Succession planning is crucial for the stability and future success of law firms. It involves preparing for potential gaps that may arise from retiring or underperforming partners and leadership transitions. Effective succession planning can help ensure that firms maintain their competitive edge and continuity in leadership.
We surveyed 30 COOs of mid-sized law firms about their succession planning. The Survey had two sections: The first section dealt with the impact on the firm, leadership responsibilities, individual and firm strategies for successful succession planning. Part two focused on how firms with succession plans differed, if at all, from firms without succession plans with these issues. In both sections we asked respondents to provide their comments about their succession planning concerns.
The findings from the surveys indicated that many mid-sized law firms (64% of our respondents) lack comprehensive succession plans, which heightens their anxiety about the sustainability of their firm. Concerns were centered around the potential gap left by retiring partners, the performance of existing partners and future leadership transitions. Firms with established plans reported greater confidence in their leadership continuity and overall stability.
Our series of BLOGs on succession planning cover a wide range of critical topics: Survey Results on Succession Planning and Firm Sustainability, Impact of Succession Planning on Individuals, Succession Planning Strategies, Succession Planning Impact on the Firm, Leadership Succession Planning responsibilities and Comparing Firms with Succession Plans and Firms Without Plans.
Succession Planning Survey Results
We surveyed 30 COOs of mid-sized Western US law firms about their Firm’s “succession planning”. Top line results: Succession Planning is NOT solely about transitioning clients (though the individual client experience is of course key). It is about the SUSTAINABLITY of their Firms.
The survey results underscore the necessity for law firms to rethink their approach to succession planning by focusing on sustainability. Implementing formal succession plans while nurturing a culture that values sustainability will be crucial for long-term success and client retention. The findings suggest that addressing leadership, firm dynamics, and individual emotional factors can create a more comprehensive strategy for ensuring a firm’s viability.
The COOs revealed critical insights into the current state of their firms’ succession planning:
1. Rank the impact of succession events on the sustainability of the Firm: #1 = Worst Impact, Most Significant to #5 = Least Impact and Most Insignificant.
- Lack of Succession Planning.
- Inability to manage out underperforming partners.
- Unplanned retirement of key partners.
- Losing institutional clients when a partner retired or leaves.
- 25% of our revenues come from partners 55 or older.
2. What is your biggest concern about managing the sustainability of the Firm?
- The gap in rain makers in 55-62 range: the younger partners get it but ones brought up as minders or grinders will likely not stay on as long as some of our 63-75 year olds.
- No one to fill in the roles of most significant leaders/ business generators, with potentially catastrophic consequences.
- The ability to effectively transition unique work for which we currently don’t have in-house capability.
- General sentiment that institutional work will remain with firm due to previous client relationships. RFPs, Proposals, and Pricing are evolving and previous succession assumptions may no longer hold.
3. Does the firm have a mandatory retirement age? No – 89%
4. Do you feel your firm is well-prepared for the retirement of its partners 60 years old or older? No – 68%
5. Do you believe the firm has enough younger partners with the right cultural fit, skills or experience levels to fill the gaps of retiring partners? No – 47%
6. Does your firm currently have a strategic succession plan in place? No – 42% If yes, does the plan or other firm governance documents include a succession plan? No – 50%
7. If the Firm has a succession plan, what type of plan is it?
40%: Ad hoc depending on the circumstances and the person involved.
25%: Formal written plan as part of the firm governance documents.
20%: Informal process, the way we have always done it for everyone in the firm.
15%: Other: Formal discussions start at age 60 and are tracked by HR; reviewed by the
Executive Committee on a regular basis.
8. Is succession planning an integral part of the firm’s culture? No – 55%
9. Is succession planning part of the discussion at new partner orientation and/or new lateral partner hiring? No – 75%
To explore the topic of law firm sustainability planning further, it’s essential to delve into strategies and best practices that can help address the identified gaps. Here are some key areas we’ll consider in future BLOGs:
- Formal Succession Plans: Developing comprehensive, written succession plans that are part of firm governance can clarify expectations and provide a roadmap for future transitions.
- Leadership Development: Firms can implement mentorship programs to prepare younger partners for leadership roles, ensuring a smoother transition when senior partners retire or leave.
- Client Transition Plans: Establishing well-defined client handoff strategies can help maintain client relationships during transitions, thereby minimizing revenue loss.
- Cultural Integration: Incorporating succession planning into the firm’s culture through regular discussions and training can make it a natural part of the firm’s operations.
To learn more on how we can help you understand your Firm’s culture visit www.evolve-law.com. Learn more about Steven P. Daitch.