Making Succession Planning an Ongoing Priority

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Transcript

Robert Half Legal Report: Making Succession Planning an Ongoing Priority – 3/10/2015

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Charles Volkert: Hello everyone and welcome. I’m Charles Volkert, executive director of Robert Half Legal, and host of our program. Our special guest today is Boyer & Greene principal, Sandra Boyer. Sandra and I will be taking a look at succession planning, and why it should be a top priority for lawyers today. Sandra has over sixteen years of law firm consulting experience and advises small to mid-sized law firms in all major business and practice management areas. Her background in business management and human resources management has helped her clients become more effective in client services and business profitability. Sandra also is the president of LEGUS, an organization dedicated to helping law firms share referrals and practice management ideas. It’s great to have you join us today, Sandra, thanks for being here.

Sandra J. Boyer: Thanks you for having me, Chad.

Charles Volkert: Research Robert Half Legal conducted for its future law office research program indicates that succession planning is imperative to the future viability of law firms. Sandra, I’d like to start our discussion today by focusing on some of the factors that are making succession planning such a key imperative. What would those be?

Sandra J. Boyer: Two things come to mind right off the bat. First, in order to have a firm continue successfully on into the future after its founding partners get ready to leave, they have to have an organized and structured plan to do that. The second thing is firms want to continue to provide consistently, high quality, legal services. And to do that, they have to have a plan to keep the lawyers in place in the firm to provide the services to its clients. Most of the senior level positions are held by baby boomers in law firms right now, and they’re getting ready and coming close to retirement age. And they are the ones that create most of the sea generating clients and hold most of the leadership positions in law firms. The transition needs to be effective for the communication of the management and it also impacts the whole firm’s profitability if it’s not done appropriately. So ensuring that the firm transitions from the first generation to the second generation is imperative to the continuation of the law firm.

Charles Volkert: That’s very interesting, obviously a number of factors that you really need to focus on with those law firms. And so, maybe share with our listeners what type of work you’re doing with law firms and what are some of the key areas on a day to day basis in working with those partners and I’m assuming human resource managers at those firms.

Sandra J. Boyer: Sure, Boyer Greene works with small to mid size law firms mostly within the United States, and we work in all major areas of the business operations of the law firm. We work with lawyer compensation, strategic planning, marketing, profitability, just a general management administration of the law firm. What we’ve seen of the last several years is a focus from our clients on succession planning. So many of our clients are first generation law firms who have not transitioned their law firm previously because they were the founders in the 70’s and the 80’s. And they were the entrepreneurs of the firm. And they’re beginning to retire and now they need to figure out how are they going to make this firm continue with the professionals that they have in place now. So we work with a lot of firms in just trying to determine the best process by which to generate those leaders of the future for the firm, and how they transition from the current leaders to the next generation. And so we spent a lot of time with firms doing that, and the most important thing is that they recognize that they need to do it.

Charles Volkert: That’s very interesting, Sandra, and I guess that leads me into my next question, which is based on the work you’ve done over the years, what do law firms tend to ignore or overlook when it comes to succession planning?

Sandra J. Boyer: Many, many firms overlook just the simple need to plan for succession. They also overlook the time that it takes to effectively create an implementation plan that will develop their future leaders. They also fail to create a succession mentality within the firm. In other words, you can’t just look at the day to day service of clients. You have to look at how the firm’s going to continue if the current partners aren’t in play, and how they can service the clients going forward. It takes a great amount of time to cultivate future leaders within an organization, and so you have to start at an early time – even some time before you actually bring the lawyers on in your recruitment process, you want to look at the lawyers that you think could be entrepreneurial and future leaders within the organization. So many firms don’t think about that when they’re hiring attorneys. And then they also overlook the fact that they actually need an excellent plan that’s organized and structured and has a timeline so that everybody in the firm can understand what the process will include and how it will get done; firms just fail to do that. They also overlook the fact that the lawyers who are responsible for firm management and also client generation management need to implement their plan several years in advance. In other words, it does take at least 3-5 years to create and bring onboard and have everybody buy into a plan and then implement it for the results to begin.

Charles Volkert: So that’s great information for existing firms that have been in business for quite some time, Sandra. Let me ask you this: what about firms starting from scratch? It would seem to me the process you just described might feel overwhelming. What are the most essential elements of a successful transition within a firm that’s just now beginning its practice?

Sandra J. Boyer: The most important thing they can do is be aware of succession planning. And I think if firms can break it down into two separate elements, it’s going to be easier for them to tackle, and those elements will include moving clients from one generation to the next. In other words, ensuring that clients are consistently taken care of from the founders on down to the next generation of the law firm. And the second part is transitioning firm management. From the founders and maybe the entrepreneurs, then on to the next generation of leaders within the organization. So you’re looking at transitioning the clients from the senior level lawyers to the next generation, and you’re looking at transitioning the firm management from the entrepreneurs and founders to the next generation of leaders within the firm. And it is important also that firms understand succession planning is neverending. So if you begin it with the mentality, when you start the firm, and you take that succession mentality throughout, you’ll gain consistent service for your clients and effective management for the firm.

