Law firm succession is a top of mind issue for today’s law firms. Making sure one generation of leadership can hand the reins off to the next generation is a key concern. Of course, it is not just having the right people in place to develop and execute sound strategies, but it also requires transitioning to capable client relationship getters and managers.
A recent report highlights industry developments and suggests that finding the right successors at law firms is more important than ever. Altman Weil’s 2018 Law Firms in Transition Survey sees law firms at a crossroads. The data and analysis suggests that law firm gains since the Great Recession of 2008 are being countered by new challenges and challengers different than a collapsing economy. Instead, client competition, alternative service providers, and a growing array of technology-based solutions undermine more than ever the position of the traditional law firm in the legal service market. Smart law firms, ones that will thrive in the future, will aggressively respond.
So how does law firm succession fit in with this challenge? In essence, succession today is not just a matter of training and selecting the next leaders and business developers in the mold of the lions that built the firm into what it is. Rather, similarity to the past may have less utility than previously thought. The next law firm successors should possess forward-looking perspectives that rival the results-oriented thinking of clients, alternative service providers, and emerging technology platforms. The next leader’s focus on the future is essential because:
Traditional Demand for Legal Services is Likely to Decline Over Time. With clients bringing legal services in house, turning to alternative service providers, and technology-based solutions gaining traction each day, the assault on traditional law firm services is sure to increase. Demand for traditional legal services is likely to fall. Creative solutions will be needed from the law firm leaders of tomorrow.
Legal Services Will be More Commoditized. Industry trends suggest that legal services are becoming more commoditized. The more that happens, the less clients will be willing to pay for those services. Firm leaders will need to either move away from commoditized work or make it more value and result oriented.
Non-Traditional Competitors are More Innovative and Client Centered. The competition is scary because it typically is more innovative, and client centered than traditional law firms. Law firms that survive and thrive will be committed to innovation and client centered results, just as the non-traditional competitors are. Any new leader must think like an innovator and drive results that focus on client satisfaction.
The Old Business Model Needs More Than Tweaking. Since the Great Recession many successful firms have tweaked the law firm business model to enjoy modest gains. Forward-looking leaders will think beyond short-term solutions but will think about new business models that drive client results and satisfaction. The future will require more than tweaking, it will require new approaches.
The Next Downturn is Coming. Since the downturn of 2008 the legal services industry has operated in an improving financial world. Even as the economy has expanded, the results for law firms have been only tepid. The decent results have come without facing the burden of another financial downturn. Forward thinking leaders will be prepared for the inevitable next downturn.
If your current succession plan has not taken on the new mindset, it needs to be changed so your next leader is not just like your traditional leaders, excellent he or she may be. Similarly, if new leadership has been installed recently, and consensus for the coronation was premised on the successor’s “fit” within the firm’s traditions or historical approach, serious thought should be given to the idea that another change is needed. A continuation of the status quo, or a moderate change from the status quo, may leave the firm behind in what promises to be an ultra-competitive and unforgiving future.