In the spirit of Casey Flaherty’s recent excellent post “Me Being Wrong,” I’m starting off the year with an admission of (at least) one thing about law firms I’ve totally swung and missed on. In some article or other within the last year or two, I wrote that “law firms are supposed to be multi-generational entities.” I’m now reluctantly set to admit that they are not.
I’ve had growing doubts about my multi-generational thesis for awhile, but the decisive blow against it was struck by this post at Adam Smith Esq. wherein Bruce MacEwen and Janet Stanton tick off all the reasons why the average law firm apparently stays in business only 40 years:
- The desire of the firm’s leaders to avoid awkward “succession” conversations with longstanding friends and colleagues,
- The immovability of senior rainmakers who will not be managed and will certainly not be “transitioned” anywhere they don’t want to go,
- The confluence, in smaller law firms, of the rainmaker, founder, and senior management roles in the same people, and most of all,
- The sorry fact that many senior lawyers really don’t care what happens to the firm the day after they retire.
What all these factors share in common is that the law firm hasn’t managed to become something more than the sum of its parts. As Dorothy Parker once said of Oakland, there’s no there there. The concept of the firm as a thriving legal services enterprise independent of the lawyers who supply its services never really caught on, at least not with the most important lawyers therein.
A few years ago, I was contacted by some people at a boutique firm who were facing an existential problem: the name founders were all coming up on retirement, but were showing little interest in devolving authority, transitioning clients, or planning for the future. It was probably dawning on everyone else in the firm — junior partners, senior associates, staff — that the reason the firm existed was to be the commercial vehicle for the name partners’ legal careers, and that when those careers ended, the vehicle would have served its purpose.
I once wrote that many law firms seem to be run these days as if they intended to close their doors in five years’ time. I was half-joking at the time, but I now think there was more truth in it than I realized. Five years is probably the anticipated remaining career length of a typical law firm’s most powerful partners. If your law firm’s engine seems to be pushed into overdrive, such that it’s going to be immensely profitable in the short term but is imperilling itself in the long term, maybe there’s a reason for that.
Bruce and Janet are sanguine about whether one-generation firms are necessarily a bad thing, and they make some good points. I still think it’s kind of a sad turn of events, though, because although the firm’s founders and rainmakers might be perfectly happy to drain the contents of the firm and recycle the empty afterwards, most of the other people in the firm, especially associates and staff, put their backs and their hearts into the enterprise and believed that there was, in fact, a “there” there. Most will probably find employment elsewhere, that’s true; but they’ll also have lost something more personal that they’ll find harder to replace.
There’s no shortage of helpful information about law firm succession planning and partner exit strategies out there, and I plan to contribute something along those lines here soon enough. But I think there’s a critically important preliminary step that you need to take before your firm commits to any of these courses of action.
I think your firm’s leaders need to sit down and have a private and very honest discussion about whether your firm is one-generational or multi-generational. It doesn’t matter that much, from my perspective, which answer you come up with. What matters is that you arrive at a clear-eyed agreement about what the firm’s leaders really, genuinely want and expect from their firm.
Beware of being too aspirational, of saying, “Yes, we’re building for the future, we want to leave a legacy, etc,” if you don’t really mean it. Because if what the firm’s powerhouse people really want is to mainline cash from this machine for the next few years and then close up shop, then it’s wasteful and counterproductive to spend time, money, and effort on succession plans and generational handovers that will never take place. Everyone will be left poorer and more embittered. You’ve got to be honest with yourselves about what sort of firm you have here.
But if you decide, during these conversations, that yes, you truly do want the firm to last beyond the current generation of rainmakers, then everyone needs to be clear about the hard choices and time-consuming mechanics that choice requires. This might, in fact, be the best way to go about the whole “succession” issue: start by establishing beyond any doubt whether this is a firm that wishes to have succession at all.
Challenge the default assumption that your law firm will continue on in perpetuity. That’s a hard conversation to have, it’s true; but holding it will make every subsequent conversation about your firm’s future easier.