Managing Law Firms in Transition

Managing Law Firms in Transition

Law Firms Enjoy Positive 2018-What If Your Firm Didn’t?

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

Although the final numbers are not in yet, 2018 has been touted as a good year for law firms.  Based on various reports including the 2019 Citi-Hildebrandt Client Advisory, revenues were up, billing rate increases held, and client demand increased.  These improvements are not shocking as law firm performance has been ascending in recent years.

Just because industry performance this past year was on the whole very good, not all law firms can look back on 2018 with such positive thoughts.  Indeed, the overall industry uptick is pulled along by strong performances among the AmLaw 100, especially the top 25 firms.  Performance among the second AmLaw 100 (or 101 to 200) generally was not as positive. Similarly, firms outside the second 100 did not, as a class, enjoy the kind of robust financial performance logged by the bigger firms.  Specialty firms (obviously focused in the right specialty) were the exception among smaller firms.

If your firm was one that had, relatively speaking, a down year, then all this good news about the industry in general is small consolation.  For leadership in those firms, what is to be done?  In some cases, an average or even modestly down year should not be overly concerning.  After all, law firm performance can run in cycles and a softer showing for 2018 may not be indicative of looming trouble.  But if firm leadership can’t slough off 2018’s performance with “no worries,” it should consider addressing its real concerns in the following five ways:

Perform a Careful Analysis.  A performance off the mark deserves a careful and unpanicked review.  Determining the causes of a down year is step one to designing an effective response.  As a start, compare 2018 performance data with prior years’ and then get behind the numbers for an explanation of what happened.  Understanding top line and expense variations can be extremely helpful. The more information that can be gathered, tested, and understood, the more likely leadership can avoid acting on false positives.

Look for External Signs.  Once a careful analysis respecting the 2018 performance is completed, consider external signs that help explain the 2018 outcome.  A change in client fortunes, movement in the market heavily relied on, loss of key partners, or legislative, judicial, or executive branch course changes must be considered.  Big picture items can be particularly important and may force a change to the firm’s direction or strategy.

Address Correctible Failings.Sometimes a down year comes about because talented people simply had a down year.  Letting talent ride out a down cycle may be appropriate or directing that talent to change the approach to working may be the better alternative. Thankfully, poor performance among firm attorneys or firm segments can be corrected.  A focus on fixing the misplayed 2018 can be a big step towards assuring an improved 2019 and beyond.

Excise Systemic Failings.  Not all problems can be corrected.  After a careful review, a firm may realize that certain components of the firm’s operations are irretrievably broken.  A practice that has been legislated to irrelevance often should be eliminated. So too for a practice whose sole client has disappeared and either can’t be replaced, or its lawyers taught to retool. Painful as it may be, an elimination strategy may be the most appropriate step.

Redo Your Long-term Plan.  Taking measures to remedy problems in the short-term is not enough.  Each problem corrected may reappear unless long-term term consequences are considered, and an action plan is implemented.  Anytime a firm falls off its intended performance, a review of long-term impact is essential.  Studying how the most recent past will impact the firm’s future can lead to a change in long-term strategy.

As a new year starts, leadership’s action will play a large role in determining the 2019 outcome.  If your firm did not perform up to expectations in 2018, now is the time to make sure it is not repeated.  What is your firm doing to make 2019 a better year?

 

Preparing Your Firm For 2019 and Beyond

Posted in Law Firm Leadership, Law Firm Transition

Most firms are in the final stretch for this year, wrestling with collections, budgets, promotions and compensation decisions. All of these are important activities. But, while focused on wrapping up 2018 let me suggest one more subject that deserves attention — something that stands a chance of making a real long-term difference.

I suggest that you spend some time really wrestling with this question: “What one thing, if accomplished in the coming year, will leave us a healthier, happier firm — better positioned to compete in 2019 and beyond?”

I came across the book The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results, by Keller and Papasan. The premise of the book is that we all face a tremendous number of distractions and demands on our time, most of which make no significant difference in our lives or the endeavors most important to us.

But if we take the time necessary to determine the most important thing to accomplish today, this week or this year, we can make a difference that really matters.

This isn’t a particularly complex concept, but it is one that far too few law firms (or individuals for that matter) seriously consider…much less, actually execute.

If you are in a law firm that doesn’t have a strong culture of planning, start by gathering the senior members of your firm for a discussion about the “one thing.” The dynamics will surprise you. Agree that you won’t be distracted…that you won’t attempt to solve every issue…but you’ll focus on identifying your “one thing.”

