Succession planning can be overwhelming whether at the start, peak, or end of a career — it helps to have a plan to do it right.
For some people, succession planning means retirement, closing a practice, or advancing into and out of leadership and client relationship roles. For others, it means leaving the practice of law and finding another career or having the freedom to follow a passion.
Regardless, successions and transitions raise psychological, logistical and ethical issues. I have helped solo practitioners figure out how to retire and retain an income stream. I have also assisted law firms as they figure out how to move people in or out of leadership roles and responsibilities without losing revenue or clients, or the attorneys and professional staff who keep the business model working effectively and efficiently.
The following four steps can guide you through the critical considerations:
STEP ONE: Identify your goals.
Why are you thinking about this transition now? What do you want to be different and better than your status quo? What don’t you want? Clarifying your motivation for and anticipated benefits from the change builds momentum, overcomes inertia and guides your planning.
John, a solo practitioner, is thinking about retiring next summer. He would like to spend more time with his wife and their grandchildren. He would like to travel more and not have to think about due dates and deadlines. As much as he has loved his last 40 years drafting wills, assisting his clients with real estate transactions, and helping his clients’ businesses grow, he wants more freedom to try something new, like learning to cook a real Italian meal in Italy. John is excited as he and his wife plan their special trip, first to see their grandchildren and then to take a cooking lesson in Tuscany.
Clarifying what we want and don’t want builds momentum to act. With a date, it’s easier to plan the first steps and each subsequent step with a specific end for your specific goals. It’s easier to focus on the end results when the benefits are meaningful and highly desired.
STEP TWO: Create your timeline.
What’s on your “to do” list? What are the action steps needed to move you forward from where you are today to your goals? Larger, more time-consuming actions come with inertia. Small steps take less time and are less painful.
Make that timeline today. Sometimes the hardest step is the first one. Having a visual cue that encapsulates where you are today, where you want to be by a certain date, and the dates and times for you to carry out every step along the way keeps your succession plan on track and your thinking and actions aligned with your goals.
Samantha knew that she was ready for a career transition to the next level of power. It was time for her to move into a leadership role at her firm. She knew that the key to success at her firm was to develop a large book of business and establish a reputation among her peers for getting things done. She had spent most of her days doing the legal work that other lawyers gave her and not extending herself outside of her small professional network.
She had the time but was unsure of what to do first. Unpacking the related goals of expanding her network and increasing her personal book of business, Samantha made a “to do” list that included meeting other attorneys at her firm, attending conferences and events where she could expect to meet the person with the power to hire her, and finding and securing opportunities to write articles and deliver presentations to develop her reputation as an expert in her field. She scheduled time to create a tickler system for contacting current clients, classmates and others to remind them of what she could do if they needed the legal help she could offer.
By creating a written schedule of action steps necessary to move closer to her goal, we increase the likelihood of follow-through. People who create written “to do” lists and set dates and times on calendars for specific tasks create conditions most favorable for executing any transition strategy successfully.
STEP THREE: Make a list of resources required for making the change — or not.
Succession, or any transition, always involves a cost and a benefit. What is surprising to many of my clients is that doing nothing also has a cost and a benefit. Making the financial, psychological and logistical costs explicit makes planning easier.
If you know the resources you’ll need, you can put them in place before you need to use them. Making these resources explicit also helps motivate you to take action instead of doing nothing. You can find checklists, templates, and more on succession planning, closing a practice, and retiring here.
Sandy, a 67-year-old solo practitioner, wanted to retire. He wanted to stop feeling anxious about case deadlines and client needs and the unexpected demands and ambiguity that are part of a litigation practice. He wanted to stop paying rent, salaries for support staff, and malpractice premiums. The cost of running a practice seemed greater than the benefits. Sandy also wanted to avoid the anxiety that would accompany a lack of a steady income if he stopped taking on those cases. At first glance, Sandy saw only the financial costs and benefits. Introducing the psychological costs and benefits provided the complete information necessary to shape a determination of what Sandy wanted.
When listing the costs and benefits, include the financial, logistical and psychological costs and benefits. You may find that a financial cost is more important than a psychological benefit, or vice versa.
STEP FOUR: Make a list of any obstacles you expect.
Many obstacles are not insurmountable. They often can be eliminated, minimized or avoided. First, you must identify them. Next, you can develop a strategy to deal with them.
Several senior partners at the ABC Law Firm began talking about retiring. The partners were significant rainmakers and held responsibilities for managing the firm day to day. They accepted no salary or other payment for the leadership and management work on behalf of the firm. Several junior partners and senior associates were eager to have a voice in law-firm decisions that affected their lives.
However, they were still spending a lot of time and effort on developing their respective client rosters and annual billable hours. When partners talked about succession planning, the discussion was brought to an abrupt halt over a disagreement on whether firm leaders should be compensated for their time. The disagreement highlighted generational differences in values and perspectives. This obstacle presented an opportunity for the partners to examine their business model and seek input from the next generation of firm leaders about their interests and concerns. It was an opportunity to co-create the future of the firm.
Even the biggest obstacles, which can appear impossible to address, are opportunities in disguise. The solutions generally require open and honest discussions of the problem and collaborative solution design. The value lies is in creating a sustainable solution and succession plan.
Succession planning is invariably a process of moving into something new and unknown and leaving behind something familiar and comfortable. Changes to processes and structures and to resource allocation are especially disruptive. People need time to adjust their thinking, process their feelings, and change behaviors. Drafting a succession plan that nudges people forward makes it easier for everyone.
Finally, there are a handful of key tasks you need to handle if you’re closing a practice.
You’ll need to (1) Notify Clients, (2) Return Client Files, (3) Protect Yourself and Your Family, (4) Account for Unearned Fees, and (5) Notify the BBO. Find more on your essential tasks for closing a practice here.
The Massachusetts BBO operates an in-house commissioner program, which offers assistance to colleagues of lawyers who have left practice unexpectedly and without succession plans, as well as others needing similar assistance. Find more on the BBO In-House Commissioner Program here.
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This post was originally published in the November 27, 2019 issue of Massachusetts Lawyers Weekly as “Four steps to developing a winning succession plan”.