More and more I meet with law firm management committees concerned with law firm succession planning issues which go hand and hand with the legal marketing efforts. Questions arise as to how to handle succession internally and externally in order to retain existing clients while acquiring new business as 30 percent to 40 percent of actively practicing lawyers in the U.S. and Canada are starting to retire (Altman Weil).
Law firms are not alone. Most long-established businesses today are facing the same issues. Indeed, 77 million people were born between 1946 and 1964 during the baby boomer era (U.S. Census) and they make up 35 percent of the American adult population (Scarborough).
In a 2012 Altman Weil survey, Law Firms in Transition, law firm leaders who responded, identified the retirement/succession of the baby boomer generation as a key issue facing their firms. In fact, succession is the number one challenge for most law firms – not just succession at the very top but in practice groups, among relationship managers, in management, etc.
At the 2013 Legal Marketing Association International Conference, Professor David B. Wilkins of Harvard Law School and Vice-Dean for Global Initiatives on the Legal Profession addressed “The Future of Law Firms in the Global Age of More for Less.”
Legal Industry Observations
Here are some of the key observations Professor Wilkins presented regarding succession planning:
- The best firms are passing down opportunities to the next generation, but opportunity must be predicated on accountability (i.e. metrics and structures).
- Senior lawyers who hand off client relationships to more junior partners and associates must be treated with respect.
- Transition of leadership creates big challenges for how firms present themselves to clients which directly correlates to the firms’ marketing initiatives.
- Human capital development requires attention to diversity – the practice of law was traditionally a restricted profession, but today law is an increasingly feminized and diversified profession.
- The traditional career path for lawyers in law firms was fashioned for white men with stay-at-home wives. This has to change.
Tips for Law Firm Succession Planning
Keeping these observations in mind, here are a few tips for successful law firm succession planning:
- Take diversity into account including non-lawyer, ethnic, racial, religious, sexual orientation, disability and all other forms of diversity.
- Change the law firm business models in order to meet the needs of the modern family and modern client. This includes billable hours and billing expectations, pricing structures, compensation models, partner tracts, etc.
- Figure out how to operate in an arena with even more multi-disciplinary practices.
- Develop junior lawyers from the beginning because clients are looking inside the firm to see how it operates. Prove to clients why more junior attorneys are capable to handle their legal work.
- Allow junior lawyers to build relationships with the clients.
- Provide incentives for attorneys to participate in legal marketing and business development activities.
- Take into account origination of all new business and retention/growth of existing client portfolios.
- Provide mentoring, professional development and leadership training from the very beginning.
- Integrate non-lawyers into the mix of the business management.
- Be forthcoming to clients with attorney transitions, help develop relationships for the long-term.
The time to start planning for attorney succession is now, no matter the age of the partners or founders. Eventually, they’ll all retire. We’ll be having this same conversation in 20 to 25 years as generation X’ers age and then again, 20 years after that. The question is not whether the retirement cycle will continue. The question is whether or not your law firm will get through the next wave of succession.