Agreeing on the “one thing” is more than half of the battle; but you will still have to execute. Things are more likely to really happen with some accountability built into action items. I recommend a regularly scheduled meeting with your partners during which progress towards the “one thing” is discussed. To accomplish the “one thing” requires a relentless, unwavering commitment to make it happen.

With these simple tools, you and your partners can take a giant step toward being in a better position as you take stock of 2018, and plan for next year.

Law Firm Profitability and Client Satisfaction: Using a Pricing Pro to Achieve Both

Posted in Law Firm Growth, Law Firm Leadership

Law firm leaders understandably see lucrative client work as an important key to overall firm profitability.  Left to their own devices, those leaders would eagerly raise rates or otherwise take steps to ratchet up the yield on work.  In contrast, their clients often consider the containment of legal costs as a key component to valuable legal services.  If clients were in control, they frequently would reduce rates, or seek other ways to manage down their legal bills.

While these respective objectives may seem incompatible, they don’t need to be.  Hitting the sweet spot of simultaneous law firm profitability and client satisfaction is possible—it simply requires greater effort in managing the law firm/client relationship.

In recent years, some firms are learning that achieving firm profitability and client satisfaction can be aided through the use of a law firm pricing professional.  The recent Thomson Reuterspaper Law Firm Pricing Insights – Value, Profitability, and What Comes Next provides an informative overview about this breed of professional and some of the successes enjoyed to date. Law Firm Pricing Insights makes the case for using pricing professionals to meet law firm financial objectives while growing client relationships and satisfaction.

It’s review of the growth, use, and roles of pricing officers at law firms is commended for your review and will not be repeated here.  But it may be worth looking at five of the more practical benefits for a law firm that utilizes a substantively empowered pricing professional:

Enhances the Understanding Between Firm and Client.  By already knowing the firm’s financial strategies, the firm’s pricing professional can concentrate on listening to the client to understand its objectives. Instead of acting as an advocate to convince the client that it mustaccept the firm’s financial terms, the pricing professional takes what is learned from the client to arrive at a solution that works for both sides.  Communication improves understanding, the client relationship, and in many cases, financial results.

Brings a Bigger Toolbox to Fixing the Profitability and Value Conundrum.  Most pricing professionals are aware of numerous ways to price legal services.  With a firm pricing professional involved, creative financial arrangements can be discussed to keep the firm/client discussions from getting bogged down.  The bigger pricing solution toolbox reduces the likelihood that an impasse with the client will arise.

Can Foster the Institutionalization of Clients.  While working on an acceptable financial arrangement with a client, a pricing professional may see opportunity beyond the immediate engagement. Instead of the analysis being limited to a short-term pricing arrangement, the pricing professional may recognize ways the client’s fundamental requirements can be leveraged long-term. An astute pricing professional may see how it may be worth strategically investing in a new relationship in order to build a long-term one.

Let’s Lawyers Concentrate of What Lawyers Do Best.  A pricing professional can free a lawyer to focus on client service.  Once an acceptable arrangement between the firm and the client is endorsed by the firm, the firm’s backing may make it be easier for the lawyer to concentrate on achieving substantive results.  While a priced arrangement does not excuse a lawyer from managing a file correctly, it can establish a clear understanding between firm and client that engenders the efficient delivery of client service.

Improves Lawyer Morale. Too often lawyers are told to raise their rates beyond their comfort zone.  It’s not as if lawyers don’t value their own worth, but they see firsthand the impact of being priced out of the market.  The firm’s desire for higher rates versus the lawyer’s desire to not rock the client boat can amp up the pressure at the firm.  By moving outside the attorney rate merry-go-round, a capable pricing professional can find a solution that satisfies firm leadership, the lawyer, and the client.  A busy lawyer is a happy lawyer.

More and more law firms are turning to pricing professionals to improve the client experience and financial results.  Is it time your firm does likewise?

 

 

Is Succession Planning On Your Firm’s 2019 To-Do List?

Posted in Law Firm Leadership, Law Firm Succession, Uncategorized

Succession and succession planning are hot topics in the legal profession. One statistic explains the focus on the topic – only about 30% of law firms make it beyond the first generation.

Why Do So Many Law Firms Fail?

