Law firm succession planning as an imperative is a popular topic. Discussing and planning for succession makes great sense on many levels. Without a good succession plan, the theory goes, a firm may drive off the cliff with catastrophic results.
But what if your firm is not a good candidate for succession? What if its drive towards the cliff does not have to mean catastrophe? These questions should be asked by all law firms that worry about succession. If the answers suggest a firm is not suited for the passing of the legacy baton from one generation to the next, a firm can be wiser and more strategic about its future and, ultimately, its end.
No two firm are alike, and there is no definitive list of markers that militate against planning for succession. But if one or more of the following circumstances exist, dedicating time to building a succession plan may waste time, energy, and emotional capital. A firm should rethink succession planning if:
Not all Owners Care. Planning and implementing succession are significant tasks that require dedication and perseverance. The needed commitment won’t be present unless consensus in favor of succession exists among firm owners (or most of your owners). If a sizable portion of your firm’s ownership is indifferent to succession, more than likely succession will fail. When presented with owner apathy, a firm may be smart to direct its focus elsewhere.
There is No Legacy to Preserve. Not all firms enjoy a legacy built up over the years. Rather, some firms see personnel steadily come and go. Likely, those firms really represent the alter ego of an overriding personality (or two). Planning for succession at such a firm may make as much sense as looking for the secret to eternal life.
A “Next Generation” is Absent. Succession is largely about transitioning leadership and/or client relationships to the next generation. When a firm has no “next generation,” it is hard to conjure a succession strategy that makes sense. Be realistic. Is there really a next generation of worthy successors? If not, succession will be very hard to achieve.
The Firm’s Decline Likely Will Continue. In all honesty, a downward spiraling firm that can’t reverse its decline just might not be something worth preserving. If recent years have not been good and nothing suggests that things will get better, a succession of the status quo can’t be attractive to the people needed to make succession work. When a track record of decline can be expected to continue, an eventual closing with a soft landing may be the best to be hoped for.
Better Alternatives Exist. A clear assessment of a firm’s situation may show that alternatives to succession are more compelling. A merger or being acquired may end a firm’s legacy, but both may serve the firm and its people better than a continuation premised on succession. A wind-down and closing, handled with advance planning and care, can avoid disaster, and appropriately provide a good future for a firm’s clients and people. In many cases, looking for the alternatives to succession is the smart move.
Just because a classic succession plan is not in your firm’s future, planning for your firm’s future remains vitally important. Asking hard questions about succession, and acting on the answers (however disappointing), is the essence of planning for the future. Are you thinking about succession realistically?