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White paper

Law firm succession planning

Developing the next generation of leaders

Whether you are an attorney who is looking toward retirement with anticipation and excitement, or one who can’t fathom the idea of a time when you will no longer be practicing law — the truth is that everyone’s time on the job will come to an end.

At the same time, no firm wants to think about an attorney’s departure from the profession. The loss of a long-time partner can cause considerable disruption; firms need to maintain continuity of client service and leadership.

That is why all firms, from the AmLaw 50 to solo practices, need to be prepared — and not put off creating a succession plan. In this white paper, we’ll provide insights on ways law firms can develop the next generation of attorneys that will serve their clients.

When it comes to succession planning, one size doesn’t fit all. Each law firm has its own distinctive combination of specialties, clientele, expertise, personalities, size, and internal dynamics. But there are considerations and best practices that all firms can benefit from as they plan for a sometimes uncomfortable but inevitable transition.

Are you ready?

To provide some context for the discussion, let’s learn a little more about the current state of succession planning in the legal profession. For this section, we will enlist the help of two experts: Ida Abbott, President at Ida Abbott Consulting and a Fellow with the American Bar Foundation, and Natalie Runyon, Director of Enterprise Content — Talent, Inclusion, and Culture for Thomson Reuters Thought Leadership and Strategic Relations.

According to a 2018 survey of U.S. midsize law firms, the industry is far behind where it needs to be regarding preparedness for a partner’s departure from the firm. Only 40% of firms surveyed said they felt prepared to deal with the retirement and succession of partners, while 61% said they were concerned with their firm’s level of preparedness.

In addition, only 37% of firms said they had a formal succession planning process in place or were in the process of creating one. The rest relied on an informal process or didn’t have succession planning on their radar. A recent Thomson Reuters Legal Executive Institute Marketing Partner Forum survey also indicated that less than 25% of law firms have mandatory retirement policies.

All this is happening (or not happening) at a time when about one-third of equity partners are at or near retirement age. “You’re looking at the potential for a major outflux,” Abbott notes. “Even firms with mandatory retirement run into a lot of problems, because lawyers tend not to 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.”

What is keeping firms from talking about succession planning? Not surprisingly, considering the general lack of retirement policies across the industry, decisions about when a partner should retire are left largely in the partner’s hands. It is the partner’s resistance to retirement that firms say is the most common challenge. Broaching the subject of the partner’s retirement, the potential loss of one of the main rainmakers, and gaps in firm leadership are also high on the list of issues that keep succession planning conversations from happening.

So, when you are thinking about your firm’s succession planning, remember to consider all parties that the partner’s departure will impact.

Succession planning isn’t just about the retiring partner. These plans must also be considered from the perspectives of the firm and its clients.

2018 survey of U.S. midsize law firms

  • 40%
    said they felt prepared to deal with the retirement and succession of partners
  • 61%
    were concerned with their firm’s level of preparedness
  • 37%
    had a formal succession planning process in place or were in the process of creating one

Let’s look more closely at each group:

The partner: The partner considering retirement — or being held to a mandatory retirement policy —faces a number of concerns, including loss of income, loss of purpose, and, perhaps most importantly, loss of community. With all these financial and spiritual losses, it’s little wonder some attorneys aren’t eager to depart.

The firm: Among the concerns for the firm are ensuring the ongoing quality of client service, the stability of law firm leadership, and the profitability of 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 clients: Naturally, those clients have similar fears. Can they feel as comfortable with the partner’s successor as they did with the partner? Will they receive the same level of service? The best way to address those concerns is by making clients active participants in the process — and by getting them involved early. The volume of a particular client’s business with your firm and the nature of the services you provide are crucial factors in identifying the right successor to handle the client’s matters.

Put together a team

With the varied and sometimes conflicting interests among the stakeholders affected by a partner’s retirement, it is important to assemble an inclusive transition team to ensure, as much as possible, that all concerns are properly addressed. In the end, however, any succession plan must protect the firm’s future.

As Runyon notes, “Overall, the law firm’s goal is to retain the business of clients. When dealing with the resistance of a retiring partner, the firm can become a partner in the success of the legacy and in the transition by linking the retiring partner’s legacy with that of the firm. Meaning that the firm’s legacy is secure when the clients are served well, and the retiring partner’s legacy is secured by the clients’ satisfaction.”

Succession planning is not as simple as introducing the new partner to the retiring partner’s clients. The retiring partner wants to feel good about the person who will be taking care of his or her clients, and clients want to feel like their new partner cares as much and will provide the same level of service and results as their previous one. Building and communicating a comprehensive succession plan takes a lot of care and requires the contributions of many facets of the practice.

So where should a firm begin, and who should be involved?

