Managing Law Firms in Transition

Managing Law Firms in Transition

Lawyer Exodus From the Law Firm: Don’t Get Mad, or Even, Get Focused

Posted in Law Firm Crisis, Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Unexpected lawyer departures from a law firm are a far too common occurrence as noted by Above the Law’s recent reporting on K&L Gates.  It can happen at any time during the year but many times peaks around the end of a fiscal year.  Whether it be disappointing financial results, political infighting, loss of confidence in management or plain staleness at the old firm, the end of year stimulates thoughts of leaving.

A typical reaction from management is to consider the departed as disloyal or misguided.  Casting a shadow (throwing shade?) on the stated rationale for departure can provide reassurance that all is not bad at the firm or that the firm is better off free of such selfish people.  Sometimes thoughts percolate about making the departure more painful or difficult for the firm’s newest alumni.  While the enforcement of fiduciary or contractual obligations has its place, extracting tribute from the departed takes on a life that seldom plays out well and usually delivers little benefit.

A more rational response is to focus on the things that really matter-the nitty gritty that determines the future health, if not survival, of the firm.  So when confronted with an unanticipated lawyer departures, leadership should:

Determine the Short-term and Long-term Financial Impacts.  Leadership must take stock of the financial impact caused by departures.  For firms that have borrowed money under credit facilities, the departures may create a non-monetary default.  Assessing this possibility is very important.  The next step is to analyze the short-term hit financial impact of the departures.   In many cases, the departures actually provide a brief cash-flow respite since financial obligations to the former lawyers are reduced or eliminated.  From a long-term standpoint, the departures always have a financial impact.  Whether the outcome is positive or negative typically turns on the profitability of the practice that left with the attorneys.  Finally, if the firm has an obligation to return capital to the former owners, the impact may be short-term, long-term of both.

Be Alert to the Tsunami.  Like the first guest at a boring party announcing the need to leave only to be followed by the entire guest list, lawyer departures can create a Tsunami of defections.  When more than an isolated departure is experienced, wide spread discontent may be gurgling beneath the surface-ready to turn a slow trickle into a gargantuan wave.  The first departures could well be a signal.  See it as such and take steps to stem the potential for more.

Secure Your Information and Assets.  A firm’s assets can be many, including client relationships, ongoing legal matters and proprietary information.  At the same time you are putting on the full-court press to retain your clients and open matters, be sure to secure the firm’s information base.  As legally and contractually permitted, cut off the departed parties’ access to sensitive information.  It may be too late since most resignations are preceded by surreptitious preparations (including collecting data, work product and vital information), but sound management must act to minimize access once departures are announced.

Notify and Reassure Those That Matter.  While you are reacting to the crisis, leadership must avoid becoming so insular as to ignore other interests that need reassuring.  Staff, associates, owners, clients, banks (remember the possibility of a non-monetary default) and landlords all have an interest in the firm’s well being.  An information vacuum can cause these parties in interest to assume the worst.  Getting out in front of the news quells the possibility of overreaction.

Develop a Plan for the Long-term Health of the Firm.  By the time the foregoing steps have been taken, or at least started, designing a long-term plan for the health of the firm becomes paramount.  Things that are learned as the crisis is addressed (the financial impact, the risk of added departures, loss of clients and third party reaction) will be the guideposts for a plan.  Soliciting input from key players still at the firm, from important clients and, in some cases, outside parties, can be very important to not only create a sound plan, but also one that has good prospects for “buy-in.”

For most firms, year-end is still months away.  If the end of your firm’s fiscal year brings with it “moving day,” immediate focus on the crisis is critical.  Is your firm prepared?

Why Do You Want To Grow Your Law Firm?

Posted in Law Firm Growth, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

growth 2Ask the Managing Partner of any 100 law firms to list their top 5 objectives for their firm, and 99 or more will say something that relates to growth in the number of lawyers, locations or practice disciplines.

Ask the same Managing Partners what is driving the need for this expansion and the response will most likely be something like:

  • To send the right message to the firm — if we’re not growing we’re shrinking;
  • We have excess office space to fill;
  • Bigger means we’ll be better positioned to seize opportunities that might come our way;
  • We must be bigger in order to be competitive.

