Early planning is key for successful succession
The Avrio Advocati Managing Partner Forum, chaired by John Clarke, convened yesterday to address a critical topic for law firm leaders: succession planning.
This forum, open to all members who own or manage their firm, underscored the importance of early and strategic succession planning under five key headings:
1. Timing
Planning for an exit should begin as early as five years in advance. This timeframe allows for a structured transition, ensuring both the continuity of the firm and the successful handover of responsibilities.
2. Clients
One of the primary concerns in succession planning is client retention. A well-networked partner will naturally bring in more clients, but will those clients stay when the partner exits? To mitigate the risk of losing key clients, early introduction to other colleagues within the firm is crucial. A strategic approach to client relationships ensures that loyalty to the firm outweighs personal connections to an individual partner.
3. People
Ensuring that work is smoothly transitioned to another capable professional is paramount. Replacing a departing partner may require hiring and training new talent, which demands careful planning. Law firms rarely have spare capacity, making it essential to proactively cultivate future leaders.
Senior partners were encouraged to demonstrate generosity by mentoring younger lawyers and gradually introducing them to key clients. While there are inherent risks in this approach, clear contractual agreements outlining the succession process can provide reassurance. The possibility of making non-lawyers partners was also discussed, though this is not an option in all jurisdictions.
4. Mergers
Mergers were identified as a potential exit strategy, though their viability depends on jurisdictional regulations and financial considerations. Some partners may find that a merger does not provide the desired financial return for their years of dedication. Nevertheless, cultural alignment emerged as the most crucial factor in determining the success of a merger.
5. Culture and Other Considerations
A generational shift in work culture is shaping the future of legal practice. Younger lawyers are often less inclined to work 70 hour weeks, prompting firms to reassess expectations and long-term sustainability. Additionally, external factors such as advancements in artificial intelligence and increasing life expectancy must be incorporated into succession plans.
For those who need to generate income beyond retirement, early investments in alternative income streams can offer financial security post-exit.
Conclusion
The key takeaway from the forum was clear: the earlier succession planning begins, the better positioned a firm is to navigate potential risks and ensure a smooth transition. By addressing timing, client retention, personnel strategy, merger opportunities, and cultural shifts, law firms can create robust plans that safeguard their legacy and future prosperity.
The next Managing Partner Forum will take place on 30th April and will consider marketing and business development. For more insights from Avrio Advocati and to learn about upcoming forums, contact Sinead Lynch – info@avrioadvocati.com