Law Firm Succession Planning - Strength, not Weakness!

Let’s face it – no one wants to think they would die one day – and yet it is a harsh reality that stares all of us in our faces. Succession planning, being linked to thoughts of death or incapacitation – often carries uncomfortable undertones. This is perhaps the reason why it is often neglected and takes a back seat in the overall scheme of law firm business and growth planning.

Hitherto, Succession Planning has been an exercise that law firm leaders undertake past their 60s. Obviously, since these are not one-off discussions but business strategies that involve developing a formal process to transition the legal practice to another leader, the discussions are layered and involve several intertwined aspects including re-evaluating policies on compensation, creating phased and tiered leadership structures, ensuring client continuity and most importantly – preserving the firm culture. When Covid-19 caught everyone by surprise, there was real and unexpected loss to human lives. Several international law firms, who were not prepared to lose their leaders and had no succession plan in place, suddenly found themselves amidst chaos of handling conflicting claims between families of the deceased leaders and the surviving leaders who were well-equipped to lead the firms but had no formal authority. Real life circumstances like these made many law firm leaders rethink their approaches to succession planning.

What is Succession Planning?

Law firm succession planning refers to a strategic planning process undertaken by a law firm to ensure a smooth transition of leadership, client relationships, and operational responsibilities from one generation of lawyers to the next. Succession planning is crucial for maintaining continuity, stability, and the long-term viability of the firm. The exercise not only involves identifying and developing future leaders within the firm, but also transferring institutional knowledge, retaining key clients, and implementing strategies to mitigate any potential disruptions that may arise during the transition period. Basically, succession planning prepares the firm to cater to expected events and contingencies alike. An effective succession plan will ensure that disruptions of all natures are minimized when the actual transition takes place with a view of sustaining the firm in the long run.

How do law firms get to Succession Planning?

In order to design a systematic approach to succession planning exercise, it is important to have a working understanding of what it entails and the culture the firm seeks to foster. For some family driven firms, it may be optimal to groom and impart training to members within the family; whereas, for other firms, it may be effective to identify competent individuals within the firm or hire laterally. In both cases, the identified incumbents should be trained to build leadership skills required to operate efficiently in such positions.

Law firm leaders often feel that Succession Planning should be undertaken only when the key leader like a Founder or a Managing Partner decides to step down and a transition is eminent. That, to say the least, is a flawed notion as it undermines the ‘planning’ aspect of succession. In fact, for any transition to be efficient, it is imperative that the actual processes of identifying and grooming of professionals is undertaken much prior to the actual handing over of the roles. At this stage, one may also need to freeze the post-transition leadership structure. The new incumbents usually take one or more of the following roles - Management Committee, Managing Partner, Co-founder, Principal or Head of Department. The leader handing over leadership may choose to completely move away from the firm or may continue to be associated in strategic capacity such as – Chairperson or Strategic Advisor. 

The need for a planned approach to succession planning is also highlighted by the fact that stepping into key leadership roles, such as that of a Managing Partner or Chair of Management Committee, brings with it a whole lot of responsibilities that are core to overall growth of the firm. Besides being good at lawyering, these roles require multitude of skills including an entrepreneurial bent of mind, rainmaking, client retention, mentoring and leadership, and the ability to take strategic calls along with preserving firm’s culture and balancing conflicting viewpoints of other Partners. While some may possess these skills and require grooming, others may have to give closer supervision to cultivate these skills. In both cases sometimes, this upskilling takes place by means of professional training or handholding by professionals like law firm management consultants and coaches. Another way in which some law firm leaders approach this is through shadow concept, that is, letting the identified incumbent work alongside the leaders in order to for them to closely observe the tricks of the trade and pick the ropes.

What are the steps involved in Succession Planning?

Informing clients and keeping them in the loop about these changes is imperative as they are the key stakeholders in this exercise. Clients must be given the opportunity to familiarize themselves with the identified new leader(s) and be reassured of receiving the same degree of support and services.  This ensures that clients are comfortable with the ensuing transition, and have ample time to allay their concerns and carry forward the natural course of the relationship.

The next important step concerns the people at the firm, which is vital for a seamless transition. Before you get to the stage of succession planning, it is important to reflect on the culture the firm seeks to build and ensure that the new leader(s) are aligned with building the same cultural values when they assume charge. Being transparent about the firm’s succession plans gives the members clarity over their growth opportunities and prospects at the firm.

The next crucial step is to ensure the transfer of relationships. When key individuals move away from leadership roles, the decades of experience and relationships they hold need to be absorbed in the firm by the new leader(s). Succession planning addresses this by embedding appropriate structures that ensure that this knowledge and experience is not squandered and is transferred to identified new leader(s).

Succession Planning is not Retirement!

Several Founders and Managing Partners misconstrue succession planning with retirement. That may not always be the case. Succession planning should not be conflated with retirement in all contexts. Individuals in key roles are at liberty to define the context of their transition. For some, it may mean adopting a hands-off approach in their transition - for instance, transitioning into positions such as Chairperson or Honorary Advisors. It is up to the individual in question to define the limits of their involvement post-transition. In that vein, succession does not necessarily imply that a single individual must occupy the incumbent’s position. Firms can deploy innovative approaches in carrying out the transition, such as replacing a single leader’s role with more than one leader (like Regional or Practice Area-based Managing Partners) or group of individuals (like a Management Committee) where other Partners and CXO-level individuals can collectively carry out the functions related to management and growth of law firms.

Succession planning is not limited to firms of a particular size. In fact, small and mid-sized firms should work on a succession plan much in advance because the dependence on one or two individuals to steer the firm is way too high. A failure to establish a comprehensive succession plan can lead to unforeseen challenges which might have adverse implications amplified by hasty decision making. A succession plan hedges against such risks, facilitates seamless transitions and ensures that key leadership positions are occupied by competent individuals who understand the various nuances attached to their new roles.

About the authors: The article has been authored by Bithika Anand (Founder & Managing Director) and Nipun K Bhatiaa (CEO) of Legal League Consulting, with research and assistance by Devansh Gupta (Consultant).