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With an ageing baby boomer population, an increasing number of senior practitioners and law firms will need to think about succession planning. The importance of strategic planning is important, both for the client’s benefit as well as those currently in a firm.
Succession planning takes time, and although a non-billable activity, it will determine the financial success and longevity of a firm.
There are many law practices in NZ where senior partners and consultants hold a wealth of knowledge and expertise, both technically but also in relation to their clients. Transferring that knowledge and expertise to other lawyers in the firm is key for a smooth transition as senior lawyers/partners exit a practice or merge with another. If you’re a partner looking to exit a practice in the next 5 years, you should start succession planning now otherwise you might find yourself working into your retirement years.
6 Key Considerations:
Skills – understanding the firm’s core practice areas and how the firm will evolve in the next 5-10 years will determine the future skill set and current training that those within the firm will need. Consider any profitable new practice areas the firm will be moving into and any practice areas that may be worth removing from your service offering.
Investment – budgeting the time and money for hiring and training younger lawyers, partner buy-outs and buy-ins, upskilling existing lawyers, phasing out partners and marketing activities.
Clients – understand the mix between the corporate, public sector and private clients your firm has and whether you have a few larger key clients where a specialised skill is needed or whether you’re offering a more volume based “commoditised” product (e.g. conveyancing). A client’s trust and confidence in their lawyer doesn’t often happen overnight - if there are key clients that the firm seeks to retain, handing over client relationship management responsibility to successors in the team over time is key.
Communication – have frank conversations with younger lawyers who you’d like to groom for partnership about their prospects. Don’t assume that all lawyers in the firm have partnership in mind for their future. On the other hand, you should be communicating realistic timeframes and providing a defined pathway towards partnership for those wanting it, so that they know what they need to achieve to get there. Transparency in the plans and process will help remove anxiety to all involved and avoid losing quality lawyers to a competitor.
Technology – with the rise in use of Artificial Intelligence, Blockchain technology, smart contracts and NewLaw business models, firms need to think about what technological investments they need to make to retain a competitive edge in the legal market. Technology is revolutionising how legal services are carried out and clients now expect a faster response. Younger lawyers are more tech savvy and want to work in a firm that has modern systems. Although technology can’t replace a human mind, it can help lawyers be more efficient and therefore deliver a better service to their clients.
Culture – hiring lawyers who are a good ‘fit’ for a firm’s culture is essential so that you maintain a cohesive culture and retain long-standing existing staff. Making a lateral hire of a high billing partner that doesn’t get along with others in the team, while seemingly profitable, may lead to a number of staff leaving the firm and greater costs in the long term.
The NZ legal market is candidate short, particularly at the intermediate level. The demand for legal services has continued to rise across a number of practice areas and when you combine that with an ageing population which will soon look to retire, succession planning is imperative in a firm’s future success.
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Image source: https://www.inc.com/john-boitnott/these-signs-can-help-you-see-if-it-s-time-to-pass-the-torch.html