Succession is widely regarded as the most significant issue facing law firms at present. Senior partners are often embroiled in problems surrounding cash-flow management, cyber security and PI renewals, but what should perhaps take greater priority is the need to find a solution to this conundrum.
Prepared for Brexit but not retirement
The majority of leaders in small and medium-sized legal service firms came out of the recession relatively unscathed and seem optimistic and prepared for, as much as anyone can be, the looming impacts of BREXIT, but real problems lie in the lack of preparation for their own retirement, often unaware that the fix to this rests in their own hands.
An old saying that still applies
The saying that the best managers make themselves redundant shouldn’t be regarded as a concern, but more of a mantra for the owners of law organisations by creating more time to commit to valuing-adding activities and business development. More significantly, it demonstrates an aptitude that the business can function without them. Having such an ability is valuable, but accomplishing it requires a culture born from respect and transparency across roles and activities – both fee-earning or in support and finance teams.
Showing it works in all environments and all teams
Our team at Menzies work in an advisory capacity with numerous law firms in instilling this form of working environment, which most have found extremely beneficial. However, it is important to note that implementation isn’t a process that can be readily applied a month before any imminent retirement; instead a more gradual approach planned well in advance is key.
The rationale is that firms must add a level of succession planning through changing behaviours and encouraging staff to rise to the challenge. Ensuring all of those within the firm have the knowledge of how they can progress their own careers from their current positions will provide mutual benefit. This transparency is vital and can occasionally include some challenging discussions on both sides.
Full service practices
In many practices, collaboration between teams and service lines will provide learning opportunities for future managers in terms of gaining first-hand knowledge about cross-team and cross-line-of-service ops. Successful partnerships on client projects will hopefully make internal strategies easier and more efficient, increasing the understanding that clients are the basis of the firms’ mission.
To the benefit of all senior-level stakeholders, these relationships become stronger, which enhances the ’capital value’ of the firm. Soon thereafter, senior and managing partners should realise the link between efficiency of teams and the size of their retirement pot.
Looking for progression
Both senior stakeholders and talent coming through the business will want to recognise the opportunities for progression. In order to encourage their successors perhaps sooner than they would have expected, current senior and practice managers may have to hand out equity share. However, as long as the gifted individuals are engaged and inspired to generate further profit, the slightly reduced share of a larger pie is logical and financially beneficial in short and longer term.
Falling short for talented individuals
Failing to engage with talented individuals is to disregard your own succession solution. This will not transpire immediately, but in a practice that you have worked tirelessly to develop, to actually have an image of your end goal and a strategy to attain value must surely be a worthwhile ambition that will leave a positive legacy.
The solution to succession
The solution to your firm’s succession conundrum is in the building and on the payroll. Senior and practice managers just need the vision to identify this and the strategic awareness to lead the firm, both with and without them, to a prosperous future.