Dan Taylor was the managing partner of the fictional 28-attorney firm Milford Taylor & Shapiro (MTS) for more than a decade. He was well-liked and ran the firm profitably, maintaining high client retention rates, operational efficiency and steady growth. Because Taylor was healthy and still in his 50s, it never occurred to anyone at MTS that the firm should plan how they’d replace him.
Then a heart attack forced Taylor into early retirement. MTS’s biggest rainmaker and its litigation practice group leader — neither of whom had been groomed for firmwide leadership — began a bitter battle for the managing partner role. After MTS’s executive committee chose the litigation group leader, the rainmaker left, taking key clients and prospects with him. Plunging revenues, poor morale and inexperienced leadership sent the firm into a downward spiral. Three years later, MTS went belly up.
This scenario may sound extreme. But it could happen to almost any firm that hasn’t planned for leadership succession.
EXCUSES, EXCUSES
To create an effective succession plan, you might first consider the reasons your firm has put it off thus far. Has your current managing partner vowed that she’ll never retire? Are other partners reluctant to broach the subject for fear they’ll offend her? Does the pool of potential successors lack the required experience and skills? Are you worried that clients will take their business elsewhere if they learn your current leader may soon step down?
Some issues are easier to address than others. Many organizations, for example, simply haven’t found the time to make a succession plan — they’re too focused on meeting short-term goals to think about the future. If time is your firm’s problem, consider devoting your next partner retreat to succession planning.
POLICIES PREVENT CONFLICT
Whether it’s in a weekend retreat or over an extended series of meetings, the first step in succession planning is to develop policies that will enable a gradual transfer of power. This includes establishing an age, such as 62 or 65, when the managing partner is required to begin the multiyear process of transferring power and client work to his or her successor.
Such a policy will help your firm deal with managing partners who are unwilling to retire from the position or reluctant to share “their” clients. To head off potential conflicts, specify that the partner can begin drawing retirement benefits only when your firm’s executive committee or new managing partner determines that the transition has been completed successfully. Keep in mind that such policies aren’t intended to force partners into retirement, but to get them to start the often-long transition process.
Indeed, it’s important to encourage retiring partners to remain involved — as advisors, mentors or even part-time practicing attorneys with reduced client workloads. Be sure your succession plan includes details about compensation, benefits and perks, such as club memberships, for retired partners who remain active in your firm.
GROOMING THE NEXT GENERATION
Once formal transition details are worked out, create a training program for managing partner successors. Some lawyers are natural leaders — capable of inspiring confidence and effecting compromise — yet on-the-job training remains essential. Law firms are complex organisms, and keeping them running and growing takes experience and a variety of personal and intellectual skills.
Training programs typically involve a mix of structured and unstructured steps. Mentoring associates and younger partners is a good way to spot leadership talent early. You can then assign the most likely candidates to be committee heads and project managers or to oversee support staff. Also consider candidates’ legal specialties, client relationships, rainmaking abilities, financial acumen and time management skills.
Once a probable successor is identified, he or she should be included in significant management decisions and financial issues such as those related to budgeting and compensation. And as the managing partner nears retirement, the successor should get to know all major clients and take the lead in meetings with them.
Much of the successor’s education, however, is likely to be informal. Some of the most valuable advice is communicated during casual lunches or golf outings.
MAKE A CHOICE
If your firm has yet to create a formal succession plan, don’t put it off any longer. Leadership succession isn’t a matter of if, but when. The only question is whether the transition will be seamless and successful or fraught with conflict and risk your firm’s future.
KEEPING CLIENTS ON BOARD
When law firms fail to plan for succession and power struggles ensue, everyone’s focus is likely to be on internal politics. Unfortunately, neglecting clients during periods of transition makes them more likely to take their business elsewhere. Clients may already be upset about the end of a trusted relationship with your retiring managing partner. Uncertainty about your firm’s very existence will only fuel their anxiety.
So be sure to tell major clients about your firm’s succession plan, and introduce younger partners and even promising associates to them long before the managing partner’s retirement date. Showing clients that you have a deep talent bench and procedures for putting the best leaders in place will reassure them that your firm is stable and will always be able to focus its energy on their matters.
