Thomson Reuters; February 12, 2013
Law firms’ increased fear of alienating valuable clients since the recession has prevented them from implementing much-needed succession plans in their companies, said Alan R. Olson, a principal in consulting firm Altman Weil.
“I’m still seeing firms planning only effectively at the last minute,” said Olson, author of a new paper on succession.
Without a leadership transition plan in place, law firms may face expertise gaps and the loss of client relationships, he said. Having a long-term plan, ideally one that can be implemented over the course of about five years, helps transition clients to new lawyers and teams and allows time to train lawyers who may lack the expertise or knowledge of a departing partner, Olson said.
The issue is critical for law firms now because 30 percent to 40 percent of actively practicing lawyers in the United States and Canada are beginning to retire, already phasing down or considering phasing down, said Olson.
Instead of tackling the issue head-on, law firms tend to avoid creating a succession plan, said Olson, who has worked on succession issues with law firms for 20 years. In instances where transition plans do exist, they often include overly optimistic assumptions, have strategic gaps or lack realistic contingency plans, he said.
Firms need to begin addressing the succession issue by taking inventory of their own practice areas, he said.
Once the firm has analyzed its demographics and its long-term goals, it must begin the difficult conversations that succession engenders, said Olson. Having a well-designed succession plan with clear objectives can make those discussions more productive.
“Talking with senior lawyers, many of whom might be at their peak in terms of performance and productivity, can certainly be uncomfortable for an individual lawyer, but that’s a barrier that needs to be crossed,” said Olson.
“Doing so in a planning context doesn’t remove all the discomfort, but there’s a better chance to create a win-win-win outcome for clients, the firm and the individual.”