Why do so few law firms make it to the second generation? Consider this progression of logic:

Few goals are realized by happenstance;
The greater the objective, the less likely it will be realized without serious intent;
A written succession plan is a reflection of serious intent;
95% of law firms have no written succession plan;
For a majority of law firms, 25% or more of revenue is generated by or closely associated with lawyers that are 60 or older;
Few firms will survive the loss of 25% of revenue in a short period of time.
So What?

If you are a law firm leader, this reality does not surprise you. We regularly visit with managing partners and governing bodies that see the writing on the wall. With the exception of those who choose to bury their 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 simplistic as this may sound, it may be the singles 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.   The first step is to be done with hand wringing and more talk.

“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 exactly 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 the areas of leadership, and/or client generation and servicing. It may mean that the core of your firm survives a part of a bigger organization. The real key is that the result your firm ends up with is the result you desire. Without planning the desired result is highly unlikely.

One additional note that many firms miss when it comes to the issue of succession planning—-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 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!

 

Law Firm Succession Planning-Five Mistakes to Avoid

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

The issue of succession planning at law firms is a topic of great importance.  The need to address succession won’t always wait until a convenient time and makes planning as important than ever.

Succession planning among firms, whether leadership succession or client relationship transition, is a mixed bag. Some firms have thought about it deeply and are well prepared for succession. Typically, those firms recognized the issue some time ago and have prepared for the eventual need to turn the reigns over to the next generation. Other firms have not had the requisite foresight or discipline. Sometimes lulled into a false sense of security by the continued vibrancy of their partner ranks, they have continued to focus on the day to day blocking and tackling instead of giving succession planning the attention it deserves.

At some point, however, most firms wake up and start addressing succession.  While the level of preparation at firms varies, there are at least five common succession planning mistakes that every firm should seek to avoid, including:

Waiting Too Long. The press of business and attention to more immediate matters can distract a firm away from planning for succession. Waiting to a later date to plan is not a good idea. Succession issues can be complex, the personalities affected can be many and the time it requires to get it right can be great. Like waiting to the night before a spouse’s birthday to buy a present, leaving succession to the last minute can have lasting negative effect.

Failing to Prepare Future Leaders or Relationship Managers. A by-product of waiting too long is failing to develop leaders or relationship managers that can be integral to a firm’s future. Scouting for future talent is one thing, but developing that talent is as important as prospect identification. Inattention to development is bad for two reasons. One, future leaders or managers may have inadequate time to mature into readiness. Second, despite initial high hopes, the development process may reveal that he or she is not up to the task. In instances in which a future leader or manager turns out to be uninspiring, a firm will benefit if it still has time to think of alternatives, including looking laterally or for a merger.

Failing to Make Succession Part of a Larger Strategic Plan. A succession plan should not stand alone-it should be part of an overall strategic plan. Simply changing out leadership or managers without knowing where the firm is going long-term is short-sighted. Installing new leaders or managers through the use of a succession plan is helpful, but if their skills are not in concert with an overall strategic plan the firm seeks to follow, success may be fleeting.

Overlooking the Impact on Morale. A well-planned and transparent succession will be far more comforting to firm personnel than a succession cobbled together when a succession crisis arises. Discussing the upcoming succession and the future of the firm will instill confidence in the firm, its management, and its future. Forgetting about how the rank and file feels can undermine morale and make an otherwise smart succession plan problematic. Good communication is critical in any succession plan, and especially so when trying to build widespread support.

Failing to Prepare Clients. At the end of the day, law firms don’t exist if they don’t have clients. Even when addressing leadership succession, a sound plan recognizes that clients can be skittish about the stability of their law firm. A smart firm deals with that concern by keeping the client informed about leadership succession. Getting a client involved is even more important when addressing the transition of relationship managers.  A client not involved in the selection of the next relationship manager for its matters will not be a client for long.  Whether addressing leadership succession or client relationship transition, preparing clients for succession is critical.

No doubt your law firm has thought about succession.  But as it has begun to prepare for its future, has it approached the task in a way that avoids these five common mistakes?

 

 

 

Thankful for Accountable Law Firm Leaders

Posted in Law Firm Leadership, Law Firm Transition

As we approach the the long Thanksgiving holiday I’m reflecting on my appreciation for law firm leaders who are accountable and drive a culture around that standard.

Somewhere along the line the idea of being held accountable began to be viewed as punitive. Paying the price.

