Although succession planning involves common sense, it poses many challenges that must be recognized and managed along the way. Read Part I (intro) here, Part II (what makes a comprehensive plan) here, Part III (challenges, part 1) here, and Part IV (challenges, part 2) here.
The Challenges of Succession Planning (Conclusion of a Three-part Discussion)
Significant challenges must be overcome to prepare, implement, and follow through with a comprehensive succession plan. Our last blog post discussed the challenges related to compensation issues, generational issues, and client retention. We conclude our conversation today by discussing the following headwinds one might encounter with regard to law firm succession planning.
Retaining the Middle
Most lawyers no longer remain with the same firm for their entire careers. Changing firms several times is not unusual. Much has been written about why young and mid-career lawyers leave firms. [See, e.g., Kate Mayer Managan, Erin Giglia & Laurie Rowen, Why Lawyers Leave Law Firms and What Firms Can Do About It, Law Practice Today (Apr. 14, 2016)]. Addressing those issues is beyond the scope of this article. It is important, however, for firms to recognize the problem and the effect that it may have on succession planning. Losing mid-level lawyers can create significant issues for law firms, particularly smaller firms, and it can wreak havoc from the standpoint of transition planning. After all, even the most well-thought-out transition plan will fail if the individuals set to assume clients or leadership roles abandon ship.
Formulating and implementing a well-reasoned transition plan may actually increase the likelihood that mid-level lawyers will stay with the firm. When mid-level lawyers can see the direction that the firm is headed, and their place in the firm’s future plans, they feel more secure. Regardless of the perceived satisfaction of a firm’s lawyers, however, a succession plan must include contingencies to deal with the potential departure of young and mid-level lawyers.
The Right Skills
Transition planning must encompass assuring that individuals with the knowledge and the correct skill sets are ready to assume an area of business or a particular client when the senior partner retires. This can be challenging under the best of circumstances. When firms lose lawyers, it often leaves a knowledge and experience gap that must be filled, either by training current lawyers or by hiring laterally. From the succession planning standpoint, these gaps in knowledge and skills should be filled as early as possible. A younger lawyer may need to acquire subject matter knowledge, develop or enhance practice management skills, gain more practical experience, or a combination of these to be in a position to assume control of a client’s business successfully. Unfortunately, “[t]oo many small firms hire because they need to cover an existing workload—not with the idea that they are choosing future partners.” [See Arthur G. Greene, Succession Planning for Solos and Small Firms, 83 N.Y. St. B.J., Feb. 2011, at 34]. Positioning younger lawyers with the skills to step into the shoes of a senior lawyer should be part of every firm’s associate training goals and should be actively considered each and every time that a new lawyer is hired. Again, it’s long-term process.
Identifying and Developing Future Leaders
The firm also must develop one or more effective future leaders. This involves identifying individuals with leadership skills or potential and determining how to train or develop those skills so that they can become successful firm leaders. That can be significantly more burdensome when mid-level lawyers leave the firm.
Opinions vary on the characteristics that distinguish a leader, but some of the qualities that are often cited include a focus on high potential, not just performance; a high level of engagement; accountability; multitasking abilities; communication skills; evidence of empathy and emotional intelligence; decisiveness; and the ability to admit failure and accept responsibility. The firm’s culture will dictate which qualities are most important for its future firm leaders, but a vision for the future and the ability to effect change are characteristics that are particularly important in today’s challenging legal environment.
Leadership is distinct from management, and leadership skills are more difficult to acquire, so it is important that firms identify and begin developing the leadership skills of individuals with leadership potential as early as possible. Some lawyers have natural leadership skills, but training and experience can develop even those individuals into better and more effective leaders. If the development process is started early, as it should be, a young lawyer can be mentored and coached by the then-current firm leaders. There is no substitute for actual experience, so giving young lawyers increasingly more significant leadership tasks will allow them to hone their skills and allow the firm to assess their progress. In fact, some recommend that firms “look for opportunities to involve all lawyers in some aspect of management, in order to evaluate whether they have the skills to be future leaders of the firm.” (Greene, supra, at 32.) When firms are on a restrictive time schedule, leadership seminars and leadership coaching may be the best option.
Firms should consider and plan for all manner of “disasters.” Most firms will never need to access their data and continue to serve their clients without physical access to the firm’s offices, but if your firm does face that situation, having a well-developed disaster plan can be the factor that determines whether your firm survives. How do you access your data? Where do you work? How do you contact employees and notify them about how your firm will continue its business and what your expectations are for them? Who is responsible for doing that? How do you notify your clients, and who is responsible for doing so? All of these things must be considered, and plans and procedures must be fully documented and understood by everyone in the firm.
“Disasters” come in all shapes and sizes, so proper disaster planning must also address smaller events that can disrupt your firm’s ability to conduct business, serve clients, and remain profitable. This is particularly significant for smaller firms that have fewer employees involved in management and administration. Have you cross-trained employees on all essential functions? Are all job duties and procedures fully documented? Who is responsible for various job functions performed by a key employee in their absence? Where are the login information, the passwords, the account numbers, the alarm codes, the office keys, and other essential information maintained, and who has access to them? Are all vendor contacts kept up to date (who, regarding what, and so on)? Are the expiration dates of licenses and contracts documented in one place and calendared? Have you identified an outside, go-to source for assistance with IT issues and your billing system? All of these issues must be addressed in a disaster plan. Once a plan has been created, it must be stored in multiple formats, and all key employees must understand it and know how to access it in the event of an emergency. The plan and the underlying information must be updated regularly.
Most of what needs to be done in succession planning is common sense, but it poses many challenges that must be recognized and managed. Perhaps the biggest challenges are recognizing the need to do it early enough and maintaining the momentum and focus to prepare a plan and implement it successfully. One thing is clear: a comprehensive succession plan will significantly decrease the chances that a firm will be derailed by an unexpected event. Is your firm prepared? If not, get started: the sooner, the better.
This blog series has been excerpted from an article that originally appeared in the November issue of the Defense Research Institute’s (DRI) “For The Defense” magazine, which can be found here.