At many law firms, the succession strategy is to “Stay the Course.” But this isn’t a productive strategy. For a succession plan to be effective, it must be forward-looking and allow for adjustments as new challenges develop. “Stay the Course” is inherently backward-looking and unresponsive to changing client needs and events.
So when a law firm says that its succession strategy is “Stay the Course,” this usually means the firm’s plan for succession is to do nothing. A firm with no outward-facing plan for replacing the revenue its senior partners produce by the time they retire is in denial about succession. The cost and effort to replace the business of retiring partners is not a productive strategy.
The solution is to start conversations with senior partners about retirement early. Often, this is not easy because retirement is a touchy subject. At many firms, the word “R” is rarely uttered in a polite company. But the stakes are too high to stand on ceremony. Generational turnover of the producers who keep revenue steady and growing will not happen without making and executing a plan.
Here are three things a firm can do right now to get its succession planning into gear:
First, a firm should consider reasonable guidelines for the manner and timing of partner retirements to make them more predictable. This allows the firm to plan – well in advance – how to guide and support senior partners out of law practice and into the next stage of life while retaining their clients.
Second, a firm must ask itself whether its partners will do the considerable non-billable work required to migrate their practices, referral sources, and brands to younger lawyers without financial incentives to motivate them. At many firms, this means preserving these partners’ compensation while they do this work, even if it results in a drop in billable hours. This often goes a long way toward ensuring the work gets done well.
Finally, a firm should watch for partners who do practice migration work for no reason other than loyalty to their partners and honor these lawyers as part of its culture. When a firm makes these partners’ stories part of its oral history, retiring well becomes something to which other partners aspire.
These initiatives – part of the “how” of succession – form the core of a dynamic strategic plan for accomplishing an effective generational turnover of firm ownership and revenue production. This kind of plan works because it is sufficiently elastic to adapt to change. A “Stay the Course” succession strategy is the antithesis of such a plan.
