Successful
Succession:
Keep
Your Best Clients When Boomer Lawyers Leave
By Roy S.
Ginsburg
The
demographic phenomenon known as the baby boom has been shaping all aspects of
American life since its advent in 1946 – from an unprecedented number of
students when the boomers were young, to an unprecedented number of workers
during their adult years, to an unprecedented number of retirees in the years
ahead. There is no escaping the impact of this generation.
For the
next 19 years, about 10,000 people a day will turn 65 – including many of
the nation’s most experienced and respected attorneys. The American Bar
Association estimates that there are 400,000 baby boomer lawyers – approximately
one-third of the nation’s current total. Before long, golf courses may be
as crowded as highways.
Take a
careful look at your law firm’s most-influential leaders and biggest
rainmakers. Chances are good that these individuals will be retiring over the
next two decades. Is your law firm prepared for the impact of this seismic generational
transition?
The
impact will be felt well-beyond the law firm itself. Clients who have been
well-served for years will find themselves bereft of the lawyer with whom they
have built and maintained a personal and professional relationship over the
years. Who at your law firm is prepared to step to the plate and keep these
clients equally satisfied? The future health of your law firm depends upon how
today’s leadership plans for the firm’s post-boomer viability. This
important effort is called succession planning.
Obstacles
to Planning
Afraid
to Plan
In
order to plan for the future of your law firm, you need to know the retirement
plans of the firm’s senior lawyers. Obtaining this knowledge is easier
said than done. It can be problematic to simply start a conversation about the
subject. Many senior lawyers avoid raising the issue on their own due to a
variety of real or perceived fears, including potential reduction of
compensation or loss of clout among partners. Others resist any conversation that
involves thinking about the end of their professional career – with its
hints of their eventual mortality.
Junior
lawyers whose futures are at stake have their own fears about starting the
conversation. If handled incorrectly, broaching the topic of succession could in
some firms be political suicide. Younger lawyers fear being perceived by their
elders as putting their self-interest ahead of the firm’s.
Too
Busy to Plan
Lawyers
are notorious for contemplating every possible way in which a client deal or
transaction can go wrong – even if it would not occur for years.
Paradoxically, when it comes to the future of the law firm, thinking ahead is
hardly a blip on their radar screens. Each lawyer’s focus is on
day-to-day issues such as handling client crises, billing and collection
matters, or dividing up firm profits. They cannot see the forest for the trees.
Too
Selfish to Plan
There
are also some partners who, quite frankly, care about themselves more than they
care about the firm. If they have a big book of business, they are usually
tolerated. These lawyers will disrupt the law firm by leaving under their own
terms, planning only for themselves and not their colleagues.
Starting
the Discussion
In
theory, any discussion about succession planning should be started by the
firm’s managing partner or management committee. Alternatively,
influential and well-respected partners can raise the issue.
In
reality, many of these individuals suffer from the fears mentioned above. In
that case, one effective tactic is to camouflage
the firm’s succession planning within its strategic planning process. This
can be particularly effective when the strategic planning process is
facilitated by an outside consultant. Unlike the lawyers in the firm, outside
consultants have no vested interest in the outcomes of succession planning.
The
best way to engage selfish partners in the process is to focus on the client
side of succession planning. Even partners who do not particularly care about
their colleagues typically care very much about their clients. When the
emphasis is placed on meeting client needs, and not on the firm, the chances of
getting their attention substantially improves.
Nuts
and Bolts
The
objective of creating and executing a succession plan is to ensure continuity
in firm management and client relationships.
Management
Responsibility
for transitioning firm leadership falls to the managing partner or management
committee and, at larger firms, the practice group heads. Firms led by managing
partners should elect or select a successor to be “assistant managing
partner” to work with the incumbent managing partner for months, or even
years. This allows time for the new leader to be mentored and gradually assume
management responsibilities. Firms led by committee should adopt a rotation
process that maintains continuity while providing a steady infusion of fresh
blood and future leaders.
