The importance of considering various perspectives
Most attorneys don’t like to think that the time will ever come when they stop practicing law. But, the truth is, that time comes for everyone. Whether a partner at your firm is in the prime of their legal career or thinking about retirement, it’s important to consider your firm’s future and who will be at the helm after current leadership moves on.
Law firms that fail to plan for future leadership changes will face major challenges and upheavals that could jeopardize a firm’s financial success and future. In this post, we’ll explore why it’s important to consider the perspectives and preferences of various stakeholders during this transition, including the retiring partner, his or her clients and the firm as a whole.
What percentage of firms are thinking about succession planning?
According to a 2018 survey of US mid-size law firms, the industry is lagging far behind in terms of leadership and firm succession preparedness. In fact, only 40% of firms surveyed said they felt prepared to deal with the retirement and succession of partners, while 61% said they were concerned about their lack of preparedness.
In addition, only 37% of surveyed firms said they had a formal succession planning process in place or were in the process of creating one. The remaining 43%, had an informal process or didn’t even have succession planning on their radar. In addition, a recent Thomson Reuters Legal Executive Institute Marketing Partner Forum survey revealed that less than 25% of law firms have mandatory retirement policies.
Ida Abbott, President at Ida Abbott Consulting and a Fellow with the American Bar Foundation says, “[The succession planning] issue is becoming really urgent because we know that about a third of equity partners are at retirement age. You’re looking at the potential for a major outflux. Even firms with mandatory retirement run into a lot of problems because lawyers tend to not believe it’s actually going to happen to them and they delay talking about it or doing anything about it until the issue is right in front of them.”
Why aren’t firms planning for future leadership changes?
Not surprisingly, considering the lack of retirement policies across the industry, decisions about whether and when a partner should retire are left largely up to partners. When it comes to law firm succession planning, surveyed firms listed a partner’s resistance to retirement as the most common challenge. Also high on the list of issues impeding succession planning conversations are fears about broaching the subject of a partner’s retirement, the potential loss of a key rainmaker and gaps in firm leadership.
Succession planning isn’t solely about the retiring partner
When thinking about your firm’s succession plan, it’s important to consider everyone that will be affected by a partner’s departure. As mentioned above, plans must be considered from the perspectives of the partner, the clients and the firm.
According to Abbott, “Each of these groups has a very different set of concerns. These concerns really overlap in many ways because most of them have to do with making sure that clients continue to receive great service, and that the firm is continuing to represent the client. The retiring partner, of course, has an interest in making sure that his or her clients and the firm continue to thrive and have a good relationship. There are very different considerations for each of these groups.”
The Partner: The partner considering retirement—or worse, being held to a mandatory retirement policy—faces a number of unique concerns, including loss of income, loss of purpose and, perhaps most importantly, loss of community. As Abbott explains, “A retiring lawyer often thinks, ‘I’ve built these clients. I’ve built these relationships. I have a physical place, an office to go to every day, and something I can do, people I can be with.’ When you’re retired, you worry about losing that.”
The Firm: Chief concerns for firms include ensuring for continuity of client service, appointing new law firm leadership and maintaining stability at the firm. Says Abbott, “You need to make sure that the firm is going to continue to operate in a way that’s successful and continue to please and serve the clients that it has, including the clients of the retiring partner.”
The Client: Clients’ main concerns center on whether they will receive the same level of service and feel comfortable with and confident in new leadership. The best way to quell these concerns, explains Abbott, is to make the client an active participant in the process, “You need to get clients involved in the transition process early. Depending on the nature of the relationship, it might take a few months. It could take many years. The size of the client, the nature of the services you render—these are all things that factor into the equation.”