Contrary to the case with corporations, which all stoutly proclaim their desire (if not their nimbleness and flexibility) to build an enduring organizations, for law firms, longevity itself may not be a priority. Maybe there’s nothing wrong with one-generation firms:
- They can provide a respectable career and a handsome livelihood for many people while they exist
- And, if they can’t or far more likely choose not to evolve into the future, what’s wrong with that?
- Often it really is the case that “the world will little note, nor long remember” the former firm.
- What is irresponsible and personally and professionally offensive is not being clear-eyed about your intentions.
What, after all, is lost when a law firm shuts its doors? Partners and, one hopes, most associates move on to other firms or go in-house. Business professionals and staff with transferable skills have a sympathetic tale to tell the job market, and, assuming the total volume of legal work is not diminished by the disappearance of the old firm, clients will shift their demand elsewhere and lawyers and staff will need to expand to meet it. Call it conservation of demand for legal services, or some such.
What is really lost, then, when the organizational form goes away, but the people and the client base are left standing?
I’m put in mind of a Prof. Kingsleyesque exchange from my law school bankruptcy class. When a student voiced sentimental reservations about the finality of liquidation, the professor interrupted:
“It’s not as though the people are taken out and shot and the buildings and equipment dumped in the Pacific Ocean! The economy puts them to use.”
So it often is with one-generation firms.
Whether it’s because “succession” “planning” around our rainmaker friend quoted above is a herculean management challenge, whether it’s because lawyers strongly prefer avoiding awkward conversations, whether it’s because the press of daily client deadlines makes it challenging to come up for air, or whether it’s because (our suspicion) lawyers at most firms honestly don’t give a fig about the firm’s future starting the day after they last walk out the door, many law firms fail for want of effective–meaning timely, purposeful, systematic, uncompromisingj–succession planning.
Lou Gerstner, famously unsentimental, took over as CEO at IBM in 1992 and served until 2003, during which time he resuscitated and revived the iconic firm, which was among the walking dead when he took the post. In one of his many post-mortem interviews discussing his approach, he observed that the 1992 IBM had “no products, no pipeline, no vision,” and offered this harsh but realistic diagnosis::
“There was nothing that said American Express [where he’d also been a senior executive] or IBM couldn’t go out of business, and IBM very nearly did.”
Two cheers for One Generation Firms?
In August (Aug 1) 2014, Bruce prepared a post on Leadership that strikes me as well worth recalling in context of the one-generation firm. Here is a key passage:
“The longer I study, meet with, advise, and deal with law firms of all sizes and shapes, the more I’m coming to believe in the power of stewardship: The core belief that most of us walked into an institution created by our forebears and which we have an obligation to hand down to the next generation stronger, more powerful, and more vibrant than we found it.”
It is very well worth re-reading in its entirety, and you can find it in the ASE archive under leadership.
To be fair – law firms themselves know this. Often the firms go after a prospective lateral partners so the book of client business would follow. If firms know (or believe) that clients transfer as easily as the lawyer’s briefcase, the firms also have known (or have not tried or failed) to make their own client base stick beyond that key set of lawyers.
Effective succession planning would make clients not only stay around for two generations, but also stop them walking out the door with the next lateral departure.
Thanks as always for your reflections.
I have written several times about my view of the insanity of the lateral partner “arms’ race,” which is bad enough insofar as it contradicts anything management might say about building an enduring firm (people watch what you do, not what you say) but, to your point, helps train clients that they might as well move with their marquee partner to another firm because, after all, law firms seem to expect that will happen.
This is not the only, but I believe it’s a major part, of the reason why there’s a high degree of correlation between firms that lose lateral partners very rarely and firms that have an “institutionalized” client base.
Thanks again.
Another key point is that succession is an even greater issue at smaller firms where the founders are (generally) the key rain makers as well as management. When the founders approach retirement, the firm has to grapple with both transition of clients and management responsibilities simultaneously.
Cheers,
Janet