Client
Relationships
Transitioning
the clients of a senior attorney to the next generation is the most challenging
component of any succession-planning equation. Client input is essential.
Success requires managing and finessing human relationships, a task that
– even with the best of intentions – is never easy. It can take
years to successfully transition a client relationship.
The
successor lawyer needs time to obtain the necessary expertise and
client/industry knowledge. More importantly, it takes time for clients to feel
the requisite “comfort and chemistry” that is so crucial for a
successful lawyer-client relationship. Finally, time should be set aside to
accommodate any adjustments to the plan. There will be inevitable bumps in the
road that will require some time to absorb shocks and make any necessary
repairs.
Furthermore,
a comprehensive client-transition succession plan is actually multiple plans.
Each senior lawyer needs a plan and, within that plan, there must be a plan for
each significant client. Remember, however, that all clients are not created
equal. Allocate the bulk of your time and efforts to the clients that are most
crucial to the firm’s bottom line.
In
order to put together a client transition plan, ask the following questions:
- Which
firm clients are being served by senior lawyers?
- How
long do these senior lawyers intend to work?
- Are
any junior lawyers serving those clients? If not, who can be introduced to
the relationship?
- What
types of training and mentoring do these junior lawyers need? How long
will that take?
- What
are the clients’ concerns about the potential loss of the
firm’s senior lawyers? Do they have successor preferences?
- Are
any of your key clients going through their own transition process? Do you
have a relationship with the client’s post-boomer generation?
- How
will successor lawyers be introduced to clients – both socially and
in a working relationship?
The
answers to these questions will help your firm develop a plan to transition
clients. Will your plan work? Only if your firm has asked and answered one
additional crucial question: What will motivate the senior attorney to begin to
let go? More often than not, the answer is money. Without the proper financial
incentives, the client-transition plan is destined to fail.
In most
law firms, the firm’s compensation policy must be adjusted for those
impacted by the plan. If the firm’s policy is heavily weighted towards
billable hours, senior lawyers are unlikely to delegate to junior lawyers. If
the firm wants senior lawyers to delegate work, the senior lawyer needs to be
rewarded for taking that action. Additional adjustments will most likely be necessary
in compensating for origination and nonbillable time (e.g., mentoring). For
any client-succession plan to work, the senior lawyer must be provided with
some level of income protection that rewards the lawyer for furthering the
goals of the plan.
Flexibility,
communication, and accountability are also critical to the success of any
succession plan. Since each lawyer may want or need a different time-frame for
transitions – to address personal as well as client needs – plans
must be flexible. Firm management, senior lawyers, junior lawyers and clients
must communicate regularly to ensure that the expectations of each party are
being satisfied. If not, individuals must be held accountable to get them back
on track.
Finally,
any succession plan should take into account the role of a retiring lawyer
after the client transition has been completed. Can the lawyer add mentoring or
marketing value to the firm in an “of counsel” role? If the cord is
to be cut completely, has the firm provided resources to ease the
individual’s change to a retirement lifestyle?
Never
Too Late
With
one-third of the nation’s lawyers contemplating retirement, it is time to
start or ramp-up your firm’s discussion of succession planning. It is
never too late. Even a few months or a year of planning is preferable to a
crisis situation generated by the precipitous retirement of a critical partner
who rides off into the sunset never to be heard from again. I can guarantee
that this unhappy scenario occurs more often than you would expect!
If your
law firm wants its best clients to stay when your baby boomer lawyers leave,
succession planning is the most effective insurance policy to accomplish that
goal.
Roy S.Ginsburg, is lawyer coach who helps individual attorneys and law firms nationwide achieve practice-development goals, including developing and executing succession plans. He has practiced law for more than 25 years and is a frequent CLE speaker in the areas of marketing, client service, career satisfaction and retirement planning. www.royginsburg.com.
This
article first appeared in the August 2011 issue of Bench & Bar of
Minnesota, by the Minnesota State Bar Association. It is republished here with
permission.