Now, there isn’t anything inherently wrong with growth. And though there is no denying the fact that talking points like those noted above are almost always going to be part of a discussion, nothing about this kind of conversation is strategic. None of these reasons are likely to lead to long term success for the firm, its lawyers or those that you seek to hire.

A Better Conversation

There are strategic reasons to grow. Two of the best are:

  • To respond to the expressed needs of a client(s) — real, not inferred or imagined;
  • To position you to do more of the type of work you aspire to do.

Let’s unpack these a bit.

Client needs

To meet the needs of existing clients is a great reason to grow. But, be careful with your conclusion. The fact that a client has a need for legal support in a practice area or location that your firm doesn’t practice doesn’t necessarily translate to an opportunity. The client may be very satisfied with existing counsel — and not inclined to make a move. Be clear about the amount of work and the likelihood that your firm will capture it.

Before considering growth in response to what you believe to be the needs of a client, have a conversation with the client. Explore their needs, desires and any current concerns. Let them know of your desire to be in a position to more completely serve their needs.

Only after receiving strong encouragement from the client should you proceed to further consideration.

Work you desire to do

In the formative days of most law firms, the founders possess a strong sense (or even written mission) of what type of work the partnership aspires to do.

To actually land that work is a different story, it is difficult to convince a client to send you work of a particular type if you have little to no experience in that area. But after having an opportunity, and performing well, you should find yourself in a position to do more and more of that type of work.

One additional approach to getting desired work opportunities is to hire someone who already has a reputation and developed practice in your targeted area. This accelerated approach to acquiring the desired work can be dangerous. If the person doesn’t share your values and aspirations the opportunity should be passed on.

Growth is alluring, and I am not sure why. The bottom line is that far, far more firms have failed because of an unstrategic (and rushed) approach to growth than from growing too slow. The importance of caution in growth can’t be overstated.

 

How and why is your firm growing?

 

Meeting the Challenges Ahead: Law Firm Success in Transitional Times

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Challenges ahead warning road signFor followers of the law firm industry, there never is a shortage of opinions about its current state or what the future holds. True to form, the recent publication of Professor Ben Barton’s Glass Half Full: The Decline and Rebirth of the Legal Profession is a provocative take on where the law firm world is today and where it is headed.  Professor Barton’s book has stimulated discussion already and no doubt more will come.  Whatever one’s view regarding whether the industry is in decline, on an upswing or just treading water, few would argue that the last 10 years have not been a time of significant change.

The challenges facing law firms (not to mention the battle being waged by solo practitioners to keep pace as noted by Professor Barton) cause some law firms to abandon past practices in favor of trying something new and more effective.  Indeed, The Wall Street Journal’s Sara Randazzo profiled Quinn Emanuel’s new approach to finding fresh lawyer talent (Quinn Emanuel to Scale Back Summer Associate Program).  The highly regarded firm has decided to greatly scale back its summer associate program.  Instead, Quinn Emanuel is focusing its new attorney recruitment on third year students and graduates headed for or coming off judicial clerkships.

Change needed to meet today’s challenges is not always as simple as replacing a summer associate program with different hiring practices.  The challenges faced by law firms today are so varied that no “short-list” of solutions exists or is even imaginable.  Meeting today’s challenges is more a question of process-dealing with transition methodically and with a purpose.  For today’s law firms and its leaders, five fundamentals are essential to success in the days and years ahead:

Develop a Long-Term Plan and Stick to It. Smart firms have developed a long-term strategic plan after careful and thoughtful consideration. If such a plan does not exist, it is time to get one. But any long-term plan’s value is undermined if it is cast aside in favor of the latest trend. So develop a long-term strategic plan (sound strategy) and couple it with the discipline to see to its execution (strong leadership). If it begins to appear flawed, recognize the flaws, rethink the plan to make necessary fixes and create a new or better long-term plan. It likely will represent a tweak of the earlier plan, not an entirely new direction. But above all, don’t manage “on the fly.” It will only disappoint.

Emphasize Your Strengths. Face it, not every practice area at your firm is a world-beater. Play to your strengths and consider phasing out anything that is weak or not critically complimentary to your strengths. As Basha Rubin wrote for Forbes in her The Business of Law: Is the Mid-Tier Law Firm Dying [?], specialization allows you to distinguish yourself in today’s ultra-competitive world. In contrast, little that a generalist does is unique.

