Succession Planning and Retirement Strategies for Law Firms and Lawyers: A Q&A with Author Kathleen Brady
Kathleen Brady has spent her career helping attorneys accomplish and integrate their professional and personal goals. Brady has worked with law students at Fordham University Law School and Columbia, and she worked in recruitment and professional development on the employer side. In addition to Succession Planning, Brady has written four books on career and life transitions, including GET A JOB! 10 Steps to Career Success. Brady holds the following certifications: Certified Professional Coach, a Master Practitioner of the Energy Leadership Index, a Certified Provider of the Highlands Ability Battery and a member of the International Coach Federation. Additionally, Brady brings her experience with the National Association for Law Placement, and she is a founding member of the NALP Foundation for Research and Education, and currently serves as adjunct faculty of Georgian Court University.
Brady’s most recent book, Succession Planning and Retirement Strategies for Law Firms and Lawyers, focuses on the challenges facing law firms surrounding succession planning. Brady focuses her expertise on how important succession planning in law firms can be for the health of the firm, the management of important client relationships, and the message it sends to junior associates and the next generation of talent. Factoring in the multi-faceted issues at play, including the emotional weight of leaving a career behind, compensation structures and best practices to normalize these conversations Brady explains how succession planning in law firms can be a win across the board.
Why is succession planning in law firms so important to law firm survival and longevity?
There are a number of both obvious and not so obvious reasons succession planning is important. The obvious is related to finances and client services. One-third of law firm partners will reach age 65 by 2030 and both the institutions and individuals are woefully unprepared for that reality. Individuals have not thought deeply enough about what a post-practice life could look like and law firms have not incorporated this inevitable transition into their overarching talent management strategy. Without any strategic thought as to how to navigate this unavoidable transition firms could find themselves scrambling to fill an expertise and leadership void created by a sudden retirement announcement. It costs time and money to replace talent. It also begs the question as to who will tend to the clients’ needs. It is arrogant to assume a Firm can simply assign a new “relationship” partner without the existence of a pre-established relationship. Firms need the retiring partners to facilitate the handoff. Keep in mind, clients likely notice as their lawyers age and may become more open to pitches from other law firms to ensure their business needs will be tended to uninterrupted if there is no obvious succession plan in place.
Without a plan, Firms may also find themselves in the awkward position of having to push people out the door after a lifetime of service as the business needs of the firm evolve and a particular partner is suddenly deemed no longer “productive.” Such actions tarnish a Firm’s brand as clients, junior partners and even associates watch how they treat institutional icons or play favorites.
These observations lead to the less obvious impact of retirement on recruiting and retention. Without transparency, junior partners may become frustrated by the perceived bottleneck created by a stagnant partnership. If they can’t see a professional growth path, they are likely to leave. Even junior associates, whose trajectory is often tied to partner success, observe the aging of rainmakers in their practice groups and wonder about their own career stability if that person should retire. They become more open to headhunter calls and job hunting. Retirements can create a talent drain at every level.
Even less obvious, but still an important factor in succession planning is what happens when a client retires? Is anyone paying attention? Does the firm have multiple relationships within the institution to ensure the business will stay?
Still, nobody talks about succession planning. The process is shrouded in mystery and assumptive thinking, and the various stakeholders end up working at cross purposes. Lawyers and law firms have a propensity to delay decisions until the last possible moment in an attempt to keep all options open. However, in this instance, time is the enemy. Delay does not maximize options for succession planning or retirement; it limits them for everyone. Individuals and law firms need to develop and align their long-term strategic approaches.
To be successful, succession plans require collaboration to outline who will take over various roles, responsibilities and client relationships and how everyone will be compensated, years before it is set to happen. Its success relies on the trust and willingness of people who have built their careers as autonomous, competitive, sole contributors to share long-standing relationships in a way that allows them to maintain control over their lives while at the same time serving the Firm. With a transparent succession plan in place, lawyers will feel comfortable initiating the conversation and sharing their plans because it won’t damage their standing within the Firm. As a result, they will be able to preserve their legacy by fostering the relationship between the client and the successor partner, which ultimately is in the best interest of the Firm. If done well, everybody wins.
How can compensation structures and cultural traits in law firms contribute to making succession planning a difficult topic to discuss?
Money is a driver for both sides whether they want to admit it or not. However, it isn’t only about money. Many lawyers will tell you they don’t work for a paycheck but rather for something bigger and more compelling. The money, albeit important, is secondary; that is, of course, until someone perceives unfairness and then the conversation becomes entirely about money. It is the most tangible thing to focus on.
At its most fundamental level, compensation rewards institutional values, sometimes affirmatively stated, many times not. Law firm leadership can’t say transitioning clients is key to Firm success and then financially penalize those trying to hand off clients or those expected to assume the additional workload. Compensation systems that do not reward transitioning clients serve as a disincentive to that purported value and put all the stakeholders at odds with each other.
The compensation plan chosen is largely determined by the culture of the firm; I would argue it defines the culture. It seems easier to avoid uncomfortable emotional conversations by relying on objective criteria like hours and profitability, but it likely fails to adequately reward or punish less quantifiable behaviors that impact the sustainability of the firm. Culture sometimes inadvertently rewards combative and competitive behaviors at the expense of behaviors that contribute to the longevity and sustainability of the firm.