Certainly this is part of the equation; but accountability is a much greater concept than merely calling one (or a group) to account for decisions and deeds.

Today’s most effective leaders know this, and successfully incorporate accountability to check progress against guides and benchmarks.

Effective law firm leaders are no exception.

Not An Outside-In Proposition

Extraordinary leaders are, before contemplating any other measure, accountable to themselves.

It is unfortunately common for would-be leaders — those who hold-down positions of authority — to shy away from accepting responsibility for less-than-winning results. Many are skilled at deflecting or redirecting blame to others or even to circumstances. This approach can work in the short run; but the eventual cost comes in the form of lost credibility and trust. When the tab in these columns reaches a tipping point, any ability to lead is gone — position on the org chart or title notwithstanding.

We’ve all witnessed the would-be leader. Accomplished in the art of deflecting responsibility when the news is bad and taking full credit when times are good. This individual’s calls for solidarity and partnership will eventually ring hollow. Few will follow.

Accountability For The Organization

The accountable executive has a clear vision of the steps necessary to ensure that the organization remains true to its purpose, mission, values and goals. When / if these components have not been articulated, the accountable leader has both the institutional equity and the tools necessary to instigate the necessary dialogue.

Accountability For Firm Members

The effective leader builds and hones an entire organization that is accountable. Expectations for performance, culture and professional growth for every member of the organization are clear. With those expectations established and communicated, the accountable leader (or a team of accountable leaders) routinely monitors actual performance to those expectations, taking appropriate actions in response.

Inside the accountable firm, when expectations have been met or exceeded the performance is rewarded in a visible manner. If expectations are not met corrective action is taken in a humane and respectful manner.

Having a culture in which there is a recognized expectation that is routinely measured against is more important than what those expectations actually are. An organization whose leader ensures that goals are regularly set and measured against is on its way to improvement.

Accountable firms are the byproduct of teams and individual leaders who first hold themselves accountable.

Does your law firm and its leadership project a culture of accountability?

Minimizing the Risk of an Unexpected Law Firm Closure-Five Steps Every Law Firm Should Take

Posted in Law Firm Crisis, Law Firm Leadership, Law Firm Liquidation, Law Firm Succession, Law Firm Transition

As the calendar year comes to a close, there is a lot to do at most law firms. Activities like collecting bills, distributing profits and casting next year’s budget can occupy many a leadership team. The tasks at hand can be time consuming and all engrossing. Given the importance of these short-term issues, thinking about a firm’s long-term strategy often gets reserved for the next year.

The importance of thinking long-term and planning for the future, however, cannot be over-emphasized. It is especially true when it comes to succession planning. Too little attention to succession planning can prove fatal, as can happen at law firms that experience an exodus once year-end distributions are made.  When year-end is coupled with a spate of departures, a firm runs the risk that unplanned closure is in its future.

Unless closing is part of a well thought out plan, no firm wants to face a closing crisis. But if firms are not attentive to the topic of succession planning, an unplanned closing, especially as year-ends approach, is a distinct possibility. It is at year-end that a firm’s lawyers think about their future, the stability of their firm and the suitability of the platform that supports their practice. The answers to those questions tend to be disquieting if succession planning has been poor. For a firm that fails to prepare, the end of calendar year attrition can sap a firm of its future generations and can put it on a path to eventual closure.

To avoid that outcome, firm leadership should:

Address the Topic of Succession Planning Early. Law firm succession planning is the essence of long-term planning. Planning involves more than identifying potential leadership and client relationship successors. It also involves planning and executing on a process of making succession a part of the firm’s culture. It takes years of continual attention to do it well.

Involve Your Lawyers in Succession Planning. Succession planning requires “buy-in.” While existing leadership can assure that the planning process gets the attention it deserves, full-fledged engagement from a firm’s lawyers enhances the possibility of success.

Review your Plan and Update it Often. Succession plans, like most long-term planning efforts, are living documents. Every firm committed to creating an effective succession plan should frequently update it in the wake of new developments or even just with the passage of time. The elements of any succession plan aren’t static but always are evolving.

Enlist Clients in the Process. It is presumptuous to think that client relationship succession is a unilateral process controlled by the law firm. Clients have the ultimate say over whom they will use as counsel. Frequent communication with clients is essential to developing a strong succession plan. The firm will be informed better about how client succession can be effective and will avoid adverse surprises.