Recognize that Growth is Neither a Solution Nor a Strategy-It is a Tactic. Refrain from thinking that growth itself is a great plan. Too often growth plans are viewed as a strategy that solves problems or stimulates opportunity. Unfortunately, growth is mostly a tactic, not a strategy. If growth implements a firm’s strategy, great. If not, it is action packed but aimless.

Understand that Not All “Best Practices” Suit Your Firm. Another law firm’s success with an initiative does not mean it is something to be emulated. Studying industry best practices is good, and thinking about them introspectively is better, but implementation should only happen if the fit is right.

Be True to Your Firm’s Culture. Trying to be something you are not is destined for disaster. A firm that has a distinct culture should manage, hire and practice consistently with that culture. If lateral hiring occurs, leadership should give as much attention to integrating the new hires as catching them. Integration means inculcating the additions into the firm’s culture. They will benefit, your legacy people will benefit and the firm will benefit.

Strong leadership and sound strategy will guide law firms through challenges and transition.  While there may not be any easy answers to the difficulties faced by law firms, these five fundamentals can go a long way towards guiding leadership to the right result.  When your law firm has faced challenges, what approach has worked best?

 

Law Firm Decline and Leadership Mistakes

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” – Charles Darwin

iStock_000026355793XSmallThese days, scarcely a week passes without news of another law firm in decline. From high-profile names to less-known partnerships, the leaders of each face pivotal decisions. Some of these firms will restructure or otherwise embark on a turnaround strategy. Others opt for merging with another group or offering themselves as an acquisition target in an effort to avoid dissolution. In recent years we have seen far too many end in a messy liquidation.

Identifying The Path That Leads To Decline

The decline of a once vibrant partnership rarely has much to do with the quality of lawyers engaged in the practice. And though the marketplace is certainly tumultuous, what is at the heart of survival and success for some, and the dire straits of a struggle to survive for others?

In his book Corporate Turnaround, Dan Bibeault identifies four key mistakes that lead to organizational decline. These mistakes, paraphrased to the legal profession are:

  1. Failure to respond effectively to a changing competitive environment
  2. Poor control over operations
  3. Over-expansion
  4. Operating with excessive financial leverage

Let’s look at each one a bit more closely.

Failure to respond to change effectively

Every leader knows that the only constant in business is change. And no one need tell the leader of a law firm that our industry is changing at breakneck speed. Specifics of the changes virtually every firm leader must contend with include:

  • Increasing mobility and declining loyalty of attorneys
  • Client imposed pressure on pricing
  • Non-traditional competitors and alternative service providers
  • Technology’s role in driving certain lines of service to commodity status
  • Consolidation

Counsel/Advice – Effective law firm leadership establishes a formal mechanism through which change is routinely addressed. These mechanisms identify emerging changes to the business of law, and collaboratively craft appropriate responses.

Control over operations

Operational challenges are varied, and abound. If the leaders of a firm are continually surprised to find threats to profitability and stability, the firm is well on its way to a potentially painful transition process. On the other hand, keeping an eye out for these early warning signs can result in averting crisis:

  • Loss of a significant client relationship resulting from continued service delivery issues, or the departure of a key partner
  • Firm-threatening malpractice claims resulting from failure to engage in client problem management
  • Shortage of working capital resulting from continuing cash flow deficits.
  • Excess capacity in terms of space and people resulting from failure to manage attrition of clients and or lawyers

Counsel/Advice – Leadership must establish control mechanisms that spot these (and any evolving) early warning signs. These mechanisms may include:

  • Operating and capital budgets
  • Client feedback systems
  • Attorney and non-attorney review systems such as 360 reviews that register building frustration

What might law firm leaders be doing today, to better predict where firms end up in the coming months and years?

Law Firm Succession Planning 2015: Leadership’s Hidden Challenge (Part Two)

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

As discussed in my last post, Law Firm Succession Planning 2015: Leadership’s Hidden Challenge (Part One), the confluence of upbeat economic news with generational differences in the lawyer ranks presents a problem for law firm leaders not having an institutional succession plan.  The issue is not just theoretical-Altman Weil’s 2015 Law Firms in Transition report warns that the many firms not having a succession plan (Altman Weil projects the percentage at more than 65% of firms surveyed) will feel the economic effects imminently.   For law firms in this predicament, the task of adopting a plan can be difficult but not impossible.

