankly, I would say that most firms are living in the now and not thinking about the future.”

No matter the reasons or excuses that many law firms offer, they must create a viable succession planning process. However, what does this process involve and how can firms ensure its acceptance and success?

Plain and simple, a succession plan identifies which attorneys will assume responsibility for which client relationships once a more senior attorney decides to retire. Once the potential replacements have been identified, these attorneys then are groomed in their new roles in order to better transition in managing the relationship without disruption, especially to the client. This grooming should include client meetings, case or matter discussions, education around understanding the client’s goals — essentially. everything related to managing the relationship.

Planning for an attorney’s departure is critical for ensuring the stability and continued working relationship with the client. Failure to plan for this change can result in client turmoil and power struggles among other firm attorneys. Succession requires managing and finessing human relationships, a task that — even with the best of intentions — is never easy. Indeed, successfully transitioning a client relationship can take years.

Overcoming obstacles

Many law firms avoid the succession issue due to a variety of real or perceived fears about hurt feelings with attorneys who may resist conversations that involve thinking about the end of their professional careers. Understandably, this is a very stressful decision, and it often takes time for clients to feel comfortable with a new relationship.

To put together a client succession plan, however, firms first need to answer these questions:

• • • Which attorneys are currently serving specific clients? If a client is seen as under-served, which firm attorney can be introduced to the relationship?
    • What types of training and mentoring will these attorneys need for any new roles? How long will that take?
    • What are the clients’ concerns about the potential loss of a retiring attorneys’ knowledge or skills? Do clients have successor preferences?
    • Are any of the firm’s key clients going through their own transition process? Does the firm have a relationship with the client’s next generation of leadership?
    • How will the named successor be introduced to clients, both socially and in a working relationship?

Starting the conversation also is in the best interest of the firm because under the American Bar Association’s Model Rules, Rule 1.3, the duty of diligence may require a lawyer to develop a succession plan. This empowers every law firm to pressure its attorneys to start the process.

Identifying the successor

To ensure that the best candidates are selected, the appropriate parties must be engaged in the process of succession planning. These include the client, the department chair, practice group chairs, and possibly the managing partner. Bringing all interested parties into the process at the outset will improve the results.

It is important to determine the kind of attorney needed for a successful succession. Law firm leaders need to look at, among other factors, the prospective replacement attorney’s character, background, experience, and shared vision of the candidate. Once someone is identified, the successor needs to be developed and coached so they can maintain and continue to grow the client relationship. For smaller law firms this can be daunting as there may only be one or two viable options.

From recent conversations I’ve had with managing partners, there is sometimes no one at the firm to fill the role in the immediate future, meaning within the next two years. To prevent this problem, firms should start the succession process early so associates can be developed up to five to seven years beforehand. “It facilitates the succession of younger partners and keeps them from becoming discouraged and leaving,” says Ida Abbott, author of the book Retirement by Design.

The goal is to find the right partner who will mesh with the client, ensuring a smooth transition. Karen Borofsky, director of administration at Lando & Anastasi, explains that her firm has a two-year succession planning process that allows for “enough time to foster relationships among [the firm’s] clients and the succession partners.” Clearly, firms should start now to identify and groom their next generation of client relationship attorneys and not wait until an attorney announces their plan to retire.

The “other” succession plan

Smaller law firms that have founders or senior attorneys as managing partners are now realizing that in addition to a succession plan for individual clients, they also need a succession plan for the firm’s overall leadership. When firms are small, there may not be pool of potential managing partners to groom. And as the Baby Boomers reach retirement age in greater numbers, there will be many small firms with managing partners wanting to retire in the next two-to-five years but there’s no one to step into the role. And this often isn’t an easy role to fill quickly — managing a law firm requires business acumen, leadership, and communication skills, as well as a large dose of self-confidence. “Unfortunately, many lawyers bury their heads in the proverbial sand,” says Erin Rhinehart of Faruki, adding that if firms “leave succession planning to chance, things will, inevitably, work themselves out — just not necessarily in the most productive, efficient way.”

For many law firms, especially though which may not have made this process a priority, the time is now to start such a leadership succession plan for the managing partner and all the other crucial leadership roles that exist within the firm on both the legal and administrative sides.

To better aid this process, Andrew Polott, Shareholder and General Counsel at Selzer Gurvitch Rabin Wertheimer & Polott, created a customized process for his successor, explaining that the successor started, “first by shadowing me, then by co-managing and taking on increased responsibilities as manager — and for the last quarter of my term [as managing partner], I acted as my successor’s shadow/coach.”

Not surprisingly, leadership succession planning has been around since people started living in groups. It’s not hard, it just takes effort — and once the candidates are identified, they should be given adequate training in the topics below:

• • • Leadership skills to enhance their ability to lead the firm effectively and strategically
    • Business development skills, taught at a higher level so they understand how and why attracting new clients in order to grow the firm’s revenue and reputation is critical
    • Law firm management training that covers topics such as creating a business plan, setting a budget, overseeing operations, implementing policies and procedures, and ensuring compliance and quality standards
    • Establishing and maintaining partner relations so new leaders recognize the value of communicating clearly and frequently, soliciting feedback, resolving conflicts, fostering collaboration and trust, and recognizing contributions and achievements
    • Succession planning so they can start identifying potential successors for themselves and others in the firm, preparing them for their new roles, and facilitating a smooth transition when the time comes.

Retirement and succession planning are essential for the sustainability and growth of small law firms, as well as for the well-being and satisfaction of their senior attorneys. However, many lawyers face emotional and practical barriers to retiring and passing on their roles and responsibilities. Firms should provide guidance, support, and incentives to better help their senior attorneys overcome these challenges and embrace retirement as a positive and rewarding transition. In this way, the firm will also benefit by ensuring a smooth transfer of knowledge, clients, and leadership to its next generation of lawyers.