Use Succession Planning as a Risk Management Tool

When generations collide, it can affect not only the morale and productivity of a law firm, but also increase the risk of bar grievance and malpractice claims because of the resulting poor communications and loss of focus.

Risk management tips are designed to keep us out of trouble. Before a trip, AAA would advise us to change the oil, check the brakes and tires, map out a route, and keep snacks in the car.

But life in a law firm is not so easily managed. Here are some ways to bridge the generational gap at your firm.

Discuss succession with transparency.

Law schools are graduating NextGen lawyers each year who are entering the workforce ready to take on the legal problems of the world. However, they are often stymied by Boomers and Gen Xers who are wedded to their long-standing traditions. What will become of firms if there is a constant clash of generations?

Many young and mid-career lawyers leave firms because no succession plan is in place. Often these lawyers were hired by a senior partner who promised partnership, substantive client work, and ownership of client relationships. Yet years pass with no movement toward retirement by the senior lawyers. This can seem puzzling to the next generation. Yet, if we consider the perspective of the senior lawyer, we can see the resulting loss of identity that could occur with retirement planning.

Many local bar associations host an annual “50 years in practice” anniversary lunch. Many of the lawyers in attendance are still practicing, and loss of identity is a big factor in why they continue to do so. It is hard to imagine stepping away from the firm you built, and the professional identity you have become. Everyday activities such as introductions likely include the fact that you are a lawyer. Learning to find an identity for yourself outside of law will be a challenge, but you can do it. Begin with an inventory of all the things you are: spouse; partner; parent; grandparent; parishioner; community member; mentor. Then start a list of all the things you can be: volunteer; teacher; mentor; athlete; gardener; hobbyist; author; photographer. The list is endless.

Succession planning benefits you, your clients, and your law firm. Are you worried about a lack of viable, qualified successors? You will never know the potential for successors if you do not start to plan. Are you worried about the reaction of clients, and those in your office? You might be surprised to find that they are excited at your courage in addressing a difficult topic. Is it likely that your partners want to create a succession plan that works for you today so that it will also work for them in the future?

Succession planning does not mean you stop working today. Having a plan in place gives you a measure of control over the future. Being transparent about that plan ensures you can choose your path with proactive decisions, rather than reacting to the circumstances that will inevitably come your way.

Mentorship and Sponsorship.

The old law firm model had lawyers interacting throughout the day as senior lawyers provided ongoing mentoring and relationship building. Lawyers within firms interacted throughout the day on client matters, and had frequent lunches together. Over time, clients began to complain about multiple lawyers working on a matter. Young lawyers began to work on their own, submitting work for a quick review by the supervising partner. Law firm lunches became less frequent. With the advent of technology, lawyers became even more self-sufficient. Within firms, lawyers rarely shared work or clients. All of this led to efficient remote work, but it can result in isolation and a lack of mentorship.

Succession plans provide built-in opportunities for mentorship. Retirement timelines can be built around the development of the new lawyers’ skills. As senior lawyers transition referral networks and community interactions, they are providing sponsorship opportunities for NextGen lawyers.

Recruiting and retention.

The problem with young lawyers and mid-career lawyers leaving law firms is not a new one. Many lawyers leave because the path that was promised to them never materialized. By developing a succession plan with timelines and clear transition of responsibilities, senior lawyers reinforce to NextGen lawyers that they have a in the future growth and management of the law firm. This vision will encourage lawyers to stay in the firm. As others see you grooming NextGen owners, your firm will become more attractive from a recruiting perspective. Start talking today to the NextGen lawyers in your firm to see what they think about the future.

Hiring a NexGen owner.

A time-honored tradition in the legal profession has been a slow-down of practice rather than retirement. Today, lawyers are living longer, and the legal marketplace is experiencing constant change. A graceful slow-down is harder to accomplish, yet studies show that 73% of lawyers in private practice say they want to practice law until they “die at their desks.”

Another traditional retirement option included a sale of a building, furnishings, and a complete law library to the recent law graduate looking to open a solo practice.

Hiring a NextGen owner is a different model. Placing a value on the firm name, website, firm reputation, client base, and staff is something that has been done in the medical field and other professional services for decades. Finally, this is an idea that is slowly making its way to the legal profession.

Hiring the NextGen owner is a different process. It is not enough to ask about class rank and grades during an interview. When hiring your next law firm owner, it is important to talk about future plans for the firm. You may want to ask questions that get to the heart of whether your new hire has an entrepreneurial spirit. Does your NextGen owner have an interest in mastering networking in order to build the law firm’s referral sources?

If you are serious about hiring your next owner, you will want to put ownership opportunities on the table at the outset. Buying into a small ownership percentage of the firm now with a path forward will incentivize the new lawyer to view the opportunity as more than a job or a two-year stepping stone.

Communication is key.

Communication is often a huge barrier between generations. Not because they fail to communicate, they just communicate differently. The tech-savvy Millennial may find it easier to send a quick email to provide a case update, while the Boomer would prefer to sit down face-to-face. The Boomer and Gen Xer may come to meetings with pen and pad in hand, while the Millennial will likely tap away at her tech device.

For any relationship to thrive, some compromise is needed. All generations need to be open to hear the suggestions and concerns of others. The best interest of the client and the firm should always be top priority, and motivation for generational differences to be put aside. Consider having topics that require face-to-face meetings, and others where a quick email update will suffice. Craft a mutual agreement about what works best. A little bending is much better than breaking.

Conclusion.

The key to negotiating the generational gap in your firm lies in changing your perspective. The mix of generations in your firm is not a problem, but a bonus. Each generation brings their unique experiences for the firm’s benefit. The experience of the Boomer, the efficiency of the Gen Xer, and the entrepreneurial spirit of the NextGen lawyer create a modern law firm ready to serve today’s client.

About the Author

Camille Stell is the president of Lawyers Mutual Consulting & Services and a specialist in working with lawyers and firms on retirement and succession planning. Contact her at camille@lawyersmutualconsulting.com or 800.662.8843.

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