Law Firm Exit Strategy or Succession Planning
Clients have a strong tendency to rely on lawyers' knowledge and actions. As a lawyer, we also aspire to keep our clients contented. Have we ever thought about what would happen to our clients if we were unable to provide them with legal service, as a result of transitioning to another role or other unfortunate event that leads to the cessation of our legal practice. Especially in the legal industry, succession planning might seem tedious and unpleasant, but it is necessary to have a plan for some inevitable and unfavourable events.
What is succession planning for law firms
Lawyerist defines law firm's succession planning as having an exit strategy for your firm. There are two sides to it – planning for the 'best' and for the 'bad'.
- Best – for what you intend to do with your business as you hop on to the next endeavour; and,
- Bad – for the instances that might leave one unable to practice law and run the firm.
However, the events/situations may differ broadly. They may include retirement, untimely demise or health issues, family issues, and transitioning to a new role.
An exit strategy is crucial in such scenarios, ensuring law firm preparedness for the future and creating a walkthrough for the team catering to your clients and progress.
What-If scenario
Legalknetwork's Succession Planning for your law firm provides a candid talk with Alecia Chandler, Professional Responsibility Programs Director, State Bar of Michigan, the USA. When asking if there is no succession plan in place, she responded that it would violate ethical conduct.
She added, "It's important to ensure that everyone in the process is protected and that the lawyer maintains some control over what happens if they're disabled or they become deceased and ensure that their ethical obligations are met through an effective succession plan."
Critical elements of succession planning
Thomson Reuters' article on the key elements of succession planning states why succession planning is a crucial aspect of any organisation's talent strategy and a vital component for its implementation.
Kathleen Brady, Managing Director and Head of Coaching at Preferred Transition Resources, portrays the challenge of succession and retirement planning. According to Kathleen, it is "fraught with emotion" that forces us to "explore personal, societal, and industry assumptions around aging, financial security, health and wellness, and, dare I say, mortality."
Brady further emphasises that succession planning has been the status quo action for law firms. She states, "It makes everyone uncomfortable, so we opt to ignore it."
The most delicate aspect of succession planning for law firms, is the struggle in approaching the successive partner. "Emotions can be mitigated by incorporating the idea of a post-practice transition into the firm's overall talent management strategy — similar to the way firms have institutionalised orientations, mid-level, and new partner retreats."
Besides, law firms generally agree on the significant critical steps needed to build a solid succession plan for partners. Some of these steps include:
- Knowledge transfer: Restricting success to the domain knowledge will not be correct. In the legal industry, it's more than just domain knowledge. It encompasses the network, value chain, and other industry commitments that drive potential growth opportunities. It's more like following the footsteps of the departing partner.
- Stakeholder communication and involvement: Stakeholders are often confused with decision-makers. However, in the legal industry, making every individual or enterprise aware of the development is crucial and their participation in change management. The involvement also adds confidence along with creating a sustainable engagement model.
- Successor identification and development: The search for a suitable successor begins with announcing retirement or even beforehand as contingency planning. Depending on the circumstances, an enterprise decides whether it should be an internal movement or external hire. However, the process begins with identifying more to add to the resources, including training and development to add management skills, leadership skills and domain knowledge.
It's a success plan
While most enterprises consider succession planning a transfer of ownership, simple transfer causes many issues like any other transaction. Hence, it is advisable to look at it as success planning - the enterprise's success, the individual, taking up the responsibility, clients entrusting the firm, or simply, the team looking at the new leader.
Without a succession plan or a roadmap, the firms can expect disgruntled clients, an unsupportive workforce, and an inefficient network – all leading the work to pile up. The selection of a successor is a critical aspect of the plan, along with other elements while considering the succession plan.
Succession planning is an exit plan and strategy for a law firm or enterprise in an unpredictable circumstance. Planning for such events has two sides: planning for "good" and "bad". Succession planning is an ethical obligation for all law firms.
However, adopting a succession plan is not easy for the firm, especially on the emotional front, to approach successive partners. With talent management strategies, it is easy to mitigate emotions. Apart from the talent management strategies, law firms generally agree on significant critical steps to build a solid succession plan for partners, including knowledge transfer, stakeholder communication and involvement, and successor identification and development.
A succession plan is pivotal for a law firm's success as it provides a roadmap for selecting a successor.
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