Yet assuming leadership is motivated purely by greed is unfair. Much like compensation is seen as a measure of individual success, the Profits-per-Partner (PPP) metric is an important indicator of a firm’s success. It enables the firm to position itself as a leader to clients, and to attract lateral partners with complementary books of business, etc. which contributes to the longevity of the Firm.
The challenge for law firm leadership is to find the sweet spot necessary to balance institutional fiscal health with attorney well-being and all the other competing demands of running a successful law firm. Individual attorneys play a role in helping define that too…BUT it requires trust and a willingness to demonstrate how individual needs are aligned with business needs.
Can you illuminate some of the factors feeding into the mindset of aging partners, and how firms can help aging partners with the transition while also making decisions in the best interest of the firm?
Fear of aging in our youth-based culture is a huge factor as people near the traditional retirement age. They begin to notice every ache and pain and fret every time they misplace their glasses or forget a colleague’s name thinking that it may signify the onset of dementia. Aging forces people to face mortality. Terror Management Theory explains that a great deal of all human behavior is ruled by an unconscious fear of death and that death anxiety drives people to take action to protect their sense of self-esteem, worthiness and sustainability. Firm leadership must be sensitive to the emotional quagmire aging partners face.
Aging also implies irrelevance. People tend to cling to the stillness of life to prove they are not irrelevant. “As long as I can still pull an all-nighter or still party with the associates or still fill in the blank as to what signifies youth…” Leaving a career that has occupied such a big space in one’s life can create a profound sense of loss - loss of identity, status, power, relationships, finances – especially if there is no vision for what will fill the void. Fear of the unknown is ubiquitous.
Programs designed to help attorneys at the later stage of their careers imagine the limitless possibilities available to them in their post-practice life can serve to protect that sense of self-esteem, worthiness and sustainability. By providing their attorneys with the tools to think deeply about the various ways to live a post-practice life long before they are ready to retire allows them to make intentional choices to shape the financial, physical, emotional and social outcomes they want for the future which serves the individual AND the institution. For example, partners might be more inclined to assume needed leadership roles to further hone their management skills to accommodate their post-practice plans.
Firms can help by offering workshops on financial planning, Social Security options, and wellness programs around nutrition, sleep and longevity throughout the attorney career span. Plant the seeds early. It is in the institution’s self-interest to provide a long on-ramp towards retirement…but it is the individual’s responsibility to take advantage of the resources and take the lead in developing an action plan that serves their personal needs as well as their clients and the Firm.
What are some strategies law firms can implement to normalize these conversations?
The easiest thing for Firms to do is incorporate retirement planning into existing programs. Begin planting seeds. Every wellness program should offer a component on longevity and discuss the positive and negative impacts of eating well, reducing stress, establishing sleep patterns, financial planning, career/life management, etc. Demonstrate emphatically how today’s choices will impact tomorrow’s outcomes. It should be presented as an overarching curriculum designed around key transition points throughout the lifecycle of an attorney so people know what to expect as they progress in their careers. The same way firms offer orientation, mid-level retreats and new partner training at the front end of the attorney career-life cycle, they ought to develop parallel curriculum for the BEST stages of partnership (Begin/Expand/Sustain/Transition). This approach gives people some control over the process in a way that preserves their dignity and serves the firm.
Keep in mind that while it may be customary for the firm to initiate the retirement conversation, it is the individual who ultimately drives the conversation. If everyone knows when to expect the initiation of the conversation, and have been provided with the necessary tools along the way, they will be prepared. This way, those uncomfortable, dreaded conversations can be normalized and therefore be less emotionally charged. Unambiguous timing creates a sense of fairness and avoids the perception of being “singled out.”It also offers flexibility to accommodate institutional and individual needs.
But here is the catch. Firm culture must not penalize people for heeding the wellness advice! They must practice what they preach and reward…or at least not punish…attorneys for tending to their mental, physical and emotional health throughout their careers. Fostering wellness in these areas will have both a short and long term positive effect on individuals and institutions.
The book: Succession Planning and Retirement Strategies for Law Firms and Lawyers looks at the issue from both the individual attorney and the law firm perspective. Why do you think this was a good approach? How do the concerns of these differing perspectives diverge, and where do they overlap?
Retirement today doesn’t look anything like we have seen before. Individual lawyers and legal institutions are now forced to cope in new and different ways with this highly charged emotional issue without any clear precedents or established rules of engagement to offer guidance. Yet, while the various stakeholders come at the issue from different perspectives, when all is said and done, they likely want the same things: a smooth transition for each individual who has served the firm well in a way that contributes to the fiscal health and reputation of the Firm.
Both individuals and Law Firm leadership must not only consider organizational needs but also be sensitive to what people nearing traditional retirement age might be experiencing in order to develop workable retirement solutions that best serve all the stakeholders. Institutions and individuals must willingly enter that great abyss together; each must engage in self-reflection to understand the internal needs, concerns and fears fueling their thoughts and actions. Equally important is for both sides to set aside assumptions of what they believe is non-negotiable for the other side and be willing to ask questions to explore the issue from alternative perspectives. These conversations are likely to be uncomfortable…commit to having them anyway.
For more insight into law firm succession planning, check out Succession Planning and Retirement Strategies for Law Firms and Lawyers by Kathleen Brady.