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Apr 29, 2026

Law Firm Succession and Transition – What is the Best Strategy?

Question:

I am a partner in a three partner firm in Fresno, California. We handle exclusively personal injury plaintiff work consisting of auto accidents, slip and fall cases, premises liability, etc. We do not handle medical malpractice, products liability. or mass tort or class action cases. We have no associates working in the firm at the present time. While we have had associates in the past we have not had good experience in recruiting and retaining associates. In addition to a receptionist we have four paralegals.

I am 73 and still trying cases and my other partners are 62 and 68 respectively and still trying cases as well. We recently starting discussion our individual long term plans regarding eventual retirement. I plan on retiring in a year and my other partners are planning on retiring in the next five or six years. What is our best strategy concerning the law firm and our transition? We would appreciate any comments that you may have.

Response:

The biggest challenge for many firms, is finding the right WHO.

The who dictates the what – the actual succession/transition/exit strategy whether it be internal (hiring an associate to groom to take over the practice, merger, practice sale, or referring out cases and closing the doors. In other words, many law firms find that they start down one path and end up on another. Not all non-equity partners and associates want to own a law firm. Not all lateral and merger candidates will be a good fit for your firm and culture. The key is the right relationship and sometimes that takes the form of making someone at the firm a partner, bringing in a seasoned lateral, merging with another firm, selling the practice, or referring out cases and closing the doors. Therefore, succession/transition plans have to be flexible and often the key is not get stuck in creating complex succession plans at the onset. Establish candidate search timelines, outline a general course of action, generate some momentum and see where that takes you. Then build the plan when you can see where the firm is headed.

You are going to have to begin sooner than later exploring your options and conduct a search for the following:

This search and exploration often is the most time consuming and difficult part of the process and often the options identified through this process ends up dictating the succession/transition/exit strategy.

Associate Candidates

You have tried this strategy without success. Years ago, it seemed that all the associates working in law firms wanted to become a partner in the law firm. This has changed because of the new mix of women and men graduating from law schools and entering the legal profession, changing attitudes toward work life balance, other opportunities outside law firms, and other variables. While partnership/ownership is still important to many – do not assume that all the associates that a firm hires hire will even want to be equity partners – especially if it means a hefty capital contribution and signing personal guarantees for a large amount of firm debt. This could be a strategy if you could find an experienced lateral attorney interested in law firm ownership or partnership. I do not believe you have time to invest in the care and feeding that you would need to do with an inexperienced junior associate.

Merger Candidates

 Another option would be to merge with another firm. This could be a viable strategy for your firm. It all comes down to whether the relationship is right for you and your firm. While mergers can be a valid option making them work is often another matter. Our experience has been that that one-third to one-half of all mergers fail to meet expectations due to cultural misalignment and personnel problems.

There can be a whole list of reasons for failure including poor financial performance, attorney defections, loss of key clients, and leadership and management issues. However, it has been our experience that most failures have been the result of poor cultural fit ‑ the wrong WHO. The merging firms – after they have moved past conflict checks and excitement about new client potential – jump immediately to an examination of practice economics and the financials. They fail to perform proper due diligence on the people. It is critical that firms insure that cultural due diligence is a key component of the merger assessment process. Philosophies, personalities, and life styles should be generally compatible. The partners should like each other, have a common vision of the firm’s future, and the deal should make sense. The question is not the what (merge) but the who (people).

You should do all the due diligence that you can – start with the people – then move through the rest of the process.

Practice Sale

Practice sale is an approach that is available in most states. Typically, there are very specific requirements and procedures that a lawyer or law firm must follow in accordance with a state’s rules of professional conduct. Many states have followed or adapted the American Bar Association’s Model Rule 1.17 regarding sale of a law practice.

Referring out Cases 

Some personal injury plaintiff firms simply refer out their cases under a fee arrangement with another firm and close their doors.

You need to discuss among yourselves your individual specific retirement timelines as that also will impact your strategy and how soon you should get started on identify potential candidates – attorneys or law firms.

Click here for our blog on succession

Click here for our blog on mergers

Click here for our blog on practice sale

Click here for out articles on various management topics

John W. Olmstead, MBA, Ph.D, CMC

 

Posted at 08:43 AM in Uncategorized

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