In last week’s post, we explored the surprise loss of a law firm leader. Today I want to suggest an orderly approach to this inevitable event.
The Zeughauser Group conducted a survey that included several interesting issues. Three observations related to planning for the long-term health of the firm struck me.
· When describing the top objectives for their firm, the most frequently stated objective was to “achieve long term stability.”
· When describing the biggest challenge facing their firm in the next 3-5 years, the most frequently cited challenge was “transitioning leadership to the next generation”, closely followed by “transitioning client relationships to the next generation.”
· Finally, when asked about the biggest priority in the next 3-5 years, the number one answer was “building a more stable future.”
These responses aren’t surprising — especially when considered along with repeated surveys indicating a minority of firms have developed any formal plan to transition leadership and or client relationships to the next generation. (See here for some good discussion related to the lack of preparation industry-wide.)
Is it possible that Covid-19 has prompted us to rethink how we prepare for the future?
If you are a law firm leader, the challenges do not surprise you. We regularly visit with managing partners and governing bodies that see the writing on the wall. Except for those who choose to bury their heads in the sand, most agree succession must be addressed. A comprehensive and workable succession plan is essential if a law firm hopes to survive beyond the current generation.
A 3-Step Path to Survival
Step 1– Start now. As simple as this may sound, it may be the single toughest part of developing a plan. The day-to-day demands of managing a practice make it difficult to step back and consider the future. This reality is one of the biggest reasons many firms find themselves in the current predicament — years of not having time to address relationship continuity and succession.
“To think too long about doing a thing often becomes its undoing” –Eva Young
Step 2– Engage your colleagues in a series of discussions intended to yield a plan for succession. Inclusion is essential to obtaining the buy-in necessary for a plan to succeed. Conversations with those impacted (clients as well as lawyers) that focus on long-term benefits, continuity of representation for clients, and the value of legacy are critical pieces of the puzzle. Some of these conversations may not be easy, but without them, you are reverting to a strategy of hope.
Step 3– Execute and monitor the plan. Very few plans roll-out precisely as intended, but the routine monitoring of performance to the plan provides a means of adjusting as necessary to achieve the objective. Succession is about the future–and any conversation about the future must be on-going. Inside a successful firm, a good plan must be able to evolve.
A successful succession plan doesn’t necessarily mean future leadership comes from within your firm. The plan may include the recruitment of new talent in leadership areas and or client generation and servicing. It may mean that the core of your firm survives as a part of another organization. The real key is that the result your firm ends up with is the result you desire. Without adequate planning, the desired result is highly unlikely.
One additional note that many firms miss regarding succession planning is —-Succession is likely on the mind of your clients. The issues of experience and continuity are likely being dealt with inside your client’s organization. A thoughtful collaboration between the relationship partner, the client, and firm leadership is an opportunity to demonstrate that level of client-centeredness all law firms proudly tout.
Our experience is that most firms wait too long and suffer the consequence of fewer or no options. Don’t let that happen to your firm!
See here for additional reading on this topic.