Why Succession Plan?
Strong succession planning has always been important to law firm success; but today it is mission critical. This is so because:
- Effective succession planning ensures client retention following lawyer departure/retirement. Client retention has always been a priority for law firms – it has always been more difficult and more expensive to get new clients than to keep existing ones. Nowadays, however, when, depending on who you speak to, the market for legal services is either stagnant or shrinking, holding on to existing clients is even more important;
- Lawyers, like the rest of the world, are aging. Statistics say that 40% of lawyers practising law in North America are either winding down their practices or thinking about doing so. Succession planning is required to be ready for the retirement of more and more senior lawyers;
- Succession planning generates opportunities for the next tier of lawyers, who are finding it much harder to build practices and are looking more to their firms for assistance; and
- Succession planning gives clients, who are now much more savvy consumers of legal services, the comfort of continuity and predictability and lower cost alternatives, as their counsel of choice ages.
What is Succession Planning?
In the past succession planning involved ensuring that the firm found good homes for ongoing files when a lawyer retired. Today, good succession planning involves much more – a plan to make sure that, after a lawyer retires, the firm retains not merely the lawyer’s files but also client relationships, referral sources, experience, expertise and reputation.
How to Succession Plan – Top Succession Planning Tips
Effective succession is not easy; it takes time and effort. The rule of thumb is that it takes about three years to properly transition a practice. It can take longer depending on a number of factors – for example, on how the client reacts to the proposed succession plan, and whether the proposed successor would benefit from developing expertise or experience before the transition.
To be successful, succession plans require agreement and commitment from four parties: the firm, the departing lawyer, the successor, and the client. If all four of these parties are not aligned on the proposed succession plan, the transition will not work.
To get the alignment required, the firm needs to recognize in words and in compensation (which speaks louder than words) the importance of succession and the time and effort involved and reward results. Traditional modes of compensation for client billings and hours do not facilitate transition – indeed they discourage it. If departing lawyers are only paid for their book of business or the hours they work, there is no incentive to transfer clients or business. Instead firms should consider rewarding successful transitions, for example, compensating the departing lawyer when clients bring new matters to the successor.
Support for Transitioning Lawyer
Any succession plan is only as good as its execution. There are many obstacles to the execution of a succession plan. In a lawyer’s busy life, everything (and particularly unpleasant tasks, which transition can be) takes a distant second place to practising law. For that reason, it is helpful to include in any succession plan a way to provide discipline around and monitor progress of the execution of the plan.
The biggest obstacle to succession planning according to Altman Weil, the law firm consultants, is that senior lawyers do not want to retire. As such, an important element to effective succession planning is dealing with the senior lawyer’s attitude to retirement. There are a number of ways to do this.
First, firms need to be more sensitive to how difficult it is for lawyers to contemplate retirement. There are many reasons why lawyers don’t want to retire. Many fear a loss of power, status, identity and even purpose. Many lawyers have deep relationships with their clients and colleagues that they have spent many years building; it is difficult to walk away from them. Helping senior lawyers address their reluctance, and in some cases downright fear, of retirement and helping them look forward to the next stage is very important to successful succession planning.
How Can Coaching for Lawyers Help?
A coach can provide invaluable assistance in the succession planning process. He/she can work with the senior lawyer to get them prepared for, and looking forward to, retirement. A coach can also impose the discipline that is required to ensure that the succession plan gets executed.
A coach is more effective at achieving these results because of his/her succession planning and retirement expertise and experience, strategies, tools and techniques. As important, though, is the fact that a coaching relationship gives the departing lawyer the opportunity to confidentially discuss and work through succession planning and retirement issues, which are often deeply personal and difficult, with a coach.
Interested in learning more about coaching? Take advantage of a complimentary half hour coaching session from Potentia. Please contact us at info@potentiacoaching.ca.