Contemplating a future without a well-designed succession plan, or just thinking that its preparation can be deferred to later, amounts to playing high stakes poker with a lousy hand. But it does not have to be that way. Five steps can be followed that can fill the void. A firm facing the risk Altman Weil warns about must:

Pursue a Prompt Solution. Do not wait. Altman Weils report tells us what everyone knows; many law firm partners are resistant to change (Altman Weil concludes that resistance to change is “a persistent threat to law firm success”). Today, the general resistance is compounded by the good times enjoyed by many law firms. Despite the significant challenge involved in rolling out a succession plan in that kind of environment, today’s management must steel itself to the task and forge ahead. While other problems may receive management attention, leaders must be resolute and prioritize the formidable task of succession now rather than wait until later. Excuses or preferences should be cast aside-unyielding attention should be directed to development of a plan and seeing to its prompt implementation.

Communicate. In times of change or transition, clear and constant communication is vital. When the Boomer with the client relationships is approached, the firm’s objectives should be explained and he or she should be encouraged to become an architect of a plan that provides for succession. The Boomer’s nominee as successor should be solicited. Likewise, a discussion with the client is needed to learn its preference. Views about fears, concerns and benefits of all concerned should be exchanged. Reconcile divergent thoughts, and then refine a plan that reflects that the firm has listened.

Create a Plan That Harmonizes Individual Self-Interest with Institutional Longevity. Whether the succession plan is management focused or client retention focused, it must answer each participant’s bottom line question of “what is in it for me?” All players in the succession plan, especially in light of the generational interests at play, will wonder about the benefits to be gained from cooperation. The Boomer, whose practice or position in leadership needs to be transitioned, must feel that the plan is fair, benefits generous and future secure. Promises must be more than words-they much be backed by commitments that are tangible, evident and secure. Similarly, the successors need to see reason to invest in the plan, even though today’s attention to the plan may seem like it asks for too great a sacrifice. These potentially conflicting interests must be managed by leadership with the goal of furthering the interests of the firm.

Make it the Key Players’ Plan. For change of any magnitude to succeed at a law firm, partner “buy-in” is required. In the case of a client succession plan, it is critical that the Boomer aging partner and the selected successor be deeply committed to the plan and its success. Again, harmonizing the ideal of key player self-interest (what are the “must haves” for the aging partner and the selected successor?) with the firm’s long-term objective is essential to making the plan work. Management should strive to develop an appealing plan that is executed by the two key players without constant prodding from up on high. If the plan becomes the key players’ plan, it has a great chance of success.

Earn Trust Every Day. Like an anti-biotic, a succession plan won’t be effective if not followed to its prescribed end. And just as the key participants must be fully committed, so too should management. To show its commitment, management must daily reinforce its unyielding support for the plan and its participant’s. By doing so, management will earn the requisite trust that is essential to success. Failing to earn that trust, or taking it for granted, will create doubt that deprives the firm of its ultimate goal.

If your firm is without a succession plan, there is no time to waste in taking these five steps.   Even so, are there other things to do that you think are equally important?

 

 

Law Firm Succession Planning 2015: Leadership’s Hidden Challenge (Part One)

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Transition

Altman Weil’s 2015 Law Firms in Transition report recently came out and as usual it offers interesting and valuable information about the law firm industry as well as the perceptions and attitudes of law firm leaders. One fact noted by AW in its report is that in 2015 much of the industry is enjoying a recovery from the Great Recession.

The report is not all happy talk; however, as challenges faced by firms were noted, including the looming need for many firms to do more about client and practice succession planning. AW’s study of surveyed firms observes “only 31% of firms have a formal succession planning process in place,” and goes on to conclude that “the economic impact of this failure to plan for succession is imminent.” Among the more notable data points from AW supporting its conclusion is that in a large number of surveyed firms partners older than 60 years control at least a quarter of their firm’s total revenues.  In some firms surveyed, the percentage controlled by the aging Boomer is even greater.

The combination of today’s happier times at law firms and succession plan shortfalls is an unfortunate mixture, indeed, an insidious brew. As I wrote recently in Five Important Objectives For Law Firms Dealing with the Generational Challenge in Succession Planning, the generational challenges faced by law firms executing on succession plans are both subtle and significant.

