Planning the Orderly Transition of Firm Governance

by Joel A. Rose

Succession planning of lawyer managers is frequently not given adequate attention until a senior partner or other influential member of the firm announce their plans to retire, reduce their active involvement in the firm or leave.

Succession Planning is a distasteful subject to deal with. The reasons for addressing succession deal with issues that significantly change the life styles, financial posture and status of partners within their respective firms, i.e., death, disability, retirement, involuntary departure, personal problems, etc.

From personal and political perspectives, no one wants to be perceived as the individual(s) who is orchestrating the departure of a senior partner who may have devoted years of service developing the firm, or has to tell another partner to  identify, develop and delegate their work to someone who will be their replacement.

Reasons for Planning for the Orderly Succession:

In today's highly competitive environment, a firm's financial and professional success depends greatly on the planning and organizational skills of its lawyer managers. Planning for succession is important for the following reasons: (a) Expiration of a term; (b) Changes in firm culture, which may affect its management style; (c) Dealing with changes in the personal and professional objectives of partners occupying managerial positions, planned departures, i.e., retirement and unplanned departures resulting from death, disability or other unanticipated reasons for departure and the retention of clients.

Approaching the Succession Process:

How law firms approach the succession issue will be influenced, in part, by the firm's historical experience, culture and/or the partners' attitudes about the firm’s form of governance for determining and implementing firm policy, the role of incumbent lawyer managers and the proposed role of successor lawyer managers.

Partners’ responses to the below questions usually provide insight about their attitudes towards the firm’s general management process and role of successor lawyer managers and those partners who may serve as successor lawyer managers:

  • How satisfied are the partners in the manner in which the business and substantive sides of the firm’s practice are organized?
  • How satisfied (or dissatisfied) are the partners in the current process for determining and implementing policies affecting the business and substantive sides of the firm’s practice?
  • Are the partners willing to be “managed?”
  • Are partners willing to be held accountable for their actions and inactions?
  • Is the management function an activity that partners take seriously and are willing to devote the time and effort to or will it be "fit in" when they can between their full client workload?
  • Will the partners be compensated for managing the firm, or are partners expected to manage because it is the appropriate thing to do and some partner (or group of partners) has to do it?
  • Which of the current partners who possess leadership and technical skills, business acumen and personal characteristics and would be willing to devote their time to manage the firm would be most appropriate to serve as the successor lawyer manager?
  • Which of those partners who possess the appropriate leadership and technical skills, business acumen and personal characteristics and are willing to devote their time to manage the firm would be acceptable to the other partners?

Selecting and Training Successor Lawyer Managers:
Planning for the orderly succession of lawyer management calls for the ability of the current lawyer managers to spot leadership and management potential among the mid-level and younger partner complement. Once this potential has been identified the current lawyer manager must nurture and develop this potential so as to provide the future leaders of the firm.

In the ideal world, successor lawyer managers should have the trust, confidence and respect of others (or have the potential for developing these attributes); are “natural” leaders/managers; have a “firm” ego, rather than a “personal” ego; are team players, rather than a solo player; are consensus builders rather than a dictator. The successor lawyer manager should be the person who can do the job effectively rather than be the person who wants the job; provide proper leadership where there are identified or perceived areas in which change or stabilization is needed. However, in the real world, oftentimes it is difficult to identify one partner who possesses all of these attributes.

Developing Potential Lawyer Managers:

For the most part, successor lawyer managers learn how to manage a law firm by:  on the job training; being mentored by experienced lawyer managers; attending bar association meetings; attending law firm management seminars; working with management consultants; and working with skilled and experienced law firm administrators.

Management Skills:

The following are recommended areas in which the management skills of mid-level and junior partners can and should be developed:

(1) Client relations, including origination, development and retention;
(2) Acceptance of new clients and matters and the management of performance of legal work in substantive practice areas and sub-specialties;
(3) Associate recruitment, training and development of a personal and professional nature, promotion, evaluation and compensation and termination;
(4) Administrative staff organization, relationships and utilization;
(5) Budgeting for revenue, expenses, capital expenditures; billings and collections; financial and variance reporting and utilization of resultant financial data and management information;
(6) Leases, space utilization, negotiations and construction, and
(7) Technology including computers, software, other equipment and technical support.

Techniques for Developing Management Skills:

Many firms develop successors to lawyer managers by delegating to selected mid-level and junior partners short term management assignments and by rotating these partners through various management areas to develop their general management skills rather than developing particular lawyers as specialists in specific management areas. These firms begin to train mid-level and junior partners by assigning short term, low risk management activities before entrusting them with key managerial responsibilities.

On-the-job-training is the most effective technique for developing and refining the management skills of mid-level and junior partners. Three of the most frequently used approaches for teaching management skills include (1)being assigned to a committee, (2) being elected or appointed to a position and (3) serving as a member of a task force.

(1) Committee Membership: Depending upon the form of firm governance, partners may be Mid-level and junior partners may be appointed or elected to serve on one or more of the firm’s committees.
(2) Appointed positions: Mid-level and younger partners may be appointed to manage functional areas of administrative or substantive firm activity.
(3) Task Force: A partner may lead or serve as a member of a task force committee to address a specific issue or function. For example, a partner may be requested to recommend new or emerging practice areas. Another may explore the feasibility of establishing a new regional office. A third partner who has an interest or background in technology may direct the firm's technology effort, etc.

Mid-level or junior partner selected for training should receive specific assignments and their performance should be evaluated accordingly. They should be requested to develop a plan for completion of their assigned task, including goals and be evaluated on their performance.

Many law firms consider the success or failure of partners in planning and implementing administrative assignments when recommending or setting their compensation levels. This is done to encourage the firm's "best and brightest" partners to accept administrative assignments and not feel uncomfortable because they may record fewer billable hours. Also, it would be wise for the managing partner or executive committee to identify and provide other non-monetary forms of recognition to successful lawyer managers, i.e., a "pat on the back" in public.

Role of Former Lawyer Manager Following the Transition:

From time-to-time, founding partners in first generation firms who served as managing partner for many years who are being transitioned out of their managerial role may serve as an obstacle to allow the successor lawyer manager to manage. The former, having the firm’s best interest at heart, may believe that no other partner is capable of managing the firm as well as he or she.

I recently received a telephone call from the newly elected managing partner of a mid-size firm who said, "As new managing partner, I am supposed to be the new ‘king of the firm,’ but the real ‘king’, who served as managing partner for 17 years, is still alive, and has attempted to retain the leadership role.”

This is a critical problem that needs to be dealt with for the continued success of the firm. It will be up to the successor managing partner to determine whether this problem should be addressed by the new lawyer manager, other senior partners who the former lawyer manager respects who recognize the problem or a combination of multi-generational partners.

Following the transition, the former lawyer manager should facilitate the transition process by mentoring/grooming his or her replacement, allowing the successor lawyer manager to manage and offering recommendations and suggestions, as requested.

©1999-2017 Joel A. Rose & Associates