Overcoming the Hurdles to Client Transition
As the baby boomer generation readies to retire, law firms face an existential crisis. If the work those senior lawyers hold isn’t transferred to more junior attorneys, a substantial chunk of firm revenue could walk out the door for good.
A 2015 survey by Altman Weil, for instance, found that nearly two-thirds of firm respondents attributed a quarter or more of revenues to partners age 60 or older. Roughly 42 percent counted on the over-60s for at least 35 percent of revenues.
While firms figure out how to handle the overarching dilemma, different segments of the partnership are at odds.
For the more senior attorneys, giving anyone other than themselves access to their clients is seen as risky business. Will that other lawyer offer the same level of service their clients have come to expect? Can they really trust their partner to deliver? But even if the younger lawyer is exceptional at client service, the senior attorney is compensated for the work he holds on to, not passes along.
For the more junior attorneys, building a book of business becomes all the more difficult when institutional work isn’t shared. And they aren’t always getting paid for their efforts in assisting the more senior partner’s clients.
“This is the dichotomy,” consultant Timothy Corcoran said. “[Firms are] asking one or the other to make a decision that is absolutely against their economic self-interest. If it is a firm strategy [to encourage client transition] then fund it. Fix your compensation plan. Make sure both can get credit.”
Obviously firms can’t turn each client dollar into two, but they can compensate partners based on behaviors and not solely on client origination or relationship management per matter, Corcoran said.
Firms also need to have the at-times-awkward conversation with partners about when they plan to retire.
In an effort to improve the firm’s client succession planning, Thompson Hine started a multiphased approached allowing partners to decrease their compensation over several years as they worked toward income status. This made the cut to compensation more tolerable and gave the firm more time to integrate other lawyers into the client team.
In order to overcome the other big hurdle—that trust factor of whether a partner can deliver the same level of service—firms can implement project management and process improvement protocols as a standard way of doing business, Corcoran said.
While law firms have significant work to do to ensure their business doesn’t walk out of the door along with the Baby Boomer generation, the individual attorney can do his or her part too.
Senior lawyers can find ways to bring younger attorneys into the process at an earlier age, even if it’s not billed to the client. They can also be proactive in letting the firm know their retirement plans.
For junior attorneys, it’s not only getting face time with as many existing clients as they can, but they should focus on bringing in their own business too. Make yourself an expert in the field that any client–existing or new–would turn to.
A number of firms have started focusing more on leadership succession planning at the top level, at times having a 12- to 18- month transition period or longer for the incoming leader to learn from his or her predecessor. Lessons learned there can be applied to the client-transition dynamic. I know of at least one Am Law 100 firm that has actively started discussing retirement plans with partners when they hit age 50, and the firm has seen a shift in its generational makeup as a result.
As Anthony Marré, the young incoming leader of Texas-based boutique Wilson Cribbs and Goren said of his remaining time with the firm’s founders, “How do you maximize that time, the time you have with them? How do you absorb operating knowledge from them?”
Aside from sharing client matters, senior and junior attorneys alike should do all they can to transfer the knowledge and intangibles that won’t be found on a client’s bill or the lawyer’s timesheet.
Gina manages The American Lawyer editorial team while managing and developing the brand innovation strategy. Gina joined ALM in 2005, where for more than 10 year she covered the business of law for ALM’s Pennsylvania publication, The Legal Intelligencer, focusing on the trends and issues impacting the largest law firms in the state and beyond. In June 2016, she moved into the role of Senior Editor, Business of Law in ALM’s Global Newsroom. In this role, Gina wrote and co-led a team of highly skilled journalists from around the country who report on and analyze how the world’s law firms operate and compete. Gina has won several awards for her reporting, including a Jesse H. Neal award for a series on the changing business models of law firm’s post-recession and two Emmy awards for her work doing feature reports with the American Law Journal. Before joining ALM, she earned her master’s degree in broadcast journalism and public policy from American University in Washington, D.C.