The Boomer, having built a practice and reputation through hustle and hard work, may naturally be disinclined to gift it to someone else. Generation X lawyers, tending to be less loyal than earlier generations, may present risks to a plan of succession. Their comfort in moving laterally between firms may temper enthusiasm towards entrusting relationships. And the Millennial, not always motivated to jump onto the partnership track, can be even less suited for a role in succession. To varying degrees, the “Boomer with the book” may find it hard to relate to the up and coming lawyers and thus hesitate on the issue of succession.   Leadership may feel likewise.

These varied interests and motivations of the different generations can be hard to harness towards long-term goals like succession. And it is especially the case when the long-term goal of succession is trumpeted at a time when things are good and most individual partners are focused on their own personal agenda.

For the individual partner, “making hay while the sun shines” is a compelling motivator that subordinates thoughts related to the survivability of the firm as an institution. The “now” mentality also views with suspicion any firm program that contemplates change, like a succession plan would.   If times are good, all three generations may ask, why rock the boat?

In today’s law firm environment, in which a recovery from the Great Recession is being widely enjoyed, what are the 69% of surveyed law firms, the ones currently without a formal succession plan, to do? Although the dilemma is common today, not all firms meeting this profile will address the problem in a timely and sound way. If AW is correct, those that don’t fill the succession vacuum will feel an economic impact-and soon.

In part two of this post, I’ll examine some steps that law firm leaders should pursue today to prepare a succession plan for tomorrow.

 

The Law Firm Lease and Testing Shared Aspirations

Posted in Law Firm Crisis, Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring

CommitmentOther than when a firm is being formed, there is no better or more organic time to test a law firm’s continued commitment to one another than when nearing the expiration of an office lease.

Typically, when a firm is formed, two or three or a handful of individuals gravitate to one another, become increasingly aware that they share some combination of values, dreams and aspirations, and form a firm.

Time brings changes — in market and working conditions, and in the individuals. What was once important becomes less critical. What one was looking for when the partnership was formed has shifted. The greater the divide, the more the relationship is stressed. And “stressed” is shorthand for pulling in different directions.

To the extent members of a firm conclude that their aspirations have shifted to a point that it no longer makes sense to practice together, it is prudent to execute the separation in a way that causes the least economic (and other forms of) pain.

The firm’s lease can often be the source of a great deal of economic pain. But it doesn’t have to be.

What does all of this point to?

As a firm nears the end of a lease term on office space — often its largest fixed expense — a partnership has an organic opportunity to pause . . . and assess the degree to which the members of the firm are still on the same page. Does the partnership still share basic hopes and dreams?

Though no one really enjoys conversations that focus on disagreements and differences, a conversation today will help with one of two eventualities: either it will facilitate a discussion around clarifying shared aspirations or, a conclusion that dissolution is a better answer for all involved.

We recommend this process begin no later that 18 months prior to the scheduled lease expiration. The “glue testing” should be conducted with a laser focus on the core of how firm members really feel about the firm, where it is and where it is headed.

An impartial third party can insure that the process is collegial and effective.

One firm that seems to have successfully been through this process is the Dallas based litigation firm Hermes Sargent Bates. The firm, which had been in business for 15 years, has a lease expiring in 2016. As the partners discussed professional and personal goals and objectives, the decision was made to dissolve rather than extend or sign a new lease. According to reports, the members of the firm remain friends and have respect for one another; but the group had simply developed differences with respect to the types of law they want to practice, the types of clients they want to serve, and area of town in which they wanted to sign a new lease.

Having reached this conclusion, the firm seems to be taking an orderly approach to what is, for many firms, a disorganized, angst-filled experience.

What is the degree to which you and your partners are still on one page? Does your firm have the experience to really test the degree of continuing shared aspirations?

No Muss No Fuss Law Firm Closure

Posted in Law Firm Leadership, Law Firm Liquidation, Law Firm Transition, Law Firm Warning Signs

Growth among law firms generates headlines. Legal publications report on a merger here, a planting of a law firm flag there and the lateral moves of significant practice groups. The thing about growth is that it is a planned exercise-an initiative that is a matter of choice based on strategy. The opposite of growth, a law firm’s forced closure, often garners headlines as well, like the closings of Dewey, Brobeck, Coudert and Howrey, to name a few. Yet many law firm closings go unreported or fall under the radar because they just aren’t that interesting. The unreported (or underreported) law firm closings are, like growth, a matter of choice-in their case usually undertaken when owners simply decide that closing the firm makes more sense than continuing the status quo. For those law firms, closing becomes their strategy.

