According to an ABA report, nearly 65 percent of equity partners will retire over the next decade. Baby boomers, who have had a hold on law firm leadership for years, are aging out and millennials are moving up. Is your firm prepared for this upheaval?
Drastic change is coming to the legal industry and the best defense you have against it is a strong succession plan. Dave Roberts, CPA and partner-in-charge of the Law Firm Services group at Armanino LLP, one of the top 25 largest independent accounting and business consulting firms in the United States, consults with law firms large and small on a wide range of financial and management issues. He joined the Law Firm Marketing Catalyst podcast, where he offered his perspective on best practices in law firm succession planning and the top mistakes he sees firms make.
Mistake #1: Not allowing enough time for the transition.
The single most important thing you can do to make a transition in leadership successful is give yourself time. At mid- and large-sized firms, where there might be several retiring senior partners, succession planning must be an ongoing part of the firm culture. Even at small firms, where perhaps there’s only one person transitioning, succession planning has to start at least five years in advance. It’s not a process that can be initiated when a senior partner decides they are a year out from retirement. There’s a constant need to look for attorney “stars” to make your bench more solid and ensure a long future for your firm.
Mistake #2: Not compensating or valuing senior partners transitioning out.
The traditional compensation structure, where lawyers are rewarded for billable hours and origination, encourages senior partners to hold onto their status for as long as possible, and they do so with good reason. There’s a lot of pride in knowing that your years of work have brought millions of dollars into the firm. So it’s no wonder that, when faced with succession planning, most senior partners’ first question is, “If I’m passing my work off to a junior partner, what about my compensation?” It’s an emotional and often conflictual conversation, but there is one proven way to ensure it goes more smoothly: compensate senior partners for transitioning and mentoring rising partners. If you’re not willing to compensate senior partners for this work, Dave says there’s no point in even starting a succession plan.
Mistake #3: Not mentoring junior partners transitioning up.
If you’ve hired promising stars, but you don’t train or mentor them well enough to become business originators (or worse, if you don’t compensate them enough to stay at the firm at all), you’ll be left in a tenuous position when it comes time to transition. Well before your senior partners announce retirement, you should be guiding junior partners toward leadership. Put them on committees so you can see how they act and react in certain situations. Get them involved in firm management, client pitches, client relationships and firm strategy. This not only helps junior partners step into a leadership role, but it also helps other people at the firm see them as leaders and feel more comfortable when their leadership position is formalized.
Mistake #4: Not monitoring progress frequently enough.
The timeline of a succession plan is obvious: the senior partner has a specific date when they will leave their position. But in the meantime, how you plan for that transition is crucial. The key players in the process must convene regularly to make sure goals are being met. Dave suggests quarterly, since any less frequently than that increases the probability of the transition not working out. These roundtables not only help everyone measure their progress, but they also give senior partners an opportunity to get public recognition and kudos for their efforts. Succession planning is all about changing people’s behavior—a notoriously difficult process—and regular meetings keep people accountable.
Mistake #5: Not involving marketing and business development professionals.
Legal marketers and business development professionals, whether in-house or in an outside consulting capacity, play a huge role in recruiting the right people. Legal stars with leadership potential are in high demand, so a recruitment team that can find them and paint a picture of why they should choose your firm is invaluable. Once these stars are hired, they need to be coached and mentored into becoming rainmakers—another duty that falls to the business development pros. Developing business is the lifeblood of a firm; if lawyers can’t originate business, everything falls apart. That’s why your succession plan must have a strong business development focus, and the experts on the subject must have a voice in it.
Find more on the Law Firm Marketing Catalyst podcast.
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