Biglaw, Boutique Law Firms, Partner Issues, Small Law Firms

Reinventing The Law Business: Succession Planning – Yuck!

Is your law firm or legal institution prepared for the future?

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Bruce Stachenfeld

Bruce Stachenfeld

All of us will either die or retire someday. Even us founding partners. For me, I am having so much fun I want to live – and work – forever. But I guess that isn’t in the cards.

Many professional service firms – including law firms, accounting firms, financial services firms, and other professions and businesses – are facing the current situation or something very similar to it:

They were founded somewhere around ten or twenty or thirty years ago.

There was a founding partner who started the business (the “Founder”).

This Founder had something special going on. Either she was exceptionally talented or she had a lock on a cool client/customer or a cool business model. One way or another, there was something in her, or maybe just a luck factor, that allowed her to do some amazing things.

Likely she was a Level Four Leader (as defined by Jim Collins in Built to Last), which means she pushed the organization forward by the sheer force of her will, skill, and heart. She had an indomitable spirit, extraordinary talent, and worked insanely hard. Those around her were pulled forward in the slipstream as she raised the organization to incredible levels.

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Others with superstar potential were marginalized – not intentionally, but because there really wasn’t a place for them. Or more likely they didn’t come to the organization in the first place. To be clear here – this is typically not because the Level Four Leader was doing anything negative or bad. Her motives were incredibly pure – it is just that with someone with this skill set there sometimes just isn’t room for someone else with an equivalent level of skill.

Likely the organization is doing very well – and maybe even super-well – with a great base of clients, investors and/or customers.

Things look pretty dang good, to be honest. What is there to worry about?

However, consider the following thoughts in this hypothetical:

First – most obviously – the Founder – let’s call her Jane — is 66 years old, and (suddenly?) everyone looks around to wonder, how much longer is Jane going to do this? And what will happen when Jane moves on? Everyone is in a comfort zone that Jane is there to help, to be a sounding board, to stick up for people, to pick them up when they are down, to lead the team through thick and thin, to arbitrate disputes, to bring in clients/customers and even get rid of bad clients/customers. There will be a power vacuum when she leaves. That is disquieting.

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Second – less obviously – will people join the organization in this uneasy situation, and if they are considering coming, the first question they will likely ask is something like “uh….not to be difficult …..but what is your plan for your organization after Jane?” If there is no good answer, a critical initiative to the lifeblood of any organization – recruiting star people – stops dead in its tracks.

Third – there may be some financial things going on – like renewing a long-term lease or signing up for other financial obligations that seem to look murky. Is Jane going to step up for a liability when it is likely she won’t be around to enjoy the upside? Should other owners do so when there is a risk to the longevity of the organization?

Fourth – for those in the organization now – are they getting a little antsy? Wondering what will happen. When a headhunter calls, they used to just say “not interested,” but now maybe they are at least a little open-minded.

Fifth – does everyone start to wonder who will run the organization next? Is that someone they are comfortable with – someone who will treat them well – be as good as Jane (or better) – or someone that makes them nervous?

Sixth – who is really going to do Jane’s job? Jane does so many things. Remember, she is very talented. Who could fill those shoes? And, if Toby could fill those shoes, who will take over the job that Toby is currently doing? This thought with the backdrop that Toby is likely super-talented too, so his job and shoes will also be difficult to fill.

Seventh – as everyone starts wondering about this, other dust devils are kicked up. Once fear and concern about the future takes over, everyone looks up from their contented cubicle where they were heretofore just cranking out business for the company and its customers and starts to wonder about what is going to happen next. Work suffers as everyone starts to focus not on growing the business and on client/customer matters, but on internal future politics and such.

Eighth – and finally, Jane is in a position where she can’t say to worried partners and associates, “don’t worry about this – I have it covered – go back to work” since, by definition, she doesn’t have it covered.

I see this issue a lot either through our recruiting program, where I see lateral partners looking to leave their current firms due to fears of succession issues, and through evaluating my own firm’s succession plan. It causes me to think a lot about these challenges – for my own law firm – for other law firms – and for clients as well. My next article will contain recommendations and possible solutions. As always, if a reader has a suggestion that you can send me in the next week, I will consider including it in my next article – and I thank you in advance for the help.

Bruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, which is an approximately 70-lawyer law firm based in midtown Manhattan. The firm is known as “The Pure Play in Real Estate Law” because all of its practice areas are focused around real estate. With more than 50 full-time real estate lawyers, the firm is one of the largest real estate law practices in New York City. You can contact Bruce by email at thehedgehoglawyer@gmail.com.

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