In a recent post about law firm succession planning, I observed

 “Succession planning and execution in 2014 is far more difficult than it was a decade or more ago. It is not that it is harder today to identify credible candidates to succeed existing leadership; searching for the best talent is a task that has not changed much. Rather, the changing face and nature of the legal industry has made succession a more complicated matter.”

Law firm succession today means leading in a legal market that presents a new set of challenges. Unlike in the past, our market is not expanding. For the new managing partner leading in our contracting market, key market differences make the job of leadership amid the disruption a more dynamic exercise. Law firm leadership taking over the reins faces a market in which:

Annual Raises for Partners Are Not a Given. When the legal market was expanding for AmLaw 200 law firms, annual raises for partners were not only expected but also reasonably easy to deliver by raising rates or increasing productivity by adding associates.  Yesterday’s legal market is not today’s legal market.  In 2014, annual rate increases and large associate classes aren’t the norm. The impact of that reality has to be explained to today’s partner ranks-a task not always easy.

Starting Salaries for Associates Don’t Always Have to Go Up. When the legal market was expanding, many law firms sought the best law school graduates by offering market leading starting salaries. With the glut of graduating law students looking for jobs and law firm economics getting tighter, high quality associates can be added at lower starting salaries.  Smart management considers this new economic advantage in planning the firm’s future.

Growth as a Business Strategy Has Limitations. Growth alone is not a panacea for dealing with today’s market challenges. In fact, non-strategic growth not only has its limitations, but it can damage a firm. In a contracting legal market, there is less room to fix any errors made in the attempt to grow

Competition Is Increasing. New leadership must deal with greater competition from more lawyers, a growing in-house presence, the advent of alternative service providers and a willingness among traditional competitors to offer services at cutthroat prices. While competition is nothing new, the multiple forms of competition means new management have to fight a multi-front war, not a binary one.

Clients Have Greater Control. The new economic pressures, the greater competition and the range of alternatives are well understood by clients. The legal market has been tipped in favor of clients who are willing to shop legal services to get them for less. Client loyalty has been replaced with a bottom line mentality-a fact being driven home daily to today’s managing partners.

Partner/Associate Leverage is Going Down. Many firms’ demographics have evolved to partner/associate ratios closer to 1:1 instead of 2:1 (or long ago 3:1). The reduced yield generated by the smaller workforce strains a firm’s economics and compounds the challenges for the firm.

Succession planning is more than finding the next charismatic leader willing to serve.  Leadership that is aware of the new normal is incredibly important to the long-term health of any law firm.  What other features of the new market must a new law firm leader think about?