Law firm closings by choice tend to be quiet affairs. This year alone, three established law firms in Dallas decided to either close entirely or leave the market in order to concentrate elsewhere. Barely a ripple was made or observed. In each instance, the firms chose to close or exit the market as a matter of choice unforced by unforeseen circumstances or crisis. In our experience, when closing becomes a law firm strategy, five things tend to determine whether the strategy is successful:

Discussion Among the Owners is Unemotional.  Successful law firm closures by choice usually grow out of unemotional discussions among law firm owners about their firm’s future. Views are expressed and ideas are exchanged that ask about the law firm’s very existence. The reasons for the law firm’s formation, its historic successes and its recent frustrations and failures are all considered as the firm’s future gets questioned. Unlike law firm discussions that occur when departures or controversy stimulate animus or finger pointing, a discussion amongst owners seeking a “gut-check” about their future together tends to be more clear and rational.

Closing Experience.   The closing of a law firm necessitates the resolution of many issues that are never faced by the law firm operating as a going concern. Having experience in closing a law firm or drawing on professional assistance specializing in closure is extremely valuable. A DIY approach risks taking critical steps out of sequence or missing important steps altogether. As odd as it may seem, most successful law firm closures are not a “first rodeo.”

Advance Planning.   Law firm closing by choice usually involves careful consideration of all the ramifications that go with a closing decision. In those instances when a law firm has embarked on a closing strategy, it likely has time to plan its closing. The absence of crisis can allow the firm time to plan a closure that is both prompt and methodical.

An Impending Deadline Compels a Discussion and Then a Decision. Oftentimes, inertia causes a law firm and its owners to march along without considering whether a continuation is in everyone’s best interests. But when a significant business decision is presented, like entering into a new long-term office lease or appointing a new leader, the owners can take stock of the firm, their relationships with each other and individual desires. A watershed business decision creates a deadline and in many cases successful law firm closures grow out of one being presented.

There is Consensus About the Planned Wind-down. Nothing is worse than a law firm wind-down in which the owners are in disagreement about the objectives, the strategy and the person to be placed in charge. On the other hand, if the owners can be in agreement about how the firm will be wound down until it is dissolved and who is responsible for the plan’s execution, the wind-down can be effective and relatively painless. Obtaining consensus among ownership is not a given but hard work and dialogue can mediate differences of opinion. Even after the wind-down begins, a commitment to cooperate is vital if early consensus is to continue until dissolution is complete.

Each year, many firms face closure decisions, sometimes with little warning. All it takes is for a few owners to ask the fundamental questions about whether the firm should continue. Is your firm, as stable as it is, facing an important decision point about whether it should continue or close? If so, is it likely to respond in a way that would make its closure by choice a success?

Is Turnover Putting Your Law Firm At Risk?

Posted in Law Firm Growth, Law Firm Transition

 

employee terminationIt has been estimated that lawyer turnover costs US law firms in excess of $13 billion per year — a staggering sum. At a more micro level the total cost of losing a lawyer is equal to more than two times the lawyer’s annual salary.

Although most industries face challenges associated with retaining talent, when it comes to managing the investments made in human resources, the legal profession’s performance is much worse than the norm. Turnover levels in US law firm’s often exceed 20% per year. Compare that to the Best Companies in America to work for, where turnover averages between 2 and 3%.

If your turnover exceeds 10% per year, you should be wondering why.

Here are four areas of management that you might want to take a look at.

Hiring Practices

Is your firm using all available tools to assess fit? Reportedly almost 90% of the Fortune 100 companies use psychometric assessments as part of their hiring process. By comparison, most law firm we know of adhere to the same hiring practices that were in place 50 years ago. If your due diligence consists of reviewing a resume or — worse yet — hiring based on proclamations of a portable book of business, you may have discovered the heart of your problem.

