Succession Planning for Firm Leaders

02.01.17 | Posted By: Susan Duncan

This article was written by Tory Ruttenberg, who is a RainMaking Oasis Affiliate Consultant and President of Ruttenberg Consulting, LLC and was originally published in PD Quarterly magazine.  It is reprinted here with permission from both.

Due to the unique nature of law firms, succession planning can be more difficult for them than for other types of organizations. This article discusses the value of succession planning, the particular challenges a law firm faces, and steps that a law firm’s leaders need to take in order to plan appropriately for the departures of the firm’s most valuable people.

For the purposes of this article, I have assumed that the person for whom the firm is doing the planning (“Jessie”) is a senior partner with a strong book of her own business, active involvement in her clients’ work, and a significant role in the management of the firm.

What is succession planning?

Basically, succession planning is the planning an organization does to prepare for the departure, anticipated or not, of someone important to that organization. The premise is that things happen—people retire, leave for other opportunities, get ill, etc.—and it is better to plan for those things ahead of time. Succession planning’s goal is to minimize negative repercussions from this person’s departure.

“Succession planning” is an insufficient term, however. It should really be called something more like “succession planning and doing” because just coming up with a plan is not enough. Organizations need to take a fairly significant number of steps ahead of time in order for the plan to be successful when the time for its implementation arrives.

What is the value of succession planning?

Let’s face it. At some point, everyone in the firm, including Jessie, will leave. Maybe Jessie will stay for another 20 years, maybe she will decide to stay for 10 more years and then do something different for a while, or maybe a ghastly accident will befall her in the next month.  No one can control that. But the firm can control what steps it will take when she does leave.

Smooth transitions

 When a key person leaves a firm unexpectedly, the firm can initially be thrown into chaos because there is no one ready to take over all the unfinished business. Succession planning can help smooth this transition. A good succession plan outlines who is going to take over the many roles Jessie plays. This includes deciding who will take over her leadership roles in the firm, who will handle the specific client matters on which she is working, and who will maintain her client relationships— assuming she does not leave for another firm and take her clients with her. It is quite possible that multiple people will step into her shoes.

In order for people to be ready to step into Jessie’s shoes, however, they need to be trained first. Getting up to speed takes time. Having a succession plan allows the firm to think through what support and development people will need in order to take over Jessie’s roles, and gives the firm the time to develop and teach these people so that they will be ready.

Retain the best people

The value of having a succession plan is not simply that it helps smooth the inevitable transitions that occur when someone leaves. Having and sharing a comprehensive succession plan also helps firms retain their best people.

In particular, many firms have difficulty keeping their mid-level partners happy. Assuming everything is going well, the junior partners are generally happy because they finally made partner. The senior partners are generally happy because they are making a lot of money, have powerful positions in the firm, and usually have a lot of autonomy and recognition.

The mid-level partners, however, may be in a very different situation. Having made partner several years ago, the bloom is often off that rose. The mid-level partners are still working really hard; they are making a good deal of money, but not as much as the senior partners; they are on some committees, but they are not in charge of running the firm; they have less autonomy than senior partners; hopefully they have some of their own clients, but often they are still servicing firm clients.

The mid-level partners might be fine with all of this if they have a sense of what their future holds. This is where succession planning can be key. I have worked with a number of firms that were losing people— often people they really wanted to keep. It turns out that many of these people left because they did not see a path forward for themselves. They were content at their firm— they were well paid, received a lot of positive feedback, had strong reviews, and did interesting work. But when the headhunters called, offering a position in a firm that would groom them to be head of their department in three years, they grabbed the opportunity.

This is where the need to share the plan is key. It was not unusual for the firm that the mid-level partner was leaving to have the same plan as the firm to which the mid-level partner went. In other words, the firm had planned to groom that mid-level partner to take over the department once Jessie left. But neither Jessie nor other firm leaders had ever bothered to discuss this with the mid- level partner.

Keep the clients happy

Having a comprehensive succession plan and sharing it with the firm’s clients can also keep the clients happy. Because guess what—law firm clients know that their lawyers could retire, change careers, or get sick. Furthermore, a firm’s competitors are probably regularly wooing their competitor’s clients, or at least making nice to them whenever they have the opportunity. So, if Jessie suddenly decides to leave to sail around the world, there are plenty of other lawyers outside her firm who are eager to take her place. Her clients are much more likely to stick with her firm if they have met and worked with, preferably over a number of years, the lawyers who will ultimately take over her work.

Prepare for future changes

 Optimally, law firms wrap their succession plans into their strategic plans. In other words, as a firm thinks about what might be happening externally two, five, or ten years from now, it should also think about its existing talent pool and give people the opportunity to get the experience they need so that they, and thus the firm as a whole, will be ready when these changes do occur.

Why aren’t law firms better about doing succession planning?

The concept of succession planning is something that law firms discuss regularly. (As in, law firm managers often say, “We really should develop a succession plan.” And then nothing happens.) For some reason, law firms seem to be particularly bad about doing succession planning. And, due to the unique nature of law firms, this is understandable. In fact, much of it hinges on Jessie because, without her buy-in, nothing is going to happen.

People are hesitant about transitioning relationships

 Succession planning in law firms has to be a highly collaborative process. So much of what a lawyer does is relationship driven. Jessie has developed relationships with her clients, her fellow partners, her assistant, the paralegals and associates on her team, co-counsel, and so on. When senior management asks her to develop a succession plan for herself, they are essentially asking her to begin sharing and transitioning these relationships.

