Janet Stanton co-authored this article.
Corporate endurance should not be an end in itself. That said, in a very real sense, survival is the ultimate performance measure.
–Ian Davis, Managing Director, McKinsey, writing in Reflections on Corporate Longevity.
Perhaps thanks to our work with a number of firms face-to-face with the awkward challenge of succession planning unattended-to, or perhaps thanks to the increasingly noisy rumblings of real serious change in Law Land, we’ve been thinking a lot lately about one generation firms.
Corporations pay lots of attention to succession planning, both for senior management of the firm and with respect to transitioning key client relationships to the next generation of team members. Law firms, by contrast (certainly if you judge by how they behave as opposed to what they might say), tend to shy away from both forms of succession planning, perhaps because they could involve awkward conversations, or because those being targeted for being “succeeded” out are often the same people who are in sufficiently senior positions to initiate the conversations, or perhaps because too many lawyers don’t honestly-truly care about the future of the firm after they step out the door for the last time.
Corporations invest senior management time and often generous resources on cultivating and grooming the next generation of leadership, rotating promising mid-rank executives through a variety of geographic and/or product line responsibilities, and two professional service industries adjacent to law, management consulting.and accountancies, impose fixed-duration tenures on key client relationship partners, making it clear that the senior leaders of today will step back in favor of the rising stars of tomorrow at regular intervals. When that’s an open and transparent premise of the client relation, nobody’s surprised and clients often appreciate fresh blood.
Need we mention that it also goes a long way towards institutionalizing clients?
Law firms are very different.
How deadly it might be to ignore succession challenges depends, first and foremost, on how large your firm is. As with a diversified investment portfolio, larger firms are better able to withstand the loss of a few players, even a few critical players; they have other investments on the table, as it were. For small firms and boutiques, failing to plan for succession is, as they say, planning to fail–utterly and completely, as in going out of business.
In many small and mid-size firms, the challenge is aggravated by the reality that the senior leaders in management of the firm and the rainmakers with the major client relationships are often one and the same individuals; losing one is a kind of two-fer, in the most unwelcome and damaging way.
Insight into how and why comes from Prof. Laura Empson’s just-published book, Leading Professionals: Power, Politics, and Prima Donnas, which distills her 25 years of research into elite professional organizations, primarily law firms. Consider this opening salvo:
One ‘rainmaker’ in a global law firm responded to my questions during a research interview as follows:
Empson: Does anyone have power over you?
Partner: Not as far as I’m concerned, no.
Empson: Does anyone think they have power over you?
Partner: I don’t think so.
So if you think you’re going to impose a “succession plan” on a figure like this, our condolences. Actually, it can be done, but not frontally and not in short order. (For sage counsel on how to do that, read Dr. Empson’s book. For the implications for law firm longevity, read on right here.)
Based on years of cumulative experience with law firms, they largely prefer to avert their eyes from the distasteful issue of succession. Now, we hasten to add that this is our assertion, albeit one grounded in cumulative decades of experience across the globe. Alas, data on how many law firms last but a single generation–for want of the next generation of management or the next generation of key client connections–is nonexistent. As luck would have it, however, my partner Janet Stanton came across an unsourced assertion that the average period a law firm stays in business is forty years (one generation of leadership, if you assume the founding group spans an age range of say, a decade).
This begs the question of whether organizational longevity is a desideratum in itself, or not? We can all admire Freshfields for its longevity, which has counted the Bank of England as a client since 1742, when the population of the still-nonexistent United States was less than one million people (and believe us, we do admire them!) but we’re not all Freshfields. What about the rest of us?