With Baby Boomers retiring left and right, law firm leaders everywhere are talking about succession planning. Yet, much like the weather, no one seems to be doing much about it. Legal consultants Altman Weil report that only 31% of its surveyed law firms had formal policies in place. ALM Legal Intelligence puts the number at 33%.
These are pretty abysmal numbers, but there are many logical and understandable reasons for them. After all, who wants to talk about aging, losing one’s professional identity and facing one’s mortality? It isn’t a hot topic for most.
Even more problematic are the practical issues surrounding law firm succession planning. First and foremost, is the transitioning of clients from retiring lawyer to junior partner.
Issue #1: Finding the Right Financial Solution
Most law firms incentivize bringing money in sooner rather than later. Short term focus is paramount. Those same firms reward hoarding clients, along with each client’s origination credit.
You don’t have to be a compensation expert to arrive at the obvious solution. Just as law firms have successfully incentivized business development using the concept of origination credit, they can incentivize the transition of a book of business using the same credit.
At some predetermined age, senior partners must begin sharing origination credit until they reach another predetermined age, where no origination credit is earned.
Though the solution is simple, I have no illusion that it would be easy to implement given most law firm cultures. Regardless, for senior partners who genuinely care about their firm’s future viability, the time to bite the bullet is now.
Issue #2: Preparing to Pass the Torch
Another issue lies in transitioning a book of business. Assuming a firm can get the senior partner to agree to pass things along, several questions still arise.
- Does the firm have a competent successor to pass them to?
- Will the senior partner need to mentor the successor to prepare them for their role?
- Does the firm expect the senior partner to donate non-billable mentoring time?
There are no easy answers here. But, for the sake of your firm, you can’t ignore these questions.
Firms That Plan Are Firms That Live On
By implementing a few strategies, it’s not complicated to put together a succession plan. What is complicated is inspiring law firms to actually plan. For those that do, the firm’s legacy will likely live on.
