By Jordan Furlong; Consultant, Author and Legal Market Analyst
A few years ago, I was contacted by some senior staff members at a high-profile boutique firm who were coming to grips with a deeply alarming prospect. The name founders, widely known and respected within the local bar, were all coming up on retirement, but seemed to be showing little interest in devolving authority, transitioning clients, or planning for the future.
It was becoming increasingly clear that the partners weren’t thinking beyond the next couple of years, and that was because that period of time was as far as their interest extended. They were going to retire from practice soon, and so they were driving hard on all cylinders, hoarding hours and maximizing client time, until that happy day arrived.
The deeply alarming prospect for the senior staff was that the firm really only existed to be the commercial vehicle for the name partners’ legal careers, and when those careers ended, the vehicle would have served its purpose.
The end is near
I once wrote that many law firms seem to be run these days as if they intended to close their doors in five years’ time. I was half-joking at the time, but I now think there was more truth in it than I realised. Five years is probably the anticipated remaining career length of a typical law firm’s most powerful partners. So if it seems to you that your law firm’s engine has been pushed into overdrive lately, such that it’s going to be immensely profitable in the short term but is imperiling itself in the long term, well, maybe there’s a reason for that.
I can think of two reasons why the leaders of a law firm — and here, I’m referring to the firm’s founders, senior partners, and/or most important rainmakers and client development lawyers — are not taking steps to arrange an orderly pre-retirement transition of legal knowledge and client relationships to their younger colleagues (a process frequently described as succession planning).
1. The charitable explanation is that these lawyers can’t really help themselves. All they’ve ever known how to do is practise law. They were raised in a profession that prized highly competitive individual profit-maximising behaviour, and there was never any “Off” button installed on their internal lawyering machines. Plus, they’re experiencing the natural human reluctance to confront the passage of time and the inevitable winding-down of individual activity and influence — especially difficult, in my experience, for older men to cope with.
It’s entirely normal for lawyers in this position to keep diving back into their work — the one thing they know how to do and that they’re indisputably great at — than to face up to both their professional denouement and the impending mortality that lies behind it.
2. The less charitable explanation is that whoever dies with the most toys wins, and these guys intend to win. They’re perfectly happy to drain the contents of the firm and recycle the empty afterwards — and if most of the other people in the firm have put their backs and their hearts into the enterprise for many years in the belief that their turn would come someday, well, that’s their problem.
Both kinds of situations occur in law firms, and there’s no point being overly sympathetic with the first group or overly angry with the second. The key to getting through this crisis — and make no mistake, a succession crisis is exactly what many law firms are either entering today or are already deep in the throes of — is to take a clear-eyed strategic approach to its resolution.
One and done?
The first step to managing a succession crisis is to ask whether there ought to be any succession at all. That might sound strange, but it’s actually important.
Earlier this year, Adam Smith Esq., a law firm consultancy in New York, explored this concept in an excellent blog post about “One-Generational Firms.” Their idea is that some number of law firms out there were never meant to be, and are not equipped to become, multi-generational. Like the boutique firm I encountered, the founders didn’t necessarily believe they were setting up a firm that would last beyond their retirements. They were setting up a firm that was going to take them to their retirements, and not one day past that.
I should emphasise that there’s nothing wrong with this. There’s no law that says every enterprise should survive its founders; in fact, the vast majority of small businesses don’t, and that’s perfectly fine.
But I do think your firm’s leaders need to sit down and have a private and very honest discussion about one-generational firms and multi-generational firms and decide which one you have there. It doesn’t matter much, from my perspective, which answer you come up with. What matters is that you agree about what the firm’s owners and leaders genuinely want and expect from their firm.
Beware of being too aspirational here, of saying, “Yes, we’re building for the future, we want to leave a legacy, etc,” if you don’t really mean it. If what the firm’s powerhouse people really want is to mainline cash from the law firm for the next few years and then close up shop, then it’s wasteful and counterproductive to spend time, money, and effort on succession plans and generational handovers that will never take place. You’ve got to be honest with yourselves about what sort of firm you really have.
Start by establishing beyond any doubt whether this is a firm that wishes to have succession at all. Challenge the default assumption that your law firm will continue on in perpetuity. But if you decide, during these conversations, that yes, you truly do want the firm to last beyond the current generation of rainmakers, then everyone also needs to be clear about the hard choices and time-consuming mechanics that choice requires.
