Succession Strategy — Part Two — Planning and Transition

Succession planning and transition is fast becoming a critical component of every smart law firm and legal service provider’s business strategy.

My three-part series examines Succession Strategy in terms of culture, planning, and techniques as well as Alumni Programs that help retain ties and nurture goodwill with all former law firm colleagues.

A treasured lawyer-friend who is also a legacy client remarked that succession is “a complex but critical issue.” She is right, which is why each of the 12 topics within this series is impactful.

Publishing this series in three parts over the span of a month should enable time and space for you to reflect and formulate your own thoughts and consider how each topic may apply to you and/or your situation.

You may wish to review Succession Strategy: Part One — Mindset and Politics.

This is Succession Strategy: Part Two — Planning and Transition that covers:

• Succession plans must be transparent
• Voice of the client is key to smooth succession
• Embedding, secondments, cohort laddering, and cross-service teams
• Coming to terms with succession

My series will conclude by examining why and how to combine Succession Strategy and Alumni Programs to create and realize maximum long-term value.

As a long-time student and participant in the global legal services market, I will be keen to learn your thoughts and experiences with respect to Succession Strategy and hope you’ll enjoy joining me on this journey.

Succession Strategy — Part Two — Planning and Transition

Succession Plans Must be Transparent

The global legal services market, which has undergone explosive change over the last 20 years is evolving and accelerating at a ferocious pace. This is primarily due to boomer lawyers retiring now or soon, fallout from the pandemic, an unstable legal job market, and acceleration of technology within legal practice, in particular, artificial intelligence.

As a result, lawyers at all stages of their careers are reimagining how their working lives will unfold. Moreover, they are acting on it and, in many cases, are loving the results.

While this may be good news for lawyers, it is not good news for clients.

Clients do not want or welcome surprises of any kind. Neither does law firm management. In both cases, predictability wins.

This is why succession, as part of business strategy, is best planned in detail two to five years before a lawyer begins to scale back or enters full-on retirement. As a result, the succession process has a stronger likelihood of being managed smoothly and in conjunction with colleagues and, most importantly, the lawyer’s clients.  

It is vital that management and the lawyer share succession plans in full transparency with other lawyers in the firm, practice groups, and industry teams, as well as with clients and the client’s other professional service providers.

There are four essential steps to ensure smooth succession while emphasising transparency:

1) Selection, training and mentoring of appropriate successor lawyers and their support teams to ensure they have the qualifications as well as the right temperaments to serve specific clients.

2) Position successor partners for a smooth handoff by enabling them to dovetail with the retiring partner on client engagements with the client’s approval.

3) Encourage and support the retiring partner to gradually step back from the client-successor relationship to allow for deeper familiarity to develop without continuing influence.

4) Transfer increasing parts of the origination credit from the retiring partner to successors as they take on increasing responsibility for the client relationship and work.

Once a client handoff is complete and as need be, the retiring partner may continue to coach her or his successor discretely for an agreed length of time without attending client meetings, appearing on calls, or rendering or billing any services.

It goes without saying that law firms also need to have contingencies and emergency plans in place should there be a need for early or unanticipated succession execution of any kind.

This is simply smart business since while there are law firms that have mandatory retirement at a specific age, others do not. Most law societies and governing guilds have rules in place for succession and transferring clients upon a lawyer’s retirement, diminishing health, death, or a firm’s dissolution. That said, it is astonishing how often this does not happen or fails to be executed smoothly. The upshot is chaos for clients as well as the firm when the unforeseen happens.

Not to beat a dead horse – or in this case, a dead lawyer – but this is yet another reason why “Clients of the Firm” is a smart business strategy due to providing a safety net for a firm’s culture, structure, finances, and brand as well as its clientele.

Voice of the Client is Key to Smooth Succession

Change doesn’t happen in a vacuum. The ripple effect that accompanies any change means that clients must be involved in the succession plans of those who serve them. After all, without clients any succession planning is a moot point.

Having conducted many client interviews, I can tell you from experience that even though a lawyer or their firm may not have succession on their minds, clients most certainly do. I have been asked many times what an aging or sometimes, in the worst case, ailing partner’s plans are around bringing in supports that will enable a smooth transition for a client and their work.

In many of these instances, a client will positively support a partner wishing to scale back their workload or retire. In other cases, a client will breathe a sigh of relief and ask, “How soon will this happen?” Without regularly interviewing clients it may never be known that they have been suffering in silence – sometimes for years – and counting the days to their lawyer’s departure. There have been instances when a client’s perspective is communicated directly, such as, “You got here in the nick of time; we’ve been thinking of leaving,” to “We’ve needed to hear this, are happy to hear it now, and insist on being heavily involved in the selection of new counsel.”

These are real-life examples of conversations I have had with a law firm’s clients, but no one would have ever known had I or someone who is a third-party ombudsperson or firm-neutral and not the servicing lawyer or partner responsible, not had a service-oriented conversation with these clients.

A client who will be affected in any way, shape, or form by a lawyer’s departure will welcome a succession plan and formal proposal. This hallmark of professional service and consideration helps both the client and firm avoid service disruption and is the ultimate grace note for a departing professional.

