If you are the founder of a solo practice or small law firm, chances are you think about the long-term future of your firm on a regular basis, yet the day-to-day demands keep you from taking steps to address it in any proactive fashion. Developing a plan is not as hard as you may imagine and the benefits from the effort spent are well worthwhile.
The goals of a succession plan should be (i) to make sure your clients’ ongoing needs are well taken care of, (ii) to provide you with the flexibility to enjoy some personally rewarding retirement years, and (iii) to maximize the value you receive for the law practice you have built through years of hard work. It is only through a process of planning that begins well in advance of the time for the firm founder’s retirement that these goals can be achieved.
First generation law firms are usually founded by lawyers who are both strong leaders and exceptional rainmakers. If the firm has grown over the years, the founder’s focus in hiring additional lawyers has been for the purpose of servicing their clients and performing legal work, without succession in mind. As a result, the supporting lawyers frequently do not develop the skills necessary to generate business on their own and successfully lead the firm. Without a successor-type lawyer in place, the retirement of the founder will challenge the very existence of the firm.
In this respect, every solo practitioner or small firm has a succession issue. Even those lawyers who say they love their work and have no plans to retire may be surprised to find that, over time, their feelings may change to, “I want to work when I want to work.”
Sometimes, this feeling can creep in unexpectedly. By the time most lawyers reach their sixth and seventh decades of life they no longer want the demands of a full-time practice. In many cases, their practice or small law firm ends dismally due to unexpected events like illness, disability or death. Lack of any forethought in retirement planning results in some lawyers winding down their practices and closing the doors, an unfortunate finale to what could have been a lasting legacy.
Every founder of a solo practice or small firm needs to consider what they want for a retirement plan and whether the alternatives include transitioning the law practice to a hand-picked successor. Making the decision may seem daunting and implementing it may seem formidable. In many instances, this is the cause of inaction. But many who take the steps say they wish they had done it sooner.
The first thing to recognize about succession planning is that it is a process, not an event. If your firm has ever created a strategic plan or long range plan, the approach and work involved are similar. The process should begin at least five to 10 years before the solo practitioner or founder of the firm intends to begin a transition. Identifying a successor and developing a step-by-step shift takes time. In most circumstances, if you are in your mid-50s, now is the time to set a plan in motion. Waiting until you reach 60 or 70 is waiting too long.