How to carry on
If your firm’s intention really is to be multi-generational, and the political will has been expressed to make it happen, then you need to start moving on this, and fast. I’m not a succession planning consultant by any means, and you should seek out someone who is to receive their expert guidance; but among the things they might tell you are the following.
You might have heard the old proverb, “The best time to plant a tree was 50 years ago. The second-best time is today.”
The same applies to succession planning in law firms. You need to start down two paths in parallel: the first, to resolve the crisis that’s now imminent or underway, and the second, to reduce the likelihood of similar crises in future. Here are three suggestions under each category.
- If you haven’t already done so through the “one and done” discussions above, take a deep breath and schedule conversations with those senior lawyers who are implicated in succession issues. These conversations, which you’ve probably been dreading, will in all likelihood be less traumatic than you fear; in a number of cases, these lawyers themselves recognise their looming succession challenge, but they don’t have the emotional or professional tools to start dealing with it. They might very well be relieved and grateful for your intervention.
- You’re going to have to incentivise this process financially. Put less delicately, you’re going to have to pay these partners to get them to move along. They’ve earned the right, over their years of service, to receive a gilt-edged handshake; and anyway, they’ll fight you harder if they don’t get one. Create a two-, three- or five-year off-ramp that combines reduced billable targets with annual remuneration averaging their five highest-earning years out of the last 10. Pay them for a couple of years after retirement, too. They won’t be bringing as much money in the door during this time; but they can earn it through this next step.
- Give them something else to do. In exchange for less work for more pay, offer them a choice of “legacy responsibilities” to last up to and perhaps beyond their retirement. Actively mentor at least two junior partners and one young associate a year; work with the law librarian to “download” their expertise and know-how into a knowledge bank for future generations; award them the title of "firm ambassador" and have them make the rounds of clients, law schools, community organisations, etc. Involve them in reinforcing the firm’s reputation by dint of their own talents and accomplishments.
- Start with nomenclature. “Succession” is probably not a helpful word for us to be using; it suggests being replaced, superseded, even usurped. From the perspective of the person being “succeeded,” it feels like being thrown aside for an upgraded model. Try “transition” instead: it’s a more neutral term, and one that lawyers are already familiar with: they transition throughout their careers, from students to associates to partners to specialists to leaders, etc. “Transition” can be introduced at the first-year associate level and continued thereafter.
- Create an infrastructure within the firm that can more easily accommodate transitional processes. One of the biggest obstacles to transition is a single-lawyer client relationship that the lawyer feels like hoarding; make it a rule that every client deals with at least two lawyers within the firm on an equal basis. Get lawyers thinking about transitions earlier in their careers; for example, start talking about long-term or disability insurance when lawyers turn 50. Place transition issues on the agenda of every partnership meeting. Bring back successfully retired partners to rhapsodize about how great it is on the other side. Normalise transition.
- Involve the clients. A commonly overlooked fact, one that often comes as a surprise to older lawyers, is that their clients are just as aware of their aging curve as they are. Clients want the firm to deal with this issue before the client has to make a difficult choice down the line. I go so far as to suggest that law firms should use the occasion of a key partner’s transition to open a dialogue with the client about rethinking the client’s legal needs, and even “rebooting” the relationship with the firm to direct some work elsewhere and focus its retainers with your firm on higher-value matters. The client will appreciate it.
I once heard a law firm succession consultant compare older lawyers with soldiers returning from war: “They struggle to reintegrate into society.” I think that’s an apt comparison, and it highlights that one of your duties to your transitioning older lawyers, both professionally and personally, is to help them with that reintegration process. Be humane and considerate in dealing with lawyers facing a career transition endpoint; imagine how you’ll want to be treated when your turn comes.
That boutique law firm I mentioned at the outset is still carrying on, by the way. I don’t know if they ever managed to resolve their succession issues, or if the firm is simply coasting quietly into oblivion; from the outside, both processes look much the same.
Which of these two paths is your own firm travelling down today? Is it the path you want to be on? And if not, are you ready to begin switching tracks? On this issue, more than any other facing law firms right now, time is of the absolute essence.
About our Guest Blogger
Jordan Furlong is a consultant, author, and legal market analyst who forecasts the impact of changing market conditions on lawyers and law firms. He has given dozens of presentations to law firms and legal organisations in the US, Canada, Europe, and Australia over the past several years.
Jordan is a Fellow of the College of Law Practice Management and a member of the Advisory Board of the American Bar Association's Center for Innovation. He is the author of Law Is A Buyer's Market: Building a Client-First Law Firm, and he writes about the changing legal landscape at law21.ca.