“A society grows great when old men plant trees whose shade they know they shall never sit in.”--- Greek Proverb
It seems you can’t gather a group of Managing Partners together for more than 20 minutes without the topic of conversation drifting to something that touches on a critical firm challenge today: “Succession Planning.” No challenge is more ubiquitous in the legal profession – there are simply no law firms of any size where succession challenges are not, or at least should not be, a high priority for firm leadership. Even those lucky firms whose partners are all still relatively young (i.e. all under 60) should recognize the challenge for the future when key individuals ultimately depart.
The challenge is as complex as it is widespread. At a recent internal LawVision Group meeting, our colleagues from all areas of our practice reported seeing succession challenges impacting their interactions with firms. Getting succession right impacts everything law firms do, from compensation to capitalization, from business development to client relationships, from practice management to firm management, and every other component of running the firm. Succession planning is hard. And more importantly, it’s probably misnamed. Calling it succession “planning” probably suggests that all you really need to do is write down a plan, and succession will naturally happen. But of course, it won’t. No chance. Whether you are talking about succession of practices, or transition of ownership, or leadership transition, the challenges are far too complex to leave to the daily energies of your partners.
Succession challenges must be managed. They involve a complex web of structural, cultural and psychological components that will inevitably drive success – or not. In the case of the most widespread succession challenge, transitioning key clients and practices from senior lawyers, the structural factors in the typical law firm actively work against successful transition efforts. Compensation systems don’t align, billing practices, measurements and the judgements made from them are counter to success, talent pools are often thin for people capable of gaining the client’s trust, and practice management approaches rarely incorporate successor development. Clients must be included in the process as well. And these are the easy factors to work on.
Much more complex are the cultural and psychological challenges to succession. We explored the psychological components of dealing with succession some months ago (See: Getting Succession Right: Remember – It’s Personal). The cultural challenges are equally important. Consider:
- At most firms, the partner’s value and prestige is intricately linked to their book of business and client relationships. Few environments celebrate those who do what they should - creating value for future generations.
- Law firms are some of the most short-term focused of businesses. For the most part, they can’t be sold and there is no residual value. Partners don’t see their share values rising as they do good things. All they see is how much they earn - this year - and the mindset is that is supposed to increase every year. No matter what.
- Because of the last point, the concept of “investment” is thin at most firms. Planting seeds for the future might make sense for younger lawyers, especially when they are “investing in themselves,” but the challenge of getting older partners to plant seeds for future generations is, at best, unsystematically imbued in the industry. Some lawyers accept this naturally as the “right thing to do” but many simply follow the style their organization subconsciously fosters.
The challenge for leadership in Succession Management is far more complex than most people realize and must be approached from a variety of perspectives. Some aspects may lend themselves to planning and adjustment, while others present longer term people-relationship challenges and firm culture management. How do you create a sense of long-term duty in a short-term environment?
We urge firm leaders to begin to think more comprehensively about the challenges associated with Succession Management, recognizing that the structural levers are but one component of a much bigger challenge. Bringing to bear the psychological and cultural efforts needs to be part of the leader’s tool kit, with the goal of building a firm where “old men (and women) plant trees whose shade they know they shall never sit in.” The first step is to recognize that this is no simple task, and this recognition will help you think more broadly about how to address these issues. Everyone talks about it but few have the consistent success they would like. Expanding the approach might help to change that.