Build Confidence in the Future. A succession plan should not be a secret to keep. It should be used to instill confidence in a firm’s future. Share it with the firm’s next generation of leaders and solicit their input in the process. If the future looks good at a firm, it is less likely to suffer attrition from the next generations.   The future will look brighter and the fate that befalls firms that “age-out” becomes less likely.

As 2018 comes to a close, is your law firm well positioned with a clear and effective succession plan? If not, it is time to get started if an unplanned closure is to be avoided.

 

Is Your Law Firm At Risk?

Posted in Law Firm Crisis, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition, Law Firm Warning Signs, Uncategorized

Don’t waste your time trying to control the uncontrollable, or trying to solve the unsolvable, or think about what could have been. Instead, think about what you can control and solve the problem you can solve with the wisdom you have gained from both your victories and your defeats in the past.  – David Mahoney – Author

Now that the mid-term elections are behind us, we can all get refocused on making our law firms stronger. An excellent start is to conduct a quick self-assessment of the state of the firm.. Here are 5 areas that, if carefully examined, combine to provide an accurate preview of what the future has in store for your firm.

1. Turnover – has there been any unexpected turnover? If so, it is a sign of potential trouble. Law firm leaders should regularly (monthly) monitor turnover levels with a process that quickly identifies any material uptick. Rapid change is destabilizing, even when there is an excellent business explanation. When spotted, decisive action in one form or another is likely in order.  What does your turnover pattern look like over the past 36-months?

2. Dissatisfaction – is there any measurable dissatisfaction within your firm? If so, is it growing? Relative satisfaction is a key indicator of business risk. A growing number of law firms find significant management value in systematically monitoring the satisfaction of their lawyer and non-lawyer employee base. And with good reason,  growing dissatisfaction is an indicator of future tourble. Do you have growing dissatisfaction in your firm?

3. Profitability – have your profits stagnated or worse yet are they falling? Profit pressures can quickly lead to stress for any business. I am not a believer in the Profits Per Partner (PPP) metric as a be-all-end-all; but if your law firm is paying progressively less for the same performance, it is at risk.

There are a numer indicators of declining profitability besides the exalted PPP metric. These include:

Falling productivity
Loss of a key client(s)
Increased aging of payables
Increased aging of receivables
Falling client billing
How is your firm’s profitability holding up?

4. Debt – has your firm increased its use of debt for operations?If so, it is a clear sign of stress.  Most law firms use some amount of debt, whether to smooth out collections cycles with a line of credit, or to finance growth and fixed asset purchases.  Any firm increasing its use of debt to cover basic operating obligation has embarked on a treacherous path.

5. Litigation- is your firm facing new exposure from client or employee claims of any type?  Claims against the firm can be enough to create serious problems for a law firm. Monitoring the frequency and size of claims against the firm is a must. If your firm has seen an uptick in claims activity, careful examination by leadership is essential.

The thing about organizational risk is that the sooner potential trouble is identified the greater the probability that a viable solution can be identified and implemented. The more serious the trouble, the greater the need for outside support which can bring an unbiased perspective.

Is your law firm at risk????

Five Law Firm Client Succession Strategies-Finding the Best Approach for Your Firm

Posted in Law Firm Leadership, Law Firm Merger, Law Firm Succession, Law Firm Transition

There are two primary succession challenges law firms face.  Leadership succession is one and is a vitally important step to assure a firm’s longevity.  A second kind of law firm succession involves the succession of client relationships as senior-lawyers wind-down or retire.

As hard as leadership succession can be, managing client relationship succession can be an even more formidable task.  In an era in which client loyalty is fleeting and personal skills can be as important as substantive ones, having a client continue with a firm past a rainmaker’s retirement may be difficult to achieve.  Because the economic repercussions can be serious if not done right, finding the right client succession strategy is more important than ever.

There are five major strategies for dealing with client succession.  Some firms will employ a combination of the five after determining that “one size does not fit all.”  Indeed, the right choice for any firm depends on its clients, talent, and situation.  From the menu of choices firms usually employ one or more of the following five strategies:

Develop and Nurture Existing Talent.  In a perfect world, a law firm’s client succession strategy involves developing its young(er) talent and nurturing it to take over client relationships as senior attorneys give way.  Considering today’s legal services market and law firm demographics, building an internally focused client relationship succession plan is harder said than done. Making it work requires identifying capable talent in the firm, training the talent, and “embedding” it into the client relationship.

