“Succession planning”. It’s a term we hear regularly in law firms. And yet, when I speak to partners, it seems to be an area that is often ignored in practice. It may not be a sexy topic. And it’s not easy. But it is crucial. It goes to the root of client service and client retention.
In simple terms, clients and their matters are not an asset to be gifted – clients have a right to choose, and therefore change, counsel. So, in succession planning, as in any other phase of the client relationship, the ongoing patronage of a client should not be assumed nor taken for granted. Succession planning should be a natural outcome of client relationship management. Instead, it appears to be a vexed issue that is not always getting the attention it deserves. The conundrum is part of a wider issue created by partner compensation models. In short, how is a partner whose comp is directly tied to revenue generation incentivized to plan for, and effectively manage, the transition of a client relationship and the associated workflow to the next generation?
Whether as a result of their firms’ compensation structures or their desire to extend their careers, many partners do not choose to see themselves as stewards of their organizations, whose role it is to nurture institutional client relationships for the long-term, i.e. for future generations of partners. Nonetheless, let’s assume for a moment that a firm’s culture and comp system underpin a willingness by firm management and individual partners to plan for client succession. Or let’s assume that a partner is finally ready to start letting go as they hit their glide path to retirement.
Succession planning needs to start as early as practicable, ideally 1-3 years before a planned departure. And it has the best chance of success if it includes the client. If you involve the client, you are more likely to minimize the risk that it will have an adverse reaction to the transition. After all, the firm’s choice of successor to the departing partner may not be the client’s choice! If that is the case, it is better to discover that before the client votes on your plan/implementation with its feet and takes its work elsewhere.
Whether to be upfront about the transition process will depend in large part on the firm’s relationship with the client. If the client executives and the departing partner are friends or well connected, the prospect of transition may be no surprise. On the other hand, if the client has no idea that the partner is planning a change in status, then the message needs to be managed thoughtfully. In either situation, the firm would do well to the prepare for the transition organically over time. Whether a transition is explicit to the client or stage-managed to avoid disclosing a planned retirement, everything done in the name of succession planning has to be oriented toward the client experience and the client relationship.
There is no one way to effect succession but as the firm plans and discusses succession with its client, there are some key themes to be addressed. These include:
Is the partner who has been tagged by the firm to become the new relationship partner (let’s call them the beneficiary) compatible with the key decision makers and influencers at the client?
Is the beneficiary as credible to the client and as competent as the departing partner? This includes not only competence in specific legal areas but also the business and lawyering skills required to best serve this particular client and its needs.
Beyond what is said, will the beneficiary be as committed to the client and its matters as the departing partner? The questions in the mind of the client will likely be: “Will I be as important to [beneficiary] as I am to [departing partner]?” and “Does [beneficiary] really understand my business the way [departing partner] does?”
Clients generally like consistency and dislike surprises: A change to the law firm roster at the relationship partner level can be a catalyst for a client to consider its options. Long-established client relationships can melt away rapidly when a relationship partner leaves. Consistency of communication, style and approach, service delivery, quality and pricing will all be key factors in executing a successful transition. Above all, planning and communication are essential. Handling the transition may be a challenge for the firm but it should not be a surprise for the client.