It’s Never Too Early to Plan for Management Transition

Navigating a transition in the management of a law firm can be daunting and troublesome, but it is an absolutely necessary endeavor for the long-term survival of the firm. While many firms have been in operation for 50-plus years, it is easy to rattle off a list of firms that have imploded or disintegrated after experiencing decades of success. Nothing lasts forever. As the Second Law of Thermodynamics says, entropy (disorder) is always increasing in an isolated system. That does not mean that one shouldn’t try to preserve a law firm that has strong name recognition and a good internal culture. It does mean, however, that doing so requires an investment of considerable effort and energy to keep it from following the natural tendency to splinter and dissolve.

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It is far easier for an attorney with an established book of business to make a go of it on their own, or to find another firm eager to add new revenue, than it is to expend the time and effort to build consensus among existing partners to drive needed change and transition in a law firm. Our firm is about to complete its fourth generational transition of management. Along the way, we took what seemed to be all the right steps. We hired an outside consultant, we held retreats to build consensus among the shareholders and we developed a strategic plan. We involved all of the shareholders, or attempted to, in the development of the strategic plan, and it was adopted without significant changes from the proposed plan. Good, open and consistent communication was the key to that success.

For all the things we did “right,” however, we still experienced hiccups along the way. You are, at the end of the day, still dealing with human beings, their varied personalities and, last but not least, with innate human nature. As might be expected, the outside consultant’s review of current management efforts was met with some hostility by the management team. Although the consultant may have made some valid criticisms of existing management, the opinions and recommendations of the consultant were viewed as a personal attack and resulted in a defensive atmosphere. No one likes to be criticized, particularly someone who has been successfully running a law firm for decades. This in turn created unnecessary obstacles and friction, and resulted in the delay of the plan’s execution. If our firm were to go through this process again, we would take a much more “hands on” approach when managing the consultant, and the presentation of findings and opinions. Managing the discussion, it turns out, can be more important than the merits of the discussion itself.

The need to be proactive in managing the presentation of the consultant’s findings when dealing with management transition in a law firm is reinforced by the truism that “perception is reality.” Once someone thinks that a proposal is intended to be detrimental to them, you will have a huge (and avoidable) fight on your hands. It will not matter that the true motivation of the transition process is the betterment of the firm; if an influential shareholder perceives a threat in some proposal, they will not hesitate to protect their turf. This can take the form of developing political alliances to derail or delay the proposal, undermining other aspects of the plan to divert resources, or outright and open defiance. Such developments can be extremely divisive and frustrate a firm’s transition plans.

In our case, managing the discussion included managing who is presenting the discussion. A well-meaning presentation involving our firm’s lead labor and employment partner was perceived as a threat and attempt to remove some individuals from management. This perception was created simply because of that particular individual’s presentation of a proposal, and resulted in the delayed implementation of our firm’s transition. We eventually overcame this obstacle, but time, energy and momentum was unnecessarily lost.

One of the best things anyone involved in a firm’s management transition can do is to step back from the process and take an objective view of the goals and strategies. I became so invested in the process and its importance to the firm that I failed to step back and look at it strategically and tactically. I overlooked some aspects of the transition that eventually developed into difficult issues. Don’t get so immersed in the weeds that you forget to look at the big picture, including the details of how you will manage internal discussions among partners and present new ideas and proposals. Treat it just like you are presenting your proposal to a judge or jury and need to persuade them; don’t assume that they will view your proposals with an objective eye, and carefully consider all aspects of the presentation.

One of the things that I overlooked in the transition process was stepping back to review how the process should work. One of the then-current management folks had told us that it was up to those of us leading the transition process to develop a plan and timeline for succession. I took him at his word, and jumped right in to do just that. After we developed a plan and proposed timeline, he found it unacceptable. With the benefit of hindsight, we should have insisted that he determine and announce the date when he would step down; after all, what CEO informs the board that they have to tell him when they are going to replace him? In the business world, the CEO tells the board when he or she intends to step down, and then the board works on the transition plan. If we had taken that tack, we would have avoided a dispute and inference of nefarious intent when we came forward with our transition proposal and timeline.

Another example of things that can be easily overlooked is the human factor. No matter how well intentioned and how inevitable the coming change may be, one or more folks in current management will not want to let go, whether because of ego or a reluctance to confront their own mortality. They can feel like they are being kicked to the curb after many years of dedicated effort to the firm, and may not hesitate to express that sentiment to others in the firm. You should not ignore that element of a management transition, and should instead seek to embrace and manage it up front. Doing so can lessen the possibility of uncomfortable moments at firm meetings, and help make the development and implementation of the transition process much smoother.

Not all perceived or actual wounds resulting from this transition process have fully healed, but the passage of time has helped. One thing we did right was to begin the process years in advance, so that even with the setbacks we encountered, we were able to recover and implement our transition plan in a timely manner, even if not within the originally desired time frame.

This brings me to the other part of planning transitions: patience and persistence. Nothing ever goes smoothly. Expect to encounter setbacks along the way, some minor and some extremely daunting. Expect your motivations to be questioned. Remember, perception is reality. Be patient and persistent. Patience is necessary to avoid giving in to a fit of pique when someone sabotages weeks and months of hard work and thankless effort. Giving into that impulse can and will impede the orderly development and implementation of your transition plan.

Persistence is also required, because you are only human too, and will undoubtedly make missteps along the way. Have the persistence to believe in what you are doing and its value to the firm, and eventually you will persevere in the desired goal. It may take more time, it may be a bit messier than you would have liked, it may fray some relationships, but in the end it is only through that persistent effort that you will be able to preserve your firm and transition it to a new generation of leaders. Without that effort, the Second Law of Thermodynamics will take over, and your firm will follow its natural tendency to splinter and devolve into chaos.

About the Author

David R. Pierce is a shareholder and the executive vice president of Lindabury, McCormick, Estabrook & Cooper, P.C., in Westfield, NJ. Contact him at dpierce@lindabury.com.

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