The retiring partner: Of course, everything starts with the retiring partner. He or she will be the primary source of information about current clients, key stakeholders, the nature of the work, and other important details. Conversations with the retiring partner need to be handled with sensitivity to ensure the smoothest possible transition. Much of the reticence many firms experience toward succession planning resides with the senior partner, who is – understandably – emotionally invested. But other leaders in the firm can also be resistant, often avoiding the thought of what the firm’s future holds once the partner leaves.

The successor partner: Firms should have an idea of who will take over for the leaders of their practice groups. Again, these decisions should always include input from the client. The firm should ask their clients about current performance and whether they want something different from a new partner. Once a new potential leader has been identified, he or she should start attending client meetings. If the chemistry between the attorney and the client isn’t there, make the necessary changes immediately to avoid the risk of harming the relationship.

Firm management/administration: Your firm needs to take a very strategic approach when managing a partner transition. Using planning methodology can help make the transition as smooth as possible.

Marketing: A firm’s marketing team is in the messaging business. In the context of succession planning, that means creating conversations with clients to ensure they are comfortable with the idea of changing from a partner they have known for years to one they may not know at all. Marketing can craft customized, consistent communications to the client that address the concerns and input the client provided before and during the transition.

Talent: The talent management team should be involved throughout the process to assess successor candidates. They also should make sure the successor receives the training and support he or she needs in areas such as marketing, client development skills, and business development techniques. This will go a long way in creating a smooth handoff.

The clients: All the work team members have done leads to the transition conversation with the clients. As we noted earlier, these should be collaborative discussions that allow clients to participate in every aspect of the process that is important to them.

Working together, these teams can create a seamless experience that satisfies both the retiring partner and the clients, while setting the firm up for success.

What clients want

To take a closer look at the client’s perspective, we will tap the expertise and insights of two associate general counsels (AGCs): Bill Crosby, Vice President and Associate General Counsel at Interpublic Group, and Susan Garcia, Associate General Counsel at Thomson Reuters.

If you know in advance, tell them in advance

Clients do not like the news of their partner’s departure delivered on short notice — especially if the firm knew well in advance. Both Crosby and Garcia agree that they expect a succession process to take years, not weeks. “I would look unfavorably on both the firm and the lawyer if I was told a month ahead of time that my partner was retiring,” Crosby says. “There should have been a transition plan years in advance to that retirement.”

Another point that both attorneys discussed was the importance of finding a successor that fits the client’s needs. As Garcia advises, “Make sure that any succession plan is started early and proposed successors are introduced as soon as possible, so you can identify any issues early on. Don’t let the selection of a successor that doesn’t fit get to the point where the relationship with the firm is impacted.”

Crosby adds, “It really goes to the whole point of having as much time and involvement as possible so that if things don’t go well with the first selection, there’s time to revisit it and make some type of an alternative selection.”

Do clients want a say in a successor?

In some instances, such as the case of a highly specialized matter or a strong working relationship with a mid-level partner, clients may want a direct say in their current partner’s successor. Garcia and Crosby both said, in general, they don’t expect clients to be intimately involved in the selection process. However, a potential relationship partner should be made aware of a client’s key concerns.

It isn’t only the clients that need to be satisfied with a potential successor. The firm will benefit from a transition process that also evaluates whether the candidate is a good fit for the general counsel’s (GC’s) entire team — not just the GC or AGC — that will manage the relationship with the firm. Garcia says, “One of the things I would strongly advise is that firms go to that next level of leadership within the client’s organization to make sure that you’re showcasing the talent you’re bringing on board to handle their matters.”

What about a retiring partner that handles niche matters?

Both Garcia and Crosby commented on the risk of a firm losing a client relationship when the retiring partner was their exclusive provider for a particular type of matter. “If it’s a specialist that’s leaving, then that’s probably going to be the end of the relationship with the firm,” Crosby says. The risks are especially high in extremely niche specialty areas where there may not be an obvious successor.

Clients expect their outside counsel to have a plan in place

Succession planning is not something that should be a nice-to-have or a check-the-box exercise. It’s an essential part of a successful firm’s management and a process that should be reviewed and updated regularly. After all, it is inevitable that people will move on. Firms should prepare for that — maybe even as soon as a major new client relationship is established. As Crosby explains, “From the second that they first get the assignment with the client, they should be thinking about ‘What do we need to be doing to make sure that we hold onto this relationship as long as possible?’”

Start preparing now

Law firms should have no doubt about the crucial importance of a clearly drawn-up succession plan. And, depending on the firm’s number of practice heads or other leaders, it might well need more than one. Each veteran attorney has built a career’s worth of expertise, client relationships, and institutional memory. To the fullest degree possible, a firm should capture that knowledge and share it with the retiring attorney’s successor.

When attorneys retire, they really cannot be “replaced.” A successor will have his or her own strengths and skills. But by preparing a clear succession plan, your firm can help ensure the departing attorney’s legacy of service continues — and that your firm’s success continues as well.

Thomson Reuters Practical Law

Close the knowledge gaps in succession partners’ expertise.

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