Why Your Law Firm Needs A Partner Succession Plan
Too many firms are strict in their insistence of mandatory retirement dates as absolute. This hurts both the lawyer and the firm.
Ed. note: This is the latest installment in a series of posts on lateral partner moves from Lateral Link’s team of expert contributors. Today’s post is written by Michael Allen, the Managing Principal of Lateral Link, who focuses exclusively on partner placements with Am Law 200 clients.
“Do not go gentle into that good night, rage rage against the dying of the light.”
Dylan Thomas prophesied in his 1951 villanelle a prescient observation of aging leadership along with the corresponding succession planning hurdles a majority of laws firms face with their baby booming (or boomed) vintages.
Of the roughly 35,000 partners in Biglaw, roughly 4,700, (13%) of them are within a few years of or have surpassed (and then some) the mandatory retirement age. Lawyers 55 or older make up nearly 1/3 of practicing partners in the Am Law 200, a figure that will likely hold steady as the tail end of the baby boomer generation ages. Am Law 200 law firms have on average about 23.5 chairs, executive members, and senior partners whose 40-plus years of experience, client relationships, and leadership must be transferred to a new generation of rising stars. The process is hardly ever smooth and often involuntary.
Most partners in senior vintages begrudge the practice of mandatory retirement; some bemoan that it is an overcautious safeguard or the epitome of ageism. Some claim the practice is supported by scientific studies that link cognitive decline with advancing age — especially after 65, which is about the average for mandatory retirement. So how many law firms are prepared to deal with the void left by these partners?
Succession planning is a difficult task for law firms. Do you want to be the one to tell the fiery curmudgeon in the corner office it’s time to put away the briefcase? Furthermore, law is often a reactionary practice. Firms are hesitant to expand practices or bring in new attorneys until they are certain there is requisite demand. No two firms are completely alike and many are expert succession planners, but many also fall into a “complacency trap,” meaning the senior leadership is seen as bringing in enough revenue to not disrupt a good thing (i.e., wait and see until the last minute to find a suitable replacement), especially if a partner can help make a smooth transition of personal client relationships maintained over decades.
Those firms with institutionalized business, the Davis Polks and Cravaths of the world, are often seen as much more stable assuming their clients use the firm and not any one partner for their work. However, institutionalized business is becoming less certain these days with the major lateral partner moves we are seeing even within the confines of firms historically counting on repeat business from clients like Goldman Sachs.
Traditionally, high-powered partners would mentor younger partners or associates whom they would transfer the bulk of their business over to when they retired. This practice is little more than a relic as Biglaw practice has become more competitive and lateral moves have increased. Law firms now rely almost exclusively on three separate practices as a form of succession: promotion to partner, promotion of partners, and lateral hirings.
Promoting partners and associates (if a firm has sufficient foresight) to create a path to leadership positions, or rewarding them with lucrative work, is an efficient way to seamlessly transfer responsibility to younger lawyers. However, increased lateral movement has made this less feasible. Firms want business. Instead of building, most buy since it is seen as a more certain bet. Say for the last five years you have been priming a partner to take over for your chair of litigation, but then another firm just offered her 25% more than what you are offering. All of a sudden you have lost a partner, and more importantly, a potential successor. If, however, partners see a real path to seniority within their confines, why look elsewhere?
This example is one reason why firms turn to us to help them find potential successors for their chairs and powerhouse partners. It requires diligent work to find partners who are willing to move, have the requisite experience, personality, clients, support, and finally at the end you pray that there are no hidden conflicts.
Spotting a succession issue is easy. Coming up with a plan is not overly difficult. Executing on the plan is where most firms get cold feet. Even though firms have mandatory retirement dates, not all of them abide by them with the same diligence, which can dissuade ambitious laterals who are looking to transition into leadership roles. Instead of calling out any specific firm for the above, let’s just say its more common than not among the Am Law 200.
While the bell curve of aging lawyers is just moving to the right, firms may have to rethink their insistence on mandatory retirement and succession planning. One suggestion: not all sixty-five year olds are made equally, but if you have made it in Biglaw for this long, chances are you still retain the bulk of your talents and even fire in the belly. The experience and practice of a lawyer is what matters; the idea of an absolute age of futility is superficial. Too many firms are strict in their insistence of mandatory retirement dates as absolute. This hurts both the lawyer and the firm, especially if there is no succession plan in place. Firms would be wiser to ease the severity of the rule and instead impose a transition period during which the lawyer could operate in a mentoring capacity to facilitate a smooth transfer of responsibility — which many firms like Winston & Strawn already do.
We are happy to discuss with firms how they can best resolve one of the inevitable realities they face. Current senior law firm leaders are not getting younger, and 90% of the solution is in executing a proper plan, not just identifying that an aging leadership issue exists. If you want to benchmark where you stand against your peer firms, and learn about best practices in the industry, we are happy to share our suggestions.
Disclosure: This series is sponsored by Lateral Link, which is an ATL advertiser.
Lateral Link LLP is one of the largest legal recruiting agencies in the world, with 13 offices in the United States and Asia. Lateral Link has been recognized by the Wall Street Journal, The American Lawyer, the ABA Journal, the Daily Journal, and the National Law Journal for its innovative approach to legal placement. Lateral Link recruiters are former practicing attorneys who have consistently succeeded in placing partners, associates, general and corporate counsel into some of the most reputable law firms and organizations in the world.
