The failure to groom successors in a law firm is a recipe for disaster for both the firm and the founding partner who one day hopes to successfully exit the business, writes John Chisholm.
There is little doubt that succession is one of the most significant issues facing professional firms of all sizes and from all regions in Australia. I suspect this may be the case in the United States and the United Kingdom, too.
Recently I gave a talk entitled Succession Planning: Why Most Firms Should But Don't outlining some of the reasons that Baby Boomers are still hanging in there and failing to consider the need to plan for the inevitable. These reasons are complex, but often include:
- Financial position: Anecdotally some partners who might have before the global financial crisis considered retiring ‘shortly' feel they are no longer in a financial position to do so. Equally, there are other partners who have seen their incomes increase substantially over the last few years, in particular, and even the mere thought of them leaving that income behind gives them the cold sweats.
- Successors = competitors: There is a short-term mindset in many firms where you may only be as good as your last month's billings. In these firms, this not only has a negative effect on their culture, but the thought of bringing in a potential successor who will in reality be seen as a potential competitor is not easily contemplated let alone accommodated.
- I am the firm: Some partners have made their profession their life's work and it could be quite threatening for them to think the firm and the profession could continue on without them. It is also not unfathomable to think that they may even prefer to see their firm be less successful than succeed without their involvement.
- The firm is me: There are those who are financially secure, and can envision the continuation of their firm and the profession but have defined themselves by their career to the extent that the thought of retirement is, quite frankly, frightening - "I can't retire, I don't know how to do nothing."
- It is not an issue (yet): Many firms have no succession policy in place or if they do it is a Clayton's policy. Such firms are happy with the status quo and only deal with the need for succession as it presents itself (usually urgently, which also lends itself to crisis management and all kinds of stress). They also operate on the assumption that there is a ready pool of people looking to ‘take the next step' if and when the time comes or that it will be easy enough to recruit.
- I'm not useless: Age should not have a direct correlation with the value someone can provide - a partner does not suddenly become an incapable shareholder, manager, rainmaker, mentor or lawyer as they wake on their 60th or 65th birthday. That said, age coupled with experience does change us. Physically, however, we cannot and should not do the same things we did at 35, 45 or even 55, but too often we find partners are expected to maintain the same level of grind (read ‘billable hours') throughout their career.
The three choices: Firms in my experience often choose to adopt one of three positions with respect to succession planning.
- Some firms take the ‘ostrich pose' and simply avoid any impending succession issue, often until it is too late and/or when it becomes someone else's problem (e.g. the remaining partners or next of kin).
- Other firms - and an increasing number of them, I am pleased to say - successfully deal with succession by planning for it and adopting any number of strategies.
- Then there is a third category of firm whose leaders, with all the best intents, purport to plan for and deal with their succession issues, but for some strange reason never quite succeed in pulling it off. This is often, but by no means exclusively, the case in first-generation firms when the handing over of the baton is often fumbled or dropped. After the founding fathers leave or retire, the firm becomes a shadow of its former self or, worse still, withers and dies.
In trying to work out why succession planning in this third category often fails, a recent blog from Michelle Golden from the VeraSage Institute articulates far better than I could the problem - and suggests some solutions. She looks at the traits of the successful partner on the one hand (‘a natural at marketing', ‘an expert or niche practice specialist', ‘recurring referrals from the same sources', ‘meticulous about work' and ‘service quality, tight control of relationships') and those traits common to the apprentice (‘highly valued right arm to partner', ‘no book of business', ‘full plate', ‘non-equity partner or forever manager or associate' and ‘subdued personality').
So what is the problem, I hear you ask? Well as Michelle correctly points out, what is "frighteningly absent" is self-sufficiency on the part of the junior person. When the partner leaves or retires, things can start to unravel as the junior has not been taught and therefore has not learned the skills needed to successfully take over the reins.
In short, the traits Michelle identifies work well for both the partner and the junior, as well as for the firm and for the firm's clients provided the two remain in their positions. As soon as one leaves, however, it all can fall apart pretty quickly.
Another VeraSage consultant, Jay Shepherd, in a recent post on Supervising Partners and Teaching Partners, adds to the reasons why succession does not always work. He highlights both the frustrations of a young lawyer as well as the roles a partner can play in contributing to or alleviating them - the ‘supervising partner' again often being the source of much frustration.
In their blogs, Michelle and Jay provide some good anecdotes and advice, but for me the following extracts succinctly sum up why succession might not work in some firms:
- "The primary job of an associate is to learn how to someday be a partner."If an associate is not working for a teaching partner, they are wasting their time.
- If you are the junior person: "Remember this as you progress in your career; it's far better to get to the point where you bring in work that you don't do than it is to always be doing work that you don't bring in."
- If you are the partner: "Seek out a strong worker who is also a people person. He might be harder to tame, but an entrepreneurial spirit will ensure the continuity of your practice."
It is sage advice for any firm likely to be in this position. I guess the only exception might be those sole practitioners who choose to have no one in their employ who they can consider anointing as their successors, so it is not going to ever be an issue for them anyway.
The upshot is that successful succession planning requires both policy and practice. Here are five factors that, if adopted, may help your firm.
- Active engagement in any plan by the partner (i.e. they are willing to leave the partnership within the planned timeframe). A policy might include: - a change in role and rewards as a more senior partner moves into assisting in the development of their successor and other lawyers (via different KPIs for those partners on a succession pathway) - valuable post-partnership roles as options to retirement - assistance in the transition. Peer or external coaching and support may help with managing the adjustment on a personal level.
- Communication and active discussion of succession. No policy can be effective if it is the elephant in the room, and no plans can be effective if nobody knows about them.
- Work-life balance. Long working hours, taking work home, working ‘vacations' - this realistically for many people means there is little outside their career to look forward to or with which to define themselves.
- External training and mentoring as well as internal engagement for younger lawyers.
- Provide options to partnership entry and exit. It should not be a ‘take it or leave it' scenario. What works for one firm in succession planning may not necessarily work for another and, indeed, even in the one firm what works for one lawyer may not work for another. You have to adapt a plan for your own particular firm and your own particular circumstances, but plan you must.
If you do not plan for succession, do not expect to have any future leaders to worry about. If you plan but do not enable the apprentice to become the master, the art will be lost - as might be your firm.
John Chisholm is principal at John Chisholm Consulting. He has held senior executive positions in leading Australian legal and accounting firms for more than 17 years, including the chief executive role at Middletons and managing partner role at Maddocks.