Let’s begin by looking at her client relationships. Even if Jessie is willing to bring someone into that relationship, the client might not be amenable. Many clients do not see their lawyer as fungible. Rather Jessie is someone on whom they have relied, and sometimes in very personal ways— entrusting her with their business, their concerns, and their weaknesses. Jessie has developed the relationship by being responsible, knowledgeable, responsive, reliable, honest, trustworthy, and hard working. In other words, originally the client may have hired her because she has a particular area of knowledge, expertise, or reputation. But her clients have stayed with her because they trust her.

The reverse is also true. When the firm asks Jessie to develop a succession plan, it is asking her to entrust someone else with a relationship that she may have developed over many years. It is quite possible that Jessie’s clients are not only people with whom she has a business relationship but also people with whom she has developed a friendship over the years.

This means that trust is the key to making any succession plan work. Jessie has to trust that the people who take over from her will take as good care of her clients as she does. And the clients have to trust that their new lawyer will do as good a job as Jessie did.

To put this in a different context, imagine someone you know—maybe not all that well even—comes to you and says, “You are going to leave in the relatively near future. At that point I would like to become close friends with your close friend. Could you introduce us and then gracefully back out of your friendship a bit so that your friend and I can get to know each other better?” Alternatively, imagine you are the close friend, a.k.a. the client, and Jessie says to you, “I’m planning on moving on but I don’t want to leave you in the lurch. So I’d like to introduce you to someone and I hope that someday she will become your new close friend.” While these requests make sense logically, they could feel very uncomfortable to everyone involved.

Succession planning digs up difficult emotions

 There are other very complicated emotions involved in succession planning. If a firm asks someone relatively young to develop a succession plan based on the “What if you get hit by a bus?” question, there are fewer emotional roadblocks involved. The potential scenario feels hypothetical, since the young partner’s intention is to look both ways when she crosses the street and to stay around for many more years.

It is a very different story, however, when a firm is dealing with someone who is nearing retirement age. For many people, their egos, self-worth, and self-image are wrapped up with their vision of themselves as a successful, working lawyer. They fear that, if they stop being practicing lawyers, they will lose their identity. In addition, succession planning raises the specter of mortality. Jessie may very well fear that, post- retirement, her life path will go like this: she stops working, she putters around the house, does some traveling and volunteer work, plays a little tennis, and then she dies.

That is not a scenario most people, including the fictitious Jessie, want to contemplate. So they don’t. They stick their heads in the sand and continue along, hoping the issues will magically solve themselves.

Lawyers are very autonomous

 As anyone who has ever spent any time trying to manage a law firm knows, lawyers tend to be highly autonomous, independent, self-starters. In other words, law firms are filled with people who hate to be told what to do. So tasking the head of HR or the head of a department with “develop a succession plan” for a partner is not likely to be successful. If that partner does not feel like planning for her departure, there is not all that much that someone else can do.

What steps can a firm take?

At a minimum, the best-managed firms have solid succession plans for their key leadership positions. Here are the steps that every firm can take to make that outcome more likely.

Establish the proper culture

Begin by ensuring that that having a succession plan is part of the firm’s culture. In other words, it is expected and required. To set this culture, the firm’s leadership should take the following steps:

First, start at the top.  Every partner needs to have a succession plan, beginning with the most senior people.  If the managing partner and the members of the executive committee don’t have plans, why should anyone else go through the hassle of developing one?  Obviously, for junior partners without their own book of business, succession planning is simpler and less crucial.  But the goal is for succession planning to be the norm for the firm.

Second, be transparent.  Remember, one of the values of succession planning is that a firm’s junior and mid-level partners are more likely to stick around if they can see a path forward in their career.  This means that the firm’s management needs to share their plans early and often.  Let people know who is being groomed for what.

Third, revisit the succession plan.  Every couple of years the senior people should review their succession plans, think about what has changed both internally and externally, think about whether the people they were grooming to take over are still the best people, and adjust accordingly.

Think creatively 

The best way to encourage recalcitrant partners to cooperate is to give them something to look forward to.  Remember, one reason the senior/older partners avoid succession planning is because they cannot imagine their own future.  At least not a future that looks enjoyable.  If a firm can provide these partners with opportunities to contribute in meaningful ways after they retire or scale back, the senior/older partners are more likely to transition their work earlier and more willingly.

Opportunities need to be interesting, carry some status, and be tailored to the individual.  For example, if a soon-to-retire partner has always been good at developing business, the firm can keep her on in a more limited role to help manage client relationships or to teach senior associates and junior partners how to market.  If a partner really likes the hands-on practice of law, give her a leadership role in a high profile pro bono matter the firm is handling. If the partner has always been involved in firm management, the firm can use its contacts to help the partner get involved in leadership roles in other organizations, including state bars, the ABA, or non-profits.  In addition to smoothing the partner’s transition, these types of steps often benefit the firm.

Make introductions early 

Once someone has figured out how they would transfer their practice, they need to get the right people involved early on.  This means introducing other partners to the client and ensuring that the associates working on the matter actually meet the client and have fairly regular direct contact so that the client is comfortable with the other partners and the associate.

In Summary 

Succession planning is a very important step for a law firm to take if it wants to keep clients, retain high performing lawyers, and transition smoothly when someone leaves. However, due to the relationship-driven nature of legal work, combined with the difficult emotions involved in planning for a future outside of the firm and the autonomous nature of lawyers, succession planning in law firms can be very difficult.  For it to be successful, the firm’s leaders have to set a good example, start taking steps early, and look for positive alternatives for its senior partners.

Reprinted from PD Quarterly with permission from Tory Ruttenberg, president of Ruttenberg Consulting LLC The author of this article is permitted to reproduce and distribute it without limitation, including republication elsewhere with credit to PD Quarterly.

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