“Succession” is a dirty word, it seems, in the legal profession. Many find it a tough or slightly awkward subject to broach. However, when it comes time to retire, it may be too late to implement a plan if you haven’t one in place.
Founding member of the Law Management Group, Simon Tupman, says succession planning simply makes business sense, and that one should plan well in advance with an unemotional and pragmatic approach.
He says reluctance for a firm to deal with succession is often related to human issues.
“There’s a reluctance to speak to someone about retiring for fear of causing offence, or making that person feel he might be no longer valued within the firm. If a partner is a real go-getter, then he or she might also be reluctant to discuss the issue of retirement with a client for fear of losing that client. However those in the firm who are left behind still deserve clarity around this issue. It’s as sensible as making a will.”
Mr Tupman says succession should be talked about in the same vein as other business variables such as the impact of technology, the brain drain to Australia, or the tendency for clients to want more for less from their lawyers. Therefore, succession is simply an issue to be discussed and one that is more about the business than the individual.
Mr Tupman says the situation is more difficult where a sole principal is approaching retirement as there is often no-one to step into his or her shoes.
“In the old days there would have been successors coming through, associates who had been groomed for partnership. Those firms that haven’t done that are vulnerable, and possibly likely to be disappointed if they’re hoping to get some money out of the business, which is what I guess most partners approaching retirement would be hoping for,” Mr Tupman says.
“Sole principals finding themselves in this position should really have started some time ago to put in place a succession plan so that there is someone there ready to take over the baton and possibly prepared to inject some cash into the business”.
There are ways around that predicament. If the retiree still has a book of clients then he or she could transition them into another local firm.
“I think this has been happening in New Zealand for some time, whereby sole practitioners or principals of firms take on a consultancy role with another firm in return for their book of business.”
Mr Tupman says it is a win-win situation and a worthwhile commercial option.
“The issue may be less pressing in a firm where a senior partner is looking to retire and where there are assistant solicitors or associates in the firm,” he adds. “Nevertheless succession is still an issue and needs to be addressed. Unforeseen situations such as death or defection can be quite damaging to a firm. At least with succession planning you have some time to prepare!”
For those firms that are top heavy with older partners, Mr Tupman suggests they understand the implications of their retirement by looking at their client base and incomes and working out the likely economic and organisational impact.
In an effort to future-proof the firm, those looking to move on should start planning five to six years out at least, says Mr Tupman, so that successors can be groomed and clients can be transitioned down the firm to the partners of the future and those clients can be given the opportunity to get used to forging a new relationship with a fresh face.
Laurie Finlayson of Kensington Swan
Succession planning strategies vary and are tailored to the individual, says Laurie Finlayson, Kensington Swan’s human resources director.
“Some people have got more clarity about their future than others and therefore want to get certainty sooner than others,” Ms Finlayson says.
The HR director says the age structure of the partnership is commonly known across the leadership group and that retirement is not a standalone issue. “There’s a regular approach to looking at career plans, contribution and long-term initiatives.
“Some people may not have a vision that they would make a fantastic senior leader and can therefore be encouraged along that path. Others have that aspiration from quite early on in their career. It is a customised and individual approach to bring through our future leaders.
“The firm works with partners on their aspirations, and on customising arrangements to retain those making a contribution and who want to continue making a contribution, so succession may not always be the desired outcome as a partner ages,” says Ms Finlayson.
Meryll Waters of Lane Neave
“On the whole, succession isn’t a word that we tend to use a great deal, but it certainly is front of mind and well considered in any structural or strategic discussion,” says Lane Neave CEO Meryll Waters.
Succession planning, she says, is evident in terms of the overall structure of partnership.
“It’s very much part of our everyday makeup. We certainly don’t avoid it as an issue, but we feel that through general strategy we actually cover it off without it being a specific protocol or policy. So it’s something that we absolutely take into consideration, but not something that we have a specific policy around.”
Ms Waters says succession isn’t something that the firm has seen as a major issue over recent years. “In past years for this firm, I think it probably did become somewhat of an issue when we had partners of a particular age range. It’s been something that we have actively considered in the makeup and structure of our partnership over time, that the partnership should be something that’s structured well enough to be able to move forward without any major hurdles such as succession becoming an issue.”
Succession planning doesn’t have to be awkward
Having a discussion about succession with someone moving up within a business is much easier than having one with someone who has to be moved out due to a strategic change, says corporate psychologist Dr Lynley McMillan.
It really depends where the person is moving to or from in terms of broaching the subject.
Dr McMillan says university research from the United States attempts to describe a person’s career path as a series of motorway on-ramps and off-ramps.
“It’s a notion that it’s almost like a motorway where there’s not necessarily a beginning and end, but various exit points. It’s valid to have off-ramps around childcare for both men and women and also for career sabbaticals,” she says.
“One of the things that organisations are just coming to terms with in the last five years is beginning to think about how to plan strategically so people can on and off ramp, and that just becomes a normal part of culture.”
Normalising the idea of succession in the firm’s culture from the beginning and having some agreed cultural values around how a career pathway in each particular firm may look, helps alleviate the common belief of succession being a taboo subject.
Dr McMillan says it is much easier to have plans in place before the process of succession crops up, making it a non-issue.
“If regular reviews are occurring in terms of someone’s career pathway about every six or 12 months, it just becomes a business as usual conversation; talking about what the next stage looks like and how that might happen.
“When it’s most difficult is when succession planning needs to happen because there’s been a strategic change in the organisation and it’s coming as a surprise for the person. That can be really hard to deal with, and therefore requires careful preparation, and delivery.
It’s important to ensure people’s dignity and sense of self-worth is left intact.
“Some firms are particularly good at helping bridge people into new leadership roles in business, the community and industry, so that it becomes a win-win for everybody,” says Dr McMillan.