According to the results of a recent Robert Half Legal survey, 53 percent of attorneys polled did not have a succession plan in place. (The survey included responses from 300 attorneys among the 1,000 largest law firms and corporations in the United States and Canada.) This could spell trouble for the next generation and senior partners ready to leave: in many small to mid-size firms the founders and/or senior attorneys are looking forward to retirement while at the same time, the younger or junior lawyers may not see a future. Why is this crucial issue not addressed? Often, succession planning takes a back seat to billable work or urgent legal matters. Another reason is that senior partners tend to be uncomfortable dealing with issues such as retirement.Karen MacKay , founder of Phoenix Legal Inc. in Toronto works with professional service firms on their most critical issues and succession planning is foremost. "Unfortunately, many firms disproportionately reward work done so there is no incentive to develop behaviours that create succession," she said, "and many compensation plans reward billing and collections." They reward work done, while work generated and given to other people is not compensated equally.
"These compensation plans that reward billable hours and work done by the individual partner really began in the 1990s," said MacKay. "Many firms in Canada had compensation plans that were either highly discretionary or lockstep (lawyers in the firm are paid the same – the assumption was that everyone was working 100 percent for the firm). But then we started rewarding billable hours and harder workers got paid more – rewarded hard work and profitability increased – which goes against building leverage and succession."
"Those 53 percent of firms that reported no succession plans run a tremendous risk of not having ongoing infrastructure that will drive the business in long-term strategy and success," said Lara Dodo, VP, Robert Half Legal, "and that can lead to business failure or frenzied hiring outside the office." Although the survey interviewed large firms, smaller companies with sole founders are also at risk. Retirement can mean losing a key member of the firm, but partners at any age can leave, with potentially devastating results if a succession plan isn't in place.
"In-house departments have a different problem -- there is usually a gap between the senior lawyer and the rest of the legal department," said Carol Fitzwilliam of Fitzwilliam Legal Recruitment, with offices in Toronto and Montreal. "When the senior person is ready to leave, the younger members of the department may not have sufficient experience to step in and assume the full range of responsibilities. However, the few large law departments we see do have sufficient people in place to groom the next generation of leaders."
Warren Bongard, Vice-President/Cofounder of ZSA Recruitment with offices across Canada, disagrees with the survey's findings. He believes that many law firms, from multi-national to single and small, have addressed the succession planning issues, "From bolstering existing or new practice areas to futuristic issues regarding the age of practitioners." For example, one client is a single office law firm in Toronto that has its roots in their founding partners, many of whom are over the age of 65. "Aside from the fact that the founders continue to practice in the firm, they have enjoyed significant growth on the lateral recruitment side to ensure a successful transition," said Bongard.
His company not only identifies good candidates, they also spend a great deal of time assessing the corporate culture of the firm. "We make sure of a good fit – the interests and desires of the candidate must align well with the vision of the firm, from cultural and personal fits to the manner in which law is practiced to the way clients are developed to information sharing and technology." And mandatory retirement is a dying trend (pun intended). "In the past we often heard from lawyers who wanted to leave because their firm didn't have the ability to keep them on much longer – but that doesn't apply much anymore. These days, key client lawyers at the age of 65 can generate lots of work." Bongard is optimistic for both junior and senior lawyers: "Currently, young lawyers are enjoying a healthy demand and there's plenty of employment in the marketplace." The key is keeping them.
Steps to Succession Planning
There is an old Chinese proverb: The best time to plant a tree was 20 years ago, the second best time is today.
Dodo recommends being proactive in taking adequate time with internal succession planning, "That will ensure you retain top talented lawyers. It will also boost internal staff moral and enable you to plan for any infrastructure adjustment."
"Law offices should begin by choosing high potential employees – look at your internal staff and provide them with ongoing mentoring and include them in strategy discussions and future plans relating to the operation of the firm," advised Dodo. "This will allow the succession candidate the opportunity to build their skills and leadership abilities and practice management, new business development, marketing, strategic planning and client services."
"Succession is a major concern in any size law firm," said Fitzwilliam. She believes the critical skill for succession in a private practice is the ability to develop and maintain client relationships.
"Start by having lunch with referral sources," advised MacKay. "The recipient firm [that gets the referrals] hosts lunch and two senior partners agree to each bring along two younger lawyers. Soon the junior lawyers are working directly with each other." MacKay recommends that, if you are in a boutique firm, host a minimum of three intimate lunches. As well, carve out some discretionary reward besides monetary. For the junior partner, it means sustainability and durability of the firm and for the senior, a chance of getting his capital out upon retirement. If the referral source dries up, the junior lawyers may get fed up and ultimately, the firm could fold.
Delegate. Assign young lawyers specific tasks and committees within the firm and have them responsible for the work of paralegals within the firm; gradually involve them with more complex files; involve them in recruitment.
Most in-house law departments have to recruit outside the company when their senior leadership leaves. This can be difficult because you cannot recruit a hotshot today for an opportunity that might become available a few years from now. The best scenario –in-house recruits that overlap about six months before the senior leaves. An outsider needs time to read the corporate culture and adjust; if the senior person stays on for several months, he can smooth that transition.
"One of the best ways to keep your high performance/potential internal candidates is to tell them regularly how you see the role they may play in the company's future," advised Fitzwilliam. "That will hopefully hold the top performers until they are handed the coveted role." She emphasizes that young lawyers should be trained from an early stage in their career to have a reflex toward client development and development skills. "Although many think it somewhat distasteful, client development is absolutely critical."
"By the time a young lawyer calls a recruitment office such as ours, they are usually fed up and looking to move," said Fitzwilliam, "and firms are asking us to go out and identify the next potential leaders -- those lawyers who understand that business development is an essential part of the practice of law and an important part of succession."
Fitzwilliam sees a shortage of lawyers who are able to grow with the business of law in private practice. "Those who are left behind may be fabulous lawyers but the only way to succeed in private practice today is to carry one's share of the client development responsibility for the firm."
Although this survey bought the topic of succession planning to the forefront, realistically, urgent legal work takes priority. However, creating and implementing a plan needs attention – but it takes time. Firms would be wise to invest the time to identify and groom the lawyers best suited for leadership roles sooner than later. Law firms have to move toward a more corporate culture and look beyond the life expectancy of the senior partners. If a firm has not thought enough about succession planning for the next generation, they will find themselves losing the competitive edge in a highly competitive marketplace.
Lara Dodo's Succession Plan Best Practices
- Develop a framework for identifying high potential employees
- Identify critical competencies and leadership criteria
- Provide both training and development opportunities
- Promote interaction between managing partners or general counsel with the potential succession candidate.
- Evaluate ongoing of potential candidate's performance.
"Ask yourself, what are the goals of the firm?" said Dodo. "In order to meet them, we have to look at succession planning. In this regard it becomes part of strategic planning.
Encourage managers to work with their HR reps to establish guidelines and methodologies in creating and implementing a succession plan.
Don't assume that the next high person on the ladder is necessarily the best choice. Instead, look to the person with the most potential to succeed and has the skills to get the job done.
If you don't have the best candidate internally and haven't been able to groom or mentor an internal prospect, you may need to look externally for a top recruit –begin the discussion of competitive compensation packages to attract and retain top talent.
Do you have a relationship with a recruiting firm? If not, ask peer groups for referrals to a specialized recruiting firm. Next up, meet with and interview recruiting firms and commence an open and honest relationship. But don't forget to ask for internal referrals: most companies hire their best recruits from word of mouth. Good people know good people.
