Although it is one of the most important keys to a law firm’s longevity, selecting future leaders—who they will be and where they will come from—is a decision that many law firms decide to put off for another day. But it does not have to be daunting if management recognizes that the next generation of leadership may already be on board, and takes the appropriate steps to prepare them to lead.
Succession is still largely unresolved at a majority of big law firms, according to a 2013 survey of managing partners and chairs at 231 U.S. law firms by Altman Weil, Inc. Only 27 percent of U.S. law firms with 50 or more lawyers have formal succession plans, while 49 percent have an “informal/ad hoc” succession process, according to the survey. “In our experience, informal/ad hoc plans often resemble little or no plan at all,” the Altman Weil researchers point out.
Another obstacle to law firm succession planning is that many find it a difficult issue to present to their attorneys: 45 percent of law firms Altman Weil surveyed view succession planning as “awkward to discuss.” “These difficult discussions with senior lawyers frequently delay and heighten sensitivities to succession planning,” the survey found.
A Different Legal Environment
The law firm environment is much different than when I entered the legal profession in 1984. Lawyers were expected to remain with one firm for their career, and were mentored by “lifers.” Lawyers faced significantly less pressure from billable obligations, so younger attorneys could shadow senior partners and learn from them. In effect, it really was an apprenticeship. Today, partners feel that they can no longer afford to spend the time to mentor the younger generation, since it takes away from their own billable time.
Starting in the latter half of the 1980s, and particularly in the 1990s, loyalty to one firm began to wane and it became more commonplace for partners to jump ship for seemingly greener pastures. The recession in the early 1990s accelerated the movement that we see today. Large firm resources were stressed and many of them failed, leaving groups of lawyers seeking new homes.
Each year, it becomes more vital to develop and retain talent, not only from a succession planning perspective, but for financial success, too. The cost of training and then losing a lawyer can be astronomical. More than ever, firm leaders need to inspire younger attorneys to take a personal stake in their firms. These “future leaders” need to be incentivized, trained, and rewarded. Firms should adopt initiatives to accomplish this goal.
The leadership at Saul Ewing has recently introduced a number of programs that are helping us recognize candidates for future leadership roles, accelerate their development, and provide them with early opportunities to lead. Ironically, one of our most successful succession programs is modeled after the old way of developing future leaders, with younger attorneys shadowing senior partners. Sometimes, traditional methods are best and the challenge lies in how to make them work in today’s competitive billable environment.
Cost of Training and Losing a Lawyer
Law firms invest in their partners and associates the same way that any business invests in its human capital. Among the specific costs that a firm can incur after training and losing lawyers are:
- Recruiting costs such as travel and placement fees;
- Ramp-up time before the firm sees any return on investment, and transition time to integrate a new lawyer into pending matters. According to industry estimates, law firms spend $300,000 before a new attorney is profitable;
- Administrative resources used to train new lawyers;
- Lost billable attorney hours spent traveling and mentoring new lawyers;
- Summer associate programs—wining and dining, teaching and leading.
Building a Championship Team
A critical element of a successful succession program is to have the appropriate combination of home-grown partners and laterals, and recognizing the benefits that each contributes. Home-grown attorneys are steeped in the firm’s culture, and tend to continue and become part of the fabric of the firm. Laterals may have a learning curve, but bring fresh ideas, which can be helpful.
Building a leadership team is similar to building a winning baseball team. The wealthiest teams, such as the Yankees and Red Sox, regularly replenish their rosters with the most expensive free agents. Smaller teams rely more on their farm systems with home-grown talent. The World Series champion, San Francisco Giants, does a mixture of both. Its general manager, Brian Sabean, is the longest-tenured current GM in baseball, with 19 years in the post. Through a blend of home-grown talent, free agents, trades, and draft picks, he has built a dynasty that has won the World Series three times in the past five years. That is a talent development model for law firms to follow.
As a lawyer who left one firm early in my career for the platform, resources, and size of Saul Ewing, I know the value that laterals contribute. When I made the jump 12 years ago, it was important to me that I would not feel like just another number at my new firm. I wanted to settle into a firm that I could make my home for the remainder of my career, but also be able to make a difference internally. Many laterals today share that desire.
Growing a winning leadership team also requires taking diversity a step beyond race and gender balance. A diversity of ideas is equally important, and comes from uniting talent recruited from other firms with our “lifers” who have been with the firm their entire careers.
Successful Succession Programs
Cultivating and retaining the next generation of leadership necessitates a commitment throughout the firm—from the CEO to partners to associates and staff. The right mix of programs and incentives must convey a feeling of caring and inclusiveness and of the mutual rewards of investing in and taking a stake in the business. Today, law firm loyalty is a byproduct of training, bonding and mentoring.
Among the programs Saul Ewing has been successfully using are:
- Leadership Progression and Training Program: Identifies young partners and senior associates who are committed to the firm and gives them a chance to lead.
- The Senior Partner Program: A new category of partnership for more senior partners to allow them to serve as mentors in a variety of different ways.
