Reinventing The Law Business: Succession Planning -- My Top 15 Recommendations (Items 1-7)

What should you do (or not do) to preserve your amazing place to work? Managing partner Bruce Stachenfeld's take.

Bruce Stachenfeld

Bruce Stachenfeld

In my last article, entitled Succession Planning – Yuck, I pointed out that many firms started in the past twenty or thirty years – both within and without the legal world – are facing this situation, and it is not an easy one. This is especially true for firms that had a dynamic leader/founder (probably a huge rainmaker) who created the firm on her back, possibly in a manner in which others were not properly groomed to take over. When the founder is at the point of retirement, the firm faces a choice of an orderly and even positive succession or decline and even extinction. This article gives my thoughts on how to handle this. (I note that I am not dealing here with the death, dementia, or incapacity of Jane, which presents some similar issues but obviously is quite different.)

In the prior article, I noted that it was likely that: the firm was founded ten to thirty years ago – there was a founding partner who started the business (who I called “Jane”) who was special somehow and built the firm with her indomitable spirit, extraordinary talent, and insanely hard work – those around her were pulled forward in the slipstream as she raised the organization to incredible levels – others with superstar potential were (inadvertently and unintentionally) marginalized and left the firm – the firm is doing very well with a great base of clients, investors and/or customers – but Jane is now 66 years old and, although people are very comfortable with her leadership, people are wondering what is going to happen when Jane moves on. Lawyers are disquieted for the reasons I outlined in the prior article and something needs to be done, since it is obvious that no one can really fill Jane’s shoes.

I thank those who were good enough to send me their ideas and/or compliment the prior article as raising a critical issue for consumption. I have a fair number of thoughts, and I am just going to give them in no special order.

(Since ATL only lets me write about 1,200 words per article, I have realized that this is going to take two more articles to finish – as I have 15 suggestions — so this is now the second in a three-article series – sorry about that…..)

Before going into what you “should” do, I ask you to consider something a bit heretical, and that is the question of whether the firm “should” be continued in the first place. What I mean here: does the firm have a “reason to exist”? Why do people come to work in the first place?

In this regard, you might ask, does the firm have a competitive niche in the marketplace? Is the firm doing things that will help it succeed as the legal world changes over the next ten years or, even with Jane at the helm, is the firm just clinging to a few long-time clients and there is really no game plan for the future? Do the partners like, trust, and respect each other, or are some “mailing it in,” others resenting that, and there is nothing really holding people together other than Jane’s forceful personality plus the money everyone is taking home? Keep in mind that there is no moral or other reason that all law firms should continue indefinitely in the first place. Perhaps Jane’s retirement is time to throw a party and celebrate all the good things that occurred and it is in fact a good time to dissolve the firm?

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Along these lines, another solution might be to try to “sell” the firm to another law firm, which is euphemistically usually referred to as a “merger.” If the firm is going strong with Jane at the helm and there is really no great succession plan, maybe the best thing to do is to merge into another firm that is likely eager to get Jane’s firm’s clients and talent. There are a zillion issues that arise from law firm mergers that I don’t have room to get into, and I think there are a ton of other articles on this subject as well. I will say that it is not necessarily an easy thing to accomplish, and some partners tend to end up better and some worse in the course of a merger.

In any case, if you have a firm worth continuing, the reason will probably lie in the strong culture, the powerful work ethic, the fact that the people like each other and like coming to work, and that there is something special “in the ether” that is hard to define but bonds people together. If you are lucky, the partners couldn’t conceive of being at another firm because your firm is so special and different and even wonderful.

So, what should you do or not do to preserve this amazing place to work? Here are my thoughts:

  1. Don’t split the job between multiple parties, perhaps with the view that there are two people whose ego can only be satisfied in this way, or perhaps with the view that Jane’s shoes are just too big for one person to fill. I would guess that this would be a huge mistake as the firm will end up with two “camps” instead of one harmonious culture. Although there are always unique exceptions to this, I would strongly urge that there needs to be a single managing partner who is backed by everyone.
  1. Don’t have the former leader just leave or stay out of things to let the “new guy,” who I will call “Toby” (my go-to moniker), have a clean slate to take control and run things her way. I don’t think this is a good idea. Have Jane stick around – even for several years – grooming Toby into place. When difficult issues come up, at first Jane will effectively decide things like always, but then – gradually – say things like “well, this is Toby’s decision.” Over time, people will see two people in charge, and then gradually Toby instead of Jane. If this is done smoothly, people won’t consider the changeover as being that dramatic and traumatic.

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  1. Jane should have a major role in picking Toby – and in grooming her. In doing so, Jane should be thinking 100 percent of Toby’s leadership skills. Key leadership skills to me are:

    Super-duper unswerving integrity, honor, and honesty, and a reputation of thinking of the firm first (always) rather than putting herself first.

    Willingness to accept – eagerly – criticism. She is not “always right.”

    Emotiveness – effectively love for the others at the firm and the firm itself.

    Willingness to try – and fail – with new innovations and ideas. Here is a link to my prior ATL article, The-Importance-of-Failure.

    Initiative – the firm can’t just sit there – the world constantly changes, and the firm has to be ahead of the game rather than playing catch-up.

    Emotional security – for example, Toby should be thinking of who will take over for her and think about grooming the next Toby for someday, instead of killing off potential rivals.

    A powerful work ethic, most likely earned over years of experience.

    And, finally, an ability to push, inspire, and somehow bring out the talents of those around her.

  1. I am not sure about this, but I think I would avoid a “succession committee.” I have a feeling that this will sound like a great idea but just will end up with more divisiveness than intended. Like it or not, the strength (and weakness) of the firm is that it was largely built by Jane. Jane has to largely solve this problem by engineering a smooth succession. Once Toby takes over, it is possible that the succession plan after Toby could indeed be handled by a committee, but my sense is not for the (first) succession after Jane.
  1. The succession plan should ideally be put in place many years before Jane is even near retirement, if possible. This way the whole “succession problem” might not even come up in the first place, as everyone just assumes – vaguely, in the backs of their minds – “oh, when Jane leaves, then Toby will just take over.” This is because they already see Toby starting to run things anyway.
  1. I would avoid having a brutally contested election with two egomaniacal rainmakers fighting for supremacy – yikes, that sounds awful.
  1. I would avoid picking the biggest rainmaker – this is painfully stupid. The rainmaker most likely should be out making rain and not running the firm. Plus, rainmaking skills are not necessarily the skills needed to run a law firm. This is a danger spot since in the law business, as everyone knows (whether they like it or not):

    Rain = power

    Hopefully your firm’s culture doesn’t run this way – and my Firm certainly strives mightily against it – but it is there in the minds of the lawyers, especially those who depend on a major rainmaker for work. This can possibly be sidestepped if Jane gradually transitions her “rain” to Toby and/or other partners. If Jane is that big a rainmaker, as is often the case in these situations, this problem can be avoided.

Okay – I am going to stop this article here and finish in Part III.

Earlier: Reinventing The Law Business: Succession Planning – Yuck!


Bruce Stachenfeld is the managing partner of Duval & Stachenfeld LLP, 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. Bruce also writes The Real Estate Philosopher™, which contains applications of Bruce’s eclectic, insightful, and outside-the-box thinking to the real estate world. If you would like to read previous articles or subscribe, please click here.