Hire from the Outside to Develop and Nurture Acquired Talent.  Sometimes a firm does not have the needed talent to develop an internally constructed client relationship succession plan.  If adequate time exists, a firm can hire talent around which a succession plan can be built.  Hiring for the substantive and interpersonal skills positions the firm to develop and nurture the talent acquired.  This can be especially effective if retirement is years away–it protects the client relationship and can be less threatening to the senior lawyer.

Hire from the Outside to Retain Client Relationships.  More than a few firms find themselves without the luxury of time.  Due to a senior attorney’s impending retirement, the client succession strategy needs to hit the ground running.  Without sufficient talent to train or time to hire and train promising talent, a firm may consider hiring a seasoned lawyer that works in the area of the retiring lawyer.  The new hire must exhibit not only the substantive skills the client needs, but also the essential interpersonal skills.  Even better, hiring an attorney that already has a client relationship with the client the firm is seeking to retain is a win/win.

Hire from the Outside to Replace Client Relationships.  Sometimes a senior attorney’s client relationships are too dispersed or quirky to realistically find a single attorney to act as a new client relationship manager. In that case, the strategy may be to replace the volume of work and its revenue by hiring a lawyer that has a book of business that can replace what is soon to be lost.  While clients are not to be considered fungible, losing a group of clients on an attorney’s retirement can be ameliorated if replaced with new clients.  If keeping long-time clients simply is not in the cards, finding new clients controlled by a lateral prospect may be the best alternative.

Merger.  Depending on the size of the succession challenge and firm, solving it with a merger may be the best approach.  The substantive skills and client relationship personality of the merger partner may fill the needs normally addressed by the other client relationship succession strategies.  More than one succession plan merger has been affected by going to a competitor that has many of the same client relationships. Indeed, merger has proven to be a popular and effective client relationship succession strategy.

Client relationship succession is one of the more difficult challenges law firm leaders face.  Finding the right strategy to meet the challenge depends on factors unique to each firm.  What strategy fits your firm best?

Succession Planning – Before It Is Too Late

Posted in Law Firm Leadership, Law Firm Succession, Law Firm Transition

A few law firms have had the benefit of organic preparation for succession. Their natural tendencies led to grooming the next generation for the transition of client relationships and management responsibilities. A small percentage of firms have actually executed carefully prepared formal succession plans.

But, the overwhelming majority of law firms are not prepared for or even preparing for succession.

Admittedly, succession planning isn’t for everyone. If your law firm doesn’t have interest in long-term, multi-generational, viability then this post isn’t really for you. In fact, you would be far from alone, 70% of all law firms don’t make it beyond the first generation — some intentionally; but far too many by default.
The consequences associated with failing to prepare for succession range from severely limited options to firm closure.

As a matter of record the profession does not have a great track record when it comes to planning even for the near-term — much less, preparing a well thought out roadmap for dealing with critical issues or navigating transitional challenges. Surveys consistently indicate that a small percentage of law firms have anything that approximates a documented succession plan in place.
The only viable conclusion is that succession simply isn’t very important to many.
Too harsh? Think about it. Virtually everyone reading this post will readily agree that in life we rarely accomplish anything we did not set out to accomplish.
Transitioning a law firm from one generation to the next is no exception.
It is arguable that there was a time in the legal profession when a reputation for excellence, or long-standing institutional clients, or even the fabric of a partnership was enough to somehow ensure, or at least facilitate succession. But I would suggest that day is gone. Clients drive a different conversation. The marketplace is definitively different. And law firms face transitional challenges on what can seem like an almost daily basis — not the least of which is that the young lawyers in your firm have their own set of goals and aspirations.
(In fact, the young lawyers in your firm have been talking about your firm’s succession plan…and evaluating their career options based on what they see.)
If you’re really serious about building a firm that moves from the founders to successive generations, it is time for you to appropriately address how you hope to make that happen.
Planning for transition isn’t easy… But most lawyers I know love to tackle difficult problems. Deciding it is an issue that warrants focus is the most difficult part of the challenge.
Once you’ve decided to focus, an effective plan will tackle some significant questions. Among them, compensation, client control (or more accurately, relationship management — the client is the one in control), talent assessment, and the mentoring and cultivation of future leaders.
But not one of these issues is insurmountable…if succession is truly a priority.
For those that care about successful transition, the time to start the process is now, before it is too late.

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