- Term limits for firm leaders: Ensures that new leadership provides a fresh perspective and new ideas.
Leadership Progression and Training Program
The sooner that young lawyers feel the firm is theirs, the more invested they become. We are growing our own “farm team” by selecting potential future leaders early in their careers.
We look for candidates with these qualities:
- Excellence in lawyering
- Solid record of high performance and productivity
- People skills
- Motivated self-starters.
Last year, Saul Ewing’s Executive Committee identified 20 young partners across the firm who had the necessary qualities, and created a year-long business development training program with an outside consultant. The training program focused on things that are not taught in law school—understanding the concerns of in-house counsel and business owners, and taking a holistic approach to clients beyond one matter or one case. It also focused, in large part, on developing strong communications skills in working with clients at all levels.
Our leaders grow into their roles. Participants first start as a leader of an internal or ad hoc committee. Then, if they do a good job, they may be appointed as a vice office managing partner or vice chair of a practice group. From there, they can become co-chair of a practice group; vice chair of a department; or managing partner of an office. It is then a short step to department leadership or a seat on our executive committee. This is how our last several firm managing partners rose through the ranks, including me.
Our leaders are evaluated at least annually to see if they are stepping up and embracing their leadership roles. They receive feedback, encouragement and mentoring.
In addition to the 20 selected partners, we recently rolled out a similar career development training program for our women and minority attorneys to address the unique challenges they face. The program is helping them raise their profiles inside and outside the firm and growing their books of business.
Another program geared to providing leadership opportunities to young attorneys is the firm’s “Philly 5” Initiative. Management selected five young partners in our Philadelphia office to work on raising the profile of the firm in the Philadelphia market. With the firm’s resources at their disposal, they are implementing a wide variety of tactics including sponsorships, board appointments, speaking engagements, public relations, and recruiting to help us achieve our goals.
Senior Partner Program
One of the difficulties in designing a succession program is the reluctance of senior partners to retire. Almost 78 percent of senior partners in the Altman Weil survey said they do not want to retire. About as many, 73 percent, do not want to forfeit current compensation by transitioning client work, according to the survey.
For almost a decade, we have held biannual meetings of our senior partners to discuss these issues. For example, do they see themselves billing the same number of hours at this stage in their lives, or might they want to scale back and begin to work at a different pace? We also meet with partners one-on-one to have non-threatening and informative conversations well before they are ready for retirement, to help focus them on the various options that will be available to them.
One such option is a new “senior partner” category of partnership. It is intended to formally allow senior partners to continue to have a significant practice, but also step back and begin to think about transitioning their work.
In our first year, 12 attorneys are taking advantage of the program. We see the following benefits to the firm:
- Continuity of client relationships
- Greater morale and loyalty
- Retention of goodwill
- More flexibility, with senior partners setting the number of hours they want to work and striking an arrangement that suits both the firm and the individual’s needs
- Mentors who are developing our up-and-comers
- Continuing to practice law as our “partners” but with a different, yet important, focus for the benefit of our clients and younger lawyers.
Term Limits for Leaders
The final policy we utilize to address leadership succession is term limits for many of our leadership positions. Our executive committee members hold five-year terms, with a member rotating off every year. Our managing partners can serve a maximum of two four-year terms. Partners are given the opportunity to be considered for committee, office, practice group, and department leadership positions every year.
The term limits policy is representative of how we have come to view leadership development, retention and succession planning. New leaders help bring aboard new blood, fresh ideas, and an up-to-date perspective, which we feel is the key to moving the firm forward. At the same time, we have a continuity of management by surrounding the new leaders with colleagues who are remaining in their roles.
Passing the Torch
According to Pew Research, nearly 4 million baby boomers in the U.S. are retiring each year (11,000 people per day). No matter the size of your firm, the future health of your partnership depends on how well you develop the next generation of leaders to maintain and grow your valuable client relationships when partners retire. From my perspective, law firm leaders should consider these critical steps when cultivating and retaining the next generation of firm leaders:
- Get comfortable having non-threatening conversations with senior partners long before they are ready for retirement, to discuss their options and the roadmap for transition of their clients to other partners.
- Design and implement quality business development training programs for young partners and senior associates who exhibit an aptitude for developing a strong book of business.
- Set term limits for committee, office, department and practice group leaders, and work with those leaders to identify and groom the next generation of leaders.
- Build a championship team of diverse attorneys and recognize the role diversity plays in growing the next generation of law firm leaders. Diversity is not only good for the firm, it is good for business.
- Find the right mix of next generation leaders not only from within, but also through lateral recruiting. Lawyers with good client skills are often lawyers with good leadership and mentoring skills.
Change in the legal profession has been the one constant since the great recession, and change in the partnerships at most law firms is a hurdle law firm leaders will continue to face over the next several years. With careful and consistent planning and implementation around succession, law firms who face this challenge head-on position themselves for continued growth and stability.
About the Author
Barry F. Levin is managing partner and CEO of Saul Ewing LLP He can be reached at email@example.com or 410.332.8935.