For law firms and legal service providers with deep bench strength and talent rosters, there are various strategies and tactics that can be considered in addition to a traditional successor handoff.

The four best solutions are: 1) Permanent Embedding, 2) Term Secondments), 3) Cohort Laddering, and 3) Cross-Service Teams.

While these solutions are most easily implemented within a large law firm environment with breadth and depth, they can often be scaled for mid-size and sometimes smaller size firms and can work especially well within firms offering boutique or specialized legal services.

Embedding, Secondments, Cohort Laddering, and Cross-Service Teams

Law firms and legal service providers with sterling client rosters often subscribe to building their organizations through organic talent growth.

As a result, these law firms and legal service providers often invest in and protect relationships with institutional, blue-chip clients by permanently embedding one of their own “organically grown” lawyers as in-house counsel. Even though if may be painful in the short term for a law firm to transfer a solid, highly regarded, and firm-polished lawyer to a sterling client’s in-house legal department, in the long term that embedded lawyer may be elevated to general counsel or a c-suite role, which helps cement the client-firm/provider relationship.

Secondments are another highly valued firm-client connector. Providing legal talent to a key client on a term arrangement of six to 12 months (or even longer) enables deeper knowledge and solidification of trust between a firm/provider and a key client. Rolling secondments where lawyers cycle in and out of a key client’s legal department on short terms of between three and six months also affords continuous opportunities to lend talent while enabling mutual learning and deepening trust.

It is no secret that clients love embedding and secondment arrangements, and handsomely reward law firms and legal service providers who engage with clients in this manner.

Cohort laddering is another strategy that enables collaboration. This technique involves the pairing and the continuous graduation of sets of cohort-colleagues often matched by seniority. Like how a ladder or elevator works, the paired firm/client lawyer cohorts gain seniority within their organizations and, most vitally, familiarity with each other over many years. As the paired cohorts graduate into higher levels of seniority and the most senior firm-client cohort eventually retire, matched firm-client pairs on the rungs or steps below rise together in equal ranks. Laddering in this manner can provide natural steps to solidifying relationships and helps smooth the succession path while enabling better traction and talent retention for both the firm/provider and the client’s in-house legal department.

Creation of a cross-service multidisciplinary team around key clients is often a graceful way of both enabling succession while transitioning a client from being a “Client of the Individual” to a “Client of the Firm.” This classic client retention strategy enables cross-servicing and growth of clients identified as key accounts while enabling an individual lawyer to experience a smooth succession and make the transition with dignity.

While embedding, secondments, cohort laddering, and cross-servicing are often more easily accomplished within law firms of large size and wide scope, firms and providers with shallower bench strength or that have fewer areas of practice or offerings can either scale these processes accordingly or combine with other law firms or legal service providers that offer complimentary services. Even though this level of collaboration requires deep trust, crisp boundaries, clear communication, and constant management, it bolsters business and enables all ranks in all entities to rise through mutual expansion.

These types of collaborative combinations may also be effective as test cases or precursors to formal mergers and acquisitions. In turn and ironically, the upshot of a formal tie-up between groups of professionals such as these may trigger a rebalancing of a combined talent roster, which could result in succession planning for some individuals of the combined entity.

Coming to Terms With Succession

While succession often means concluding lawyer-client relationships, it does not necessarily mean the end of a lawyer’s involvements. In fact, it can be the start of a different relationship between a lawyer and their firm.

There is a plethora of statesperson roles that are enjoyed by lawyers who continue to have the drive to thrive in the legal services environment. Such roles can include law firm ambassadors who represent the firm in outside professional arenas such as corporate Board work, or who offer senior counsel pro bono service to firm-supporting philanthropic efforts or provide connections between current and prospective clients as well as introductions to the firm. Oftentimes, these new roles can also extend to acting as advisors or counsel to the firm or mentoring the next generation of lawyers.

Roles such as these and more can be created to suit the individual. This enables a retired partner to continue to provide value to the firm, its clients, stakeholders, and the community without having to deal with politics around voting or being encumbered by management responsibilities.

Regardless of ongoing involvement, lawyers in many jurisdictions are mandated by regulators to have contingency arrangements, so it behoves them, their firms, clients, and colleagues to discuss succession and possible next roles in full transparency and plan for it openly.

One of the easiest ways to begin the process is by conducting a set of lawyer/firm/client succession interviews. Often this happens in steps, such as a one-on-one with the lawyer that expands to include the law firm, the lawyer’s successors, and then clients. Law firms say that with the aid of a neutral third party, succession can often be more easily broached, discussed, planned, and acted upon.

Strategic management of a client, lawyer, and firm’s ongoing interests are paramount to the success of any succession plan. Therefore, solutions, consensus, and most importantly, continuation of trust can be gained with respect and grace while providing a seamless and smooth transition that retains professionalism and respect while instilling peace of mind for all parties.

[This is the second in a three-part series on Succession Strategy. You may wish to review Succession Strategy — Introduction and Part One — Mindset and Politics. Succession Strategy — Part Three — Alumni Programs Onward — will appear here on June 30, 2024. The full chapter on Succession: Transition Strategies for Lawyers, Law Firms, and Clients appears in the book, Talent in the Legal Profession: How to Attract, Retain and Engage Top Talent published April 2024 by Globe Law and Business.]