Charles Volkert: Well that’s great information, Sandra, both for existing firms and for firms just starting out. Now let’s take a quick break.

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Charles Volkert: Welcome back to the Robert Half Legal Report. I’m Chad Volkert and with us today is Sandra Boyer, principal of Boyer & Greene. Let’s regroup, Sandra, and talk a little bit about the most important steps to take when developing a succession plan. What are those?

Sandra J. Boyer: Well, first, one of the most important things a firm can do is put somebody in charge of understanding the succession plan. So either you have a managing partner, or a managing committee, or a COO, or a CEO, somebody that’s aware of the fact that the firm has to have a succession plan and is aware of what elements need to be included in it. Second, most firms that really do this effectively have created a strategic plan. And within that strategic plan, they have a goal for succession planning. So it’s kind of spelled out within their strategic plan, the goal and succession plan. So those are two areas that are very, very important. And then once you have those things in place, it’s important to communicate with the senior attorneys on a regular basis. In other words, if it’s your managing paraensis in charge of the succession planning, have them talk to the senior attorney and ask them to share the retirement plan. So whether you want to suggest a certain age when the senior leaders begin to do that or the managing partner gets a feel that it’s time to start talking to these senior attorneys about their retiring plan. That communication has to take place. And then what you do is have the people in charge along with the senior attorney review the professional staff that they have in place and the resource to ensure that the firm is adequately covered with personnel and resources to step in and replace the senior attorney with the clients within the management process. And then have that group take a look at what the overall effects of any senior lawyer’s retirement while have on the firm as a whole. To understand what needs to be addressed if these specific attorneys are beginning to look at retirement. And then ensure that you take a look or the firm take a look at the long term vision. If they have a strategic plan in place, they know what their long term vision is, and they know what they need to get there, and that’s an essential part of the succession plan and something that they need to take a look at. And then also it’s very, very important to identify the potential leaders that can help guide the organization to the next stage of its life. They need to take a look at the legal professionals to see what strengths and weaknesses they have and what capabilities they have as potential leaders of the firm. They also need to put together a timeline. It’s important once the senior lawyers have identified how many years they have left and what their retirement plans look like, create a timeline that at least incorporate 3 to 5 years, to begin to help that senior transition and create a plan of action regarding the management and also the client transition. And that’s when you begin to integrate the younger lawyers into the management and into the client activities of the firm. If you’re looking at a senior lawyer who’s acting as a managing partner, you need to begin to look at the next level of lawyers and what skills they have as far as management, communicating with people, and general business. And then you also need to take a look at integrating the young lawyers in with clients. Begin to take them to lunch, begin to introduce them to the clients so they become more comfortable with the clients and the clients become comfortable with the idea that at some point, their current attorney may retire. And then of course, the mentoring development plan for the young lawyers is essential. We work with many, many firms now to create business plans and marketing plans for young lawyers so they can keep in line what they want to do with their future and how that relates to the firm and succession of the firm. And of course you need to monitor the progress and provide feedback to the lawyers so they know if they’re progressing appropriately. And then as you have these plans in place, just revisit them and ensure that they’re working appropriately.

Charles Volkert: That’s an outstanding list, Sandra, and certainly very thorough; so I hope our listeners were taking notes as I’m sure they are, as they go through that list and check off those boxes that are so crucial in a succession planning process. Could you share with our listeners what some of the obstacles are when it comes to transferring clients from one lawyer to another at the retirement age?

Sandra J. Boyer: Sure. It’s so essential to have the retiring attorney and the firm both buy in to the process; and understanding a written process helps each segment to buy in to what needs to happen in order to continue the firm. So many firms, they just are complacent. They have lawyers who are in charge of clients, it’s working well, why bother making any changes. But it’s something that firms needs to be aware of that these changes will take place regardless of whether they planned for it or if it just happens; so complaceny can be a real issue. You also have clients who are comfortable with the lawyer that they’ve had, and they really don’t want other lawyers in the firm doing their work. And this could cause a problem in trying to bring in younger lawyers into the fold and begin introducing them to these clients, because they’re really just comfortable with the lawyer they’ve had over the years; he’s done a good job and they want to maintain that relationship with that lawyer. Also sometimes, we find that senior partners aren’t as good at sharing information about their clients or their client’s business. So they are the only ones who are really familiar with that client and what that client does. And so it’s a very narrow group of people within the organization, within the firm, who are aware of that client. Sometimes, we also find that the point lawyer is really not providing the best legal services and the firm hasn’t conducted any kind of client satisfaction survey to find if they’re happy with the services. So when the senior lawyers decide to retire, the client just says well, that’s okay, I can go find a lawyer at another firm who might do a better job than what I’ve been receiving anyway. We really don’t like to see that. And then we have the senior attorneys who – for one reason or another – get nervous or don’t like sharing or including younger attorneys in the meetings with their clients. These senior attorneys take ownership of those clients, and whether they fear that it could be taken away by a younger lawyer or they don’t want to take the time to include a younger lawyer, they just simply don’t want younger lawyers to be involved with their clients. One of the biggest factors is the compensation systems. Many, many compensation systems do not reward senior attorneys for transferring their clients. Among all the obstacles, we find this one the most often within law firms. If the compensation system does not reward that senior attorney for transferring a client, there’s no incentive for that attorney to do so. That can really be a problem for the firm. And also, many times, the senior lawyer then will handpick an attorney that he feels or she feels might work well with the client, but the client hasn’t had any insight to that and that can make the client nervous. And there again, there also are other times where the senior lawyer doesn’t listen to what the client’s needs are when the clients sharing with their senior lawyer what they will be looking for as the senior lawyer transitions out. And then lastly, sometimes the firm’s clients are transitioning their own leadership, and the client that’s been there for a number of years with the senior lawyer may be retiring close to the same time and there’s not been anybody in that organization or in the client who has formed a relationship with the senior lawyer, and so that relationship is completely lost. So those are some of the obstacles that we’ve seen, there’s probably more; but those are some of the ones that we’ve seen that are really hurt firms in the succession planning process.

