In the legal industry, the status quo surrounding law firm succession planning has experienced a significant shift over the recent decades. Notably, where corporate clients were once considered the property of law firms, such a notion has largely faded. This change began in earnest during the seventies when general counsels began to question the cost-effectiveness of assigning all legal work to one firm, laying the groundwork for lawyers and partners to retain a more personal book of business. As a result, client transition and succession in law firms are no longer automatic processes.
Partners must now work diligently to transition client relations and business generation to younger members of the firm. Senior partners are expected to spend significant amounts of non-billable hours training successors and preparing them to foster and build their own client relationships upon their retirement. It is no surprise that a firm’s retention of clients post-retirement is often directly linked to the effort and time invested by the retiring partner in this successor training process.
The contemporary legal market has awarded clients the ability to exercise greater discretion in their choice of legal representation. Clients can now critique the caliber of incoming candidates, reject unsatisfactory successors, and critically assess the devotion of the firm to maintaining the relationship. The ultimate determinant in successful succession is client satisfaction with the new team.
Crucially, law firms often neglect the imperative nature of this succession process. Internal roadblocks and a lack of motivation to tackle the issue result in the unwarranted loss of clients. Clients express their frustration with this process, particularly when the departure of their relationship partner is not accompanied by appropriate successor designation, reflecting an unprofessional indifference to their needs.
However, clients are increasingly flexing their muscles and demanding more control over the succession planning process. Clients are requiring firms to disclose the next in line for leadership roles and requesting succession planning transparency as conditions for engagement. This shift in power dynamic is likely to favor those law firms that are proactive in their management of partner retirements and succession planning, demonstrating that they are responsive to their clients’ concerns.
This shift in power dynamic presents an impending tipping point for law firms. Tackling succession planning head on now appears to be the less painful route for law firms than suffering business loss due to negligence of this issue. Firms must start to question the sustainability of ignoring their clients’ concerns over succession transparency.
Ultimately, the future of law firms depends on their receptivity to these changes and their willingness to incorporate clients in the process of firm succession planning. Law firms that resist this inevitable trend do so at their own peril, while those who embrace it stand to benefit from stronger client relationships and continued business growth.
The original article written by David Wood, a retired senior partner of Barnes & Thornburg who advises law firms about retirement succession, may be found at Bloomberg Law.