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May 31, 2016
Law Firm Succession – Transitioning Clients to the Next Generation
I am a member of a three-member executive committee for a 34 lawyer firm in Austin, Texas. We have been in practice for over one hundred years. While we have had partners retire in the past with no issues we are now facing a situation where seven partners are approaching retirement at the same time and each of them controls significant books of business. What can the firm do to ensure that retiring partners properly transition their clients so the firm can continue to flourish after the partners are no longer here? We would appreciate your thoughts.
This is problem that many law firms are facing as baby boomers approach retirement. Rather than one or two partners coming up for retirement many firms are experiencing a "bunching of retirees" all at the same time. This can have a significant impact upon cash flow planning, client development, and attorney talent management.
Here are a few thoughts:
- Access your lawyer talent pool to insure that you have people in place that can service the needs of the retiring partner's clients. If your talent pool is insufficient develop a strategy (lateral recruitment, merger, etc.) and develop a plan for locating lateral/merger opportunities.
- If the firm does not have a plan for dealing with the upcoming partners retirements and the transition of their clients write a client transition plan and commence its implementation. The plan should include an action plan that is structured like a project plan with beginning and ending dates, specific times, and individuals assigned to specific tasks. The plan should serve to keep things moving over a three to five year transition time period.
- Your committee should be communicating with your partners approaching retirement, talking with them about their goals and timelines concerning retirement, and getting them to commit to a date certain even if it is many years into the future.
- The compensation should include incentives that encourages retiring partners to transition rather than hoard clients.
- Determine a shortlist of who in the firm should take over clients.
- Begin client introductions to successor attorneys early. Go deep with relationship building – not just a simple introduction. Your committee and the retiring partners should monitor and follow-up with successors to insure that they are developing relationships with these clients.
- Assign co-responsible attorneys to all matters that a retiring partner is assigned.
There are a lot of other ideas that you can explore. The key point is to communicate with your senior partners, get them thinking about retirement rather than pushing it under the rug so there is a three to five year transition period, and start early. I have seen too many situations where a partners walks in and announces that he wants to retire in the sixty days, six months, or one year. This is not enough time if the firm wants to retain retiring partner's books of business.
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John W. Olmstead, MBA, Ph.D, CMC
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