Charles Volkert: Well that’s very interesting, obviously a lot of obstacles out there and you’ve hit a lot of the big ones and I’m sure you work with clients every day on how to overcome those obstacles. So could you share with the listeners your advice on how to overcome many of the points you just addressed?

Sandra J. Boyer: First of all, there’s two major things. One, firms need to be fair and rewarding the senior attorney for transitioning his or her clients to the firm, and a communications process has got to be put in place so that everybody in the firm is aware of any transitions that could be taking place in the near future. And communication could lead to a whole pool of benefits for the firm and for the retiring senior partner and for the client. And so what we tell our law firms is to have the firm review their roster of clients on a regular basis. Usually every two years or so, and along with which attorney in the firm is responsible for that client. So you have the roster of clients that you’re reviewing, and then which senior attorneys are in charge of those clients. That way the firm has an idea of who their clients are, who’s serving those clients, and then what clients they need to address in the near future regarding transitioning. It’s also imperative that law firms really create training and mentoring programs for their young lawyers. It’s my belief that even before you hire a lawyer, you’re going to take a look at what kinds of lawyer can be successful in your law firm, and then hire those types of lawyers. Once you get those types of lawyers in place in the firm, create a mentoring program that will help prepare them to take over leadership positions in the firm as far as management and also how to service clients appropriately. Then you’re preparing your younger lawyers in both management and client roles. And as I said before, create an implementing communications program. It’s one of the most important things that firms can do. Where we see firms fail to fall again is in the communication. So create a communications program whether that’s including meetings of the partners and the associates, meetings with the staff; create that communications process regarding what the firm needs and how that transition might take place. And then lastly, the former compensation review. Usually, we tell firms usually to do this every three or so years anyway, but when you’re doing it, keep profession in mind and ensure that your compensation system adequately rewards senior lawyers for transitioning the client. And that it also rewards the younger lawyers for taking on these clients and being willing to take leadership role within the form.

Charles Volkert: Well thank you, Sandra, those are great pointers on how to overcome many of the obstacles that you listed for us today. Any closing thoughts that you’d like to share with the audience on succession planning?

Sandra J. Boyer: Kind of a reiteration of what I said and that is the clients are not going to transition themselves and the firm is not going to transition itself from the management. So just be sure you have a plan in place, with a timeline, and with specific activities to allow the firm to create a succession plan to help transition the clients. Again, the communications process is so important. Again, make sure that the firm is understanding which firms are looking towards retirement and how that’s going to affect the firm. Create a timeline, at least 3-5 years out; you need to start a succession plan in the process and it takes a little bit of time to get that plan in place and have it be effective. So you’re looking at at least 3-5 years to create the plan and implement it effectively. So start early and be organized and be structured. And most firms, if they do that, can be very successful from one generation to another and then to another. And that’s how firms that have been around for a hundred years have done it. I think it’s also important that what we have seen with law firms is that the senior partners really want to create a successful transition from the firm. Most of them are happy to help and want the firm to move on. And so having the firm, make sure it rewards those attorneys for that transitioning is really, really important.

Charles Volkert: Well that’s a great summary of best practices, Sandra, and it sounds like the more firms embrace the succession planning, the more successful they’ll be moving forward. It looks like we’ve reached the end of our program and it was certainly a great discussion. Special thanks to Sandra Boyer for joining us today. Before we close, Sandra, I want to let the audience know how they can contact you and where they can obtain more information about succession planning.

Sandra J. Boyer: Sure, we’d be happy for you to visit our website at www.BoyerGreene.com, and you can send an email to me at [email protected] any time, I’d be glad to talk to you.

Charles Volkert: Thanks so much, Sandra. And our listeners can reach me at [email protected]. You can also visit RobertHalfLegal.com to download a free copy of our future law office report and also to subscribe to our legal blog for weekly updates on the legal job market and other important industry developments. Thanks for listening today, and join us next time on the Robert Half Legal Report as we cover another great topic impacting legal practice management and legal careers.

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