As significant numbers of equity partners near retirement age—by some estimates, nearly 65 percent over the next decade—law firms face the daunting question of how to smoothly transition their clients and practices to the next generation. Essentially, the challenge is twofold. The firm must identify and support younger partners as they grow into their roles of running a practice, and it must prepare and support the senior partners who will be transitioning away from their full-time client responsibilities.
STEP-BY-STEP When LeClairRyan named David Freinberg as its next CEO, it was the result of a measured, step-by-step succession process.
WHAT IF? For Fred Hacker, succession planning meant addressing the “what-if” scenarios for his 16-lawyer firm, Hacker Gignac Rice. Next? A major overhaul of the firm’s structure.
THINKING AHEAD Grooming future leaders is a high priority at Honigman Miller Schwartz and Cohn. Tricia Sherick, attorney development partner, truly is a case in point.
Who Will Succeed?
It wasn’t so long ago that an experienced lawyer with a thriving practice simply hired, trained and mentored his or her own associates. Those associates were expected to eventually become partners and take over the practice when the senior partner retired. There are definitely some smaller practices where this strategy still works. However, many law firms today require a far more structured plan to ensure that clients’ needs continue to be met, the firm continues to thrive against competitors, and new partners are able to effectively manage client relationships and adapt to changing law firm realities.
Here’s a snapshot of fundamental steps and issues that firms should consider in charting out the practice transition process.
Starting the Transition Dialogue with Partners
Any law firm partners who are within five years of retiring from the full-time practice of law (and that may include you) should begin to formulate an action plan in tandem with firm leadership. The following suggestions should help jump-start the planning dialogue.
To begin, you need to assess the current situation among the firm’s senior partners. This means identifying those who are likely to retire or pull back from full-time practice in the near future. Then, as a means of starting an ongoing conversation regarding their individual plans and succession strategies, consider some of the following as talking points for the initial conversation:
- Do you have a plan for your retirement from the full-time practice of law? If you do, what specifically have you considered to date?
- What support do you need from the firm to ensure a smooth transition for yourself and for your practice?
- What attributes, experience, skills and knowledge do you believe your successor needs to possess?
- If you have someone in mind to handle some or all of your clients, can you determine areas in which this person will need further development, training, coaching or mentoring?
- If you don’t have anyone in mind now, let’s determine a strategy and timeline in which we can find and develop your successor.
There will, of course, be other considerations involved (including financial and legal ones) as the planning proceeds, and you may need to obtain expert advice to fill in knowledge gaps that may exist so the retiring partner’s and the firm’s interests are both protected. But the critical first step is to get partners to start focusing on building a strategy for what’s ahead.
Ascertaining the Successor’s Competencies
Whether or not the partners already have a successor in mind, it’s important to take an organized approach to determining what competencies are really needed to manage the given client base and lead the particular practice. Establishing a set of core competencies helps not only in identifying the best potential successor, but also in evaluating what specific developmental needs that person might have.
While needed competencies are often firm-specific as well as practice area-specific, practice leadership competencies generally fall in four areas.
Self-Management. Examples of competencies in this area include:
- Has a clear sense of one’s strengths and areas in need of further development and experience
- Sets professional goals and is able to create action plans needed to accomplish them
- Has a clear sense of priorities and can manage time efficiently
- Takes ownership of his or her career and practice
- Maintains a positive attitude, even in stressful situations
People Management. Examples of competencies in this area include:
- Understands the strengths and weaknesses of team members
- Looks for ways to delegate assignments that will further each person’s development
- Gives timely and effective feedback and models positive supervisory and leadership behaviors
- Seeks ways to improve the work environment, including ensuring that work is challenging and encouraging cooperative behaviors
Case Management. Examples in this area include:
- Is able to create the overall strategy for a matter and determine corresponding assignments and timelines
- Delegates effectively, defining expectations, resources and deadlines
- Holds regular and effective team meetings and regularly communicates any changes to team members
Client Relationship Building and Management. Some competencies in this category are:
- Is able to create a vision for the direction of the practice and determine specific business development goals and strategies based on the vision
- Knows how to build strong relationships with clients and engenders trust
- Manages clients’ expectations throughout the course of their matters
- Understands different clients’ needs and communicates effectively with them
Determining and Supporting Successors’ Developmental Needs
Once the competencies have been determined and an appropriate successor has been identified, another important step is finding out what gaps exist between the competencies and the successor’s current abilities. Rarely will there be “that perfect someone” who can simply step into the shoes of a partner who has spent years building a sturdy practice and trusted client relationships. If you expect a successful transition of the practice, you must also expect that some developmental support will be needed.
That support can come in several forms, including mentoring by the partner whose practice is being transitioned; training in areas such as time management, project management and supervisory skills; and one-on-one coaching in areas such as business development and client management.
Ensuring the development support matches the needs of the successor, the practice and the firm means creating a specific plan that includes quarterly goals, action steps, support mechanisms and informal evaluations. This plan will help all stakeholders assess how the successor lawyer is progressing and what additional interventions may be needed to ensure the best possible transition.
Providing Support for Transitioning Partners
Too often firms just focus on the practice and its clients and not the partner who is actually transitioning out. Of course, it may be that the partner won’t be retiring altogether, but rather will take on a different role within the firm, such as becoming of counsel, overseeing attorney professional development, or changing the hours he or she commits to the firm by moving to part-time status. Changing status but not leaving altogether can make for an easier, gentler transition for many. Some, though, will have separate plans already laid and prefer to leave the firm entirely at a date certain.
Whatever decision is made between the firm and the individual regarding his or her going-forward position, the firm needs to give its support. This is a major life change for any lawyer, and it clearly has financial, psychological, emotional and interpersonal implications. Here are suggestions for how firms can lend their support to those going through this transition:
- Create an “easing out” process, if the partner desires one, rather than making it an abrupt transition out. This might take the form of reducing hours over time, giving short sabbaticals to discover new interests to pursue, and supporting the person in working from home more often versus being in the office every day.
- Engage a financial planner to assist with the individual’s retirement planning.
- Engage a career coach to help the individual consider the next stage of his or her career. Nowadays, it’s not uncommon for people to keep working past the traditional retirement age. Also, exploring new ways to stay active and engaged is immensely important. There are numerous choices, such as sitting on a company board, working in a nonprofit, starting a new business, teaching or volunteering one’s services. Rarely, though, has the successful hardworking partner had much time to consider such options until now.
- Connect the individual with a peer who has been through the same life change. Mentoring by another partner who has changed status within the firm or has moved on to other activities outside the firm can be quite helpful.
Safeguarding the Future of the Firm
Succession planning is essential for firms that want to continue to thrive, just as it is for longtime practitioners who deserve to be rewarded for their hard work in building a practice within the firm. Likewise, the new generation of partners waiting in the wings deserves the opportunity to grow within the firm. Supporting all lawyers involved in the succession process, whether it’s the next generation or the older partners who are transitioning out, helps ensure the continuation of a strong, healthy firm for many years to come.