SUCCESSION – WHAT’S YOUR PLAN?
If you are a member of a law firm with a growing number of aging partners, (so that means all of you); succession planning has become, and continues to be, a growing concern. The changing demographics tell us so. In order to navigate the future of your law firm successfully, this is an area that deserves your undivided attention. There is more than one solution but, the key is to have a plan, and plan early!
“If you don’t know where you are going, you’ll end up someplace else.”
― Yogi Berra
The world is shrinking. Our access to new, successful ideas and new technologies are within every law firm’s reach and price range. There is no excuse to ignore your competition and the change required to maintain or grow your firm.
The big firms get bigger as we’ve witnessed especially with the onslaught of International firms coming into Canada and taking over. They are taking a larger share of the marketplace. But small firms have the ability to remain more nimble, reacting to disruption, and even becoming proactive and getting ahead of the curve.
Small to Mid-size Firms
Ask your senior or managing partner: What is your business plan for retirement?
Do you wish to leave a viable business to sell, a legacy? Or, are you simply going to close the doors and walk away? It would be a shame, after putting your heart and soul into your career for so many years, to not plan for a buy out of your equity or set up passive income from the transfer of the business.
A colleague of mine (not a client), worked for over 40 years building his successful practice, only to close the doors and walk away. That’s money, BIG money he left on the table.
I had a client who had the right idea, but she left it too long. Her goal was to be appointed as a judge. When we started working together her plan was to groom new ownership from within, and eventually ‘pass the torch’. She had very talented associates and staff, was very well respected among her peers and clients, had a great reputation, and a huge book of business, basically a ‘turn-key’ operation. Unfortunately (for the sake of succession), she was appointed to become a judge sooner than expected and didn’t have the time to fully implement her plan. In the end, after all of her hard work, instead of selling her practice, or having her juniors buy in, and take it over, she only managed to sell a few clients. As I mentioned earlier, you can’t start too soon in planning for succession. She also left BIG money on the table.
What about larger firms?
This is a conversation you should have with your senior partners: “Hey you senior partners, who is going to invest and give the firm the cash infusion needed to buy you out?” When it comes to succession planning most firms lack the coordinated efforts to successfully construct a succession plan. Much of this can be attributed to poor Partnership Agreements, not setting forth succession as a mandate or incentivising and rewarding partners for leveraging Associates and Staff to drive much of the case work. Being more concerned with revenue goals today and taking home as much as possible now, lawyers are short sighted.
Layer a shortage of support staff; gap in lawyer talent between senior and junior ranks; and shift in workforce composition (senior workforce working longer, millennial sector growth, shift in expectations, and drive for inclusivity of all demographics); and law firms of all sizes are challenged with successful strategic succession planning.
Can you say “perfect storm”?
From the perspective of Partners – “Let me speak in your language – MONEY”.
The gap between senior lawyers and junior associates continues to grow. Few firms seem to have found a way to bridge this gap. Traditional hierarchies and silos in law firms contribute to the stagnation of associate growth, their skill and business development, and, as a result, retention. Additionally, the old law firm business model also impedes employee productivity and advancement.
So how can you help your firm improve the natural transition from hire to retire of every member?
My work in succession planning is rooted in very specific actionable efforts. These strategies work with law firms of all sizes. Here are a few tips to get you started down that path.
- Hire with better accuracy for the needs and the “fit” of the firm (Having the right lawyers and staff in place will greatly increase your success in the implementation of your plan)
- On-board more successfully – Greater focus on welcoming, supporting, and clearly communicating expectations from the start (Set all your employees up for success)
- Retain with a greater sense of individuality by providing regular feedback (Not relying on the typical year-end performance review)
- Create an improved culture of learning and knowledge transfer – Use mentoring and coaching, at the individual level, as tools to be more effective (Not one size fits all)
- Foster a respectful and collaborative workplace to help narrow the generation gap and work more effectively as a team (This will enable the law firm to better serve your clients)
These are just a few things you can do to improve succession and transition within your firm.
It is my passion to see law firms thrive and continue as a successful business. Reach out to me if you would like to have further dialogue to help improve your law firm’s future planning for success.
Gary Mitchell is the Principal & Founder of On Trac® Coach. He specializes in business, leadership, and transition coaching, as well as consulting for start-ups, going from solo-practice to building a firm, and succession planning. Gary can be reached at firstname.lastname@example.org or 604.669.5235