Development

The existence of a clear path to self-development and professional growth is one of the keys to engaged colleagues. Firms that hire, invest 3 hours in “orientation” to processes and procedures, and then leave a new partner to sink or swim should not be surprised when there is little or no integration. Nor should you be shocked when talent winds up in an exit interview.

Satisfaction Monitoring

Do you know what the members of your organization really think about the firm? Do you know if they are content or discouraged? Often dissatisfaction is the defining fabric of an unproductive, unsettled workplace. And this environment gives rise to departures. Wise (and effective) firm leadership implements ways to listen, engage and respond to serious issues of dissatisfaction.

Economic Performance

Whether you believe it or not, the professionals in your firm know when the economic performance bar is set low. If your firm consistently performs at or above industry norms, you have a much greater shot at having happy and satisfied colleagues. If this isn’t the case, evaluation and adjustment are in order. Fail to address this issue, and be prepared to deal with serious retention issues

Managing turnover is a choice; firms that accept high turnover are unnecessarily costing themselves dearly. Which choice is your firm making?

Five Important Objectives For Law Firms Dealing with the Generational Challenge in Succession Planning

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Transition

Passing on leadership to the next generation at small to medium law firms can be a challenge. These firms give themselves the greatest chance of success for eventual transition if they identify future leadership early and take the time to nurture the best prospects before succession presents itself. Taking on this blocking and tackling is critical to passing the torch. Yet the generational diversity present in many of today’s law firms, especially smaller ones, can make succession planning a challenge.

The recent post How Law Firms Can Navigate the Generational Divide by Jonathan Fitzgarrald drills down into the “generational divide” law firms face when trying to implement leadership succession, transitioning relationships and client succession plans. He identifies four generations and details their characteristics that make succession at law firms such hard work. Working with the different generations and their needs and wants is critical in virtually all circumstances, but particularly when considering leadership succession planning.

Mr. Fitzgarrald’s labels and descriptions of the four generations are both understandable and familiar. Not only have we heard about “The Silent [Generation],” “Boomers,” “Gen X,” and “Millennials,” but we all know people that are just as Mr. Fitzgerrald describes. As today’s law firms confront leadership succession, many involve Boomers looking to its Gen X and Millennial lawyers to assume significant roles for the future health of the firm. When bringing together lawyers of these generations to design an effective leadership succession plan, there are five key objectives:

Getting a Boomer to Trust. Transition or succession, whether involving clients, relationships or leadership, requires trust. While all parties involved in transition need to trust each other, the hardest task can be convincing the Boomer-the one you want to let go a little-to trust the process and its participants. If he or she cannot be brought to the trust tree, transition will falter, fail or result in his or her departure without succession getting a chance to take place.

Getting a Gen X or Millennial to Invest. The flip side of the coin in transition is to convince the Gen Xer or Millennial to invest time and effort in the process. For the typical Gen Xer, if his or her participation promises tangible or intangible rewards that are valued, participation and investment is likely. The same generally will be true for the Millennial, but the rewards valued by members of that generation may be different than the ones that motivate the Gen X generation. And while getting the younger generations’ participation and investment is vital, equally important is making sure that the rewards that stimulate their investment are not so generous as to offend the Boomer. Finding the right blend is no small task.

Protecting the Firm and the Boomer. Transition is not effective if your efforts lead to your anointed Gen X or Millennial successors transitioning out the door and joining another firm, especially if they take your best people and clients. Since many Gen Xers and Millennials do not view loyalty to the law firm as a paramount consideration like earlier generations, protecting the Boomer and the firm from possible departure has to be an important component to the transition plan.

Eliminate the Individual Score Keeping. Transition has to be measured by the firm to see if it is working. But score keeping between the Boomer and the successor Gen X or Millennial participants will undermine individual commitment and the firm’s chance of success. When the Boomer or the nominated successors compare each other’s contribution to the overall effort, seeds of discontent can be sown, resentment rises and a fracture becomes more likely. Should that happen, your succession plan is on shaky ground.

Institutionalizing Succession. If your succession planning turns out well, don’t rest on your laurels. Start planning for the next phase. A firm’s goal should be to institutionalize the concept of succession. It will strengthen the firm and all the relationships that matter, including the ones with clients.

When dealing with law firm succession planning, understanding the wants and desires of all parties affected is essential. When developing your succession plan, have you adequately considered the “Generational Divide?”

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