Baby Boomers are beginning to retire. In the legal profession, one microcosm of that trend is that managing partners are beginning to retire. In the old days, managing partners were mainly full-time lawyers who also carried out administrative responsibilities part-time. But in more recent years, the role has grown into a full-blown leadership role with much greater demands.
Many of the firm leaders who have announced their upcoming retirements have been in office for ten years or more, some even longer. Many firms are now facing the need to cope with succession issues, either scrambling to replace a leader who is stepping down, or hopefully planning for one whose exit from the role is imminent or inevitable.
The ideas on succession planning that follow come largely from a recent gathering of law firm leaders. I was fortunate to be invited to the annual conference at Pebble Beach that Brad Hildebrandt and Thomson Reuters sponsor for approximately 120 leaders of large law firms. One of the panel discussions included the following participants:
- Ralph Baxter, Chairman Emeritus, Orrick, Herrington & Sutcliffe LLP
- Geoffrey Green, former Chairman of Ashurst LLP (now Senior Consultant – Asia)
- Fran Milone, Chairman & CEO, Morgan, Lewis & Bockius LLP
- Keith Wetmore, Chair Emeritus, Morrison & Foerster LLP
- Mitchell Zuklie, Chairman, Orrick, Herrington & Sutcliffe LLP
- Andy Baker, Managing Partner, Baker Botts LLP
Both Mitch Zuklie and Andy Baker recently stepped into their roles. The others have all either stepped down or have announced that they are doing so.
In no particular order, here are some of the insights offered by the panel, along with some of their cautions:
- When a leader announces that s/he is stepping down, the rank-and-file lawyers will naturally begin asking, “Can we trust the new person?” This will be particularly evident if the incumbent has served a long term.
- When a Baby Boomer leader steps down, many Baby Boomer partners in the firm will likely begin asking themselves, “Is this the time for me to retire too?” Firms that are considering succession planning should take this into account.
- When possible, it’s a good idea to identify a new leader at least 6 months before s/he will need to actually take over the reins. Keep in mind that not only does the incoming leader need to learn the ropes, but his/her new leadership team will also have a learning curve. While the new leader has likely already been deeply involved in the details of leading the firm before being selected to succeed the incumbent, this may not be true for every member of the new leadership team.
- It’s absolutely critical to build buy-in with the partners for the new leader. This becomes even more important if the “rules of the game” are going to change in some way when the new leader takes over. This could include a shift from a single leader to a bifurcated leadership arrangement; a re-shuffling of practice group organization; new approach to comp; etc.
- Many of the panel members mentioned how important it is to maintain the firm’s culture through the transition period.
- Maintaining the perception of fairness is another theme that was mentioned several times.
- There were several “timing” issues that were mentioned: (1) Should there be term limits for a new leader? (2) If you are stepping into a role in which your incumbent led the firm for ten years or more, what expectations has this tacitly set up among your partners? (3) Considering that the pace of change has quickened dramatically in the past few years, will a new leader ever serve as long as the currently retiring generation has? Or will we see shortened terms just because of the increasingly changing dynamics? Can you prepare for this?
- Has the firm grown or changed significantly since the incumbent started his/her original term? If so, maybe the firm should examine its assumptions about leadership structure and responsibilities, leadership competencies, and related issues, in thinking about the next leader.
- Anticipate and deal with “Lame-Duck-ism”. “As soon as your new title is announced, all eyes will shift to the new guy.”
- At MoFo, the Chair who steps down becomes the head of the Comp Committee. This allows a degree of continuity and sends a signal that the former leader will “still be in a position to keep his promises”.
- Should an incumbent recommend his/her own successor? What are the pros and cons of doing so?
- If your firm has a multi-country footprint, what are the pros and cons of choosing your next leader from one of the other countries in which you are present?
- Every leader who steps down has “unfinished business.” Some of this unfinished business involves perennial problems that seem intractable and will always be there; some involves problems that are fixable and must be resolved before you go; and some involve good ideas that you should definitely pass on to your successor to consider.
- The panel concluded that every firm is different, and there is no “one size fits all” governance structure that works for every firm.
- The panelists agreed that it’s a good idea to look at structure first—given the conditions that we face today, what’s the best governance structure for our firm? Having determined this, then consider who should actually fill the role.
- Most of the panelists endorsed the importance of the new leader having many conversations with the partners to discuss the transition, listen to their input, build trust, and foster continuity.
- One panelist mentioned that once you’re in transition—on the way out—in some ways, you may have more latitude to “clean up stuff” – unfinished business – because you no longer need worry about the political implications.
- One panelist mentioned that “When you go through your first partner retreat, that’s when you really take over, you make your mark.”
- If you leave on your own timing, you get to negotiate your own title and perks.
- There was some discussion about whether it’s a good idea or not for an outgoing leader to become Emeritus. On the one hand, it can be helpful to the new leader, reassuring to the firm, and useful in a number of ways. On the other hand, there is always the risk that partners will try to go through the Emeritus leader instead of the new incumbent, or that the Emeritus leader will interfere with the new leader’s ability to build credibility. Each firm has to work out how this evolves.
These are just some of the issues to consider when the top leader’s time to step down is approaching. Some of these issues also apply to other leaders such as practice group leaders or office heads. But one thing that everyone can agree on is that if you have the luxury of doing so, planning for succession far in advance is significantly better than scrambling at the last minute, even despite the fear of “Lame-Duck-ism”.
As usual, if you have comments or questions, please post a reply.
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