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?