This column is by Janet Stanton, Partner, Adam Smith, Esq.
Succession planning has been much on our minds lately, in part because it is so rarely on the minds of most law firms or lawyers. And as Bruce noted when posing this question, “according to the 2018 Citi Law Firm Group Client Advisory, one-third of equity partners are at or approaching retirement age.”
Moreover, Altman Weil’s 2015 Law Firms in Transition Survey reported that in 63% of law firms, 25% of law firm revenue is controlled by partners 60 years old and up.
For the very real possible consequences of ignoring the exigency of succession planning, please read our recent piece on “One Generation Firms.”
Newer partners and associates should pay close attention.
In contrast to corporate America and other professional service industries—where planning for senior management succession and transitioning of clients from older to younger relationship point people is by and large viewed as an essential “core competence”—law firms seem unable or unwilling to address these challenges in focused, disciplined, and concerted ways. Per ALM Intelligence (2017 figures), more than 80% of large law firms surveyed have either no succession planning at all or one looking at most a year or two ahead.
So our question to you, dear readers:
What is the primary explanation for this evidently irrational behavior?
These are the choices we gave you and how you voted:
- The people who would be stepping aside are the very same people who would need to initiate the succession effort. (41%, 39 Votes)
- Law firm partners fundamentally don’t give a fig about the future of the firm; the day they walk out the door is the day their interest ends. (39%, 37 Votes)
- The conversation about passing the baton would be awkward and uncomfortable. (14%, 13 Votes)
- Emphasizing detailed plans is over-wrought; these things happen organically. (3%, 3 Votes)
- There are no obvious leaders in the next generation. (2%, 2 Votes)
- I don’t want to think about it. (1%, 1 Votes)
As usual, you did not disappoint. Quite rational, influenced by unblinking recognition of what actually goes on in Law Land. The top two vote-getting options were virtually tied:
- The people who would be stepping aside are the very same people who would need to initiate the succession effort (41%, 39 votes) and
- Law firm partners fundamentally don’t give a fig about the future of the firm; the day they walk out the door is the day their interest ends (39%, 37 votes)
Each of these, in its own way, speaks to fundamental fragilities in “business as usual” at many firms and are somewhat related. First, that there are not institutionalized processes in place to address consequential and inevitable developments is a management failure of the first order. It is recklessly irresponsible; both craven and solipsistic.
Which leads to the next point that our responders think many partners don’t really care about the future of the firm. To paraphrase Louis XV (or, some say, his mistress Mme. Pompadour), “après moi – who cares.” Despite lawyerly self-absorption might there be mechanisms to counter these tendencies?
Could, perhaps, some kind of deferred compensation program, tied to the firm’s performance broaden partners’ horizon of interest in the long-term success of the firm? Looking for workable ideas. Got any?
Third on the list is that discussions surrounding succession are awkward (often referred to as the “3rd rail” of law firm management, succession planning is just ahead of easing out low-performers on the angst-o-meter). This is another management failure. The problem won’t just disappear. Buck up. And, if you need a little help, I’ve always found Xanax to be effective. Or, you might try a shot of “liquid courage.”
For extra credit, please read Daniella Isaacson’s bracing report on succession planning from ALM Intelligence here (requires a free download).
Thanks again, Dear Readers for your engagement.
And, if any of you have hot-button questions you’d like to see – please let us know!