Fractional Law Firm CMO’s Post

#successionplanning comes up in virtually every #FLFCMO #lawfirm engagement. 💡How does it work? 💡What are best practices? 💡What happens if a partner doesn’t want to #retire? 💡What if we don’t have a clear “next gen leader?” 💡How can we incentivize younger partners to step up? 💡What happens if a #client doesn’t jive with the newly dubbed relationship partner? So many questions. 🤔 Check out this great article from law.com for great insights and answers. Fractional Law Firm CMO Katherine #law

Why is succession planning hard for law firms? It's complicated. Lawyers react to the term "succession planning" in a variety of ways, from fear to indifference to (rarely) excitement. Good planning depends on a shared vision. Partners in a law firm do not always have a shared vision about succession, so that makes planning challenging. It takes time. Succession done right involves years of planning and execution. Partners have obligations to each other to bring in clients, do legal work and bill time. This limits the time they have for longer term projects. It seems abstract. Succession planning is important for a law firm at all times, but not to all partners at the same time. There must therefore be a balancing of individual v. collective interests, which can be tough to pull off. To survive and advance the next generation, law firms must do many hard things. Succession planning and implementation is one of those hard things. But firm leaders need to take on this challenge before a crisis hits.

It was good to speak with The American Lawyer's Amanda O'Brien about succession planning in mid-sized law firms, which remains a critical issue for law firm leaders. While there are some lawyers who engage in succession planning naturally, because they operate with a firm-first mindset and want to leave a positive legacy, many lawyers resist succession planning for a variety of reasons. Often, the firm’s compensation system also does not reward good behavior in succession planning. Some ideas for improvements include: ✅ Creating a systematic approach to succession planning rather than handling it on a case-by-case basis, both to increase efficiency in the process and to promote objective decision-making; ✅ Identifying aspects of the firm’s compensation system that disincentivize work sharing and/or transitioning of clients over a period of years to solidify new relationships and making improvements to the system; ✅ Developing ways to incentivize cross-selling throughout a lawyer’s career, such as implementing a billing attorney or relationship attorney credit, to create multiple touch points for a client within the firm; and ✅ Implementing a program for lawyers who retire as partners/shareholders but stay with the firm in Of Counsel roles to ensure a smooth client transition and to receive compensation for the same. #lawfirmmanagement #lawfirmsuccessionplanning #successionplanning

In our latest blog post, commercial law expert, Victoria Spellman outlines the issues an individual who is the sole director and shareholder of a company should consider when succession planning for their business. #commerciallaw

This is an interesting read focusing on compensation strategies of law firms, especially in a current period of drastic technological and industry changes. Curious to see how firms, of large or small, formulate these strategies in the coming near future.

Why is succession planning harder for law firms than it is for other businesses? Of course I am making an assumption here that law firms do have more challenges in this area. My assumption is based on my years of working on succession as a partner in two law firms (one medium sized and one Am Law 100) and in talking with a lot of people in other industries about the subject. Assuming I am correct, the question is why law firms struggle in this area. I don't have all the answers, but here are some likely reasons: 1. A law firm partner is both an owner of the business and a revenue generator for the business. This complicates the discussion about when and under what circumstances the partner will engage in succession planning. 2. Law firms are still primarily run by lawyers, who were trained in law. Businesses in other industries have ceded more management authority to people trained in management. We can certainly debate whether that is a good thing or a bad thing for law firms, but it does impact how a firm will approach strategy issues like succession planning. 3. Law firm partners have more autonomy than many business professionals. Partners cherish autonomy. Succession planning can be seen by some as reducing that autonomy. Hence, they avoid it. I'm not naive. I know that law firms will likely never have the succession planning rigor that is standard in businesses in other industries. Nor do I think that is necessarily desirable. But I do believe we can do better as a profession by taking some baby steps. This would help law firms stay relevant to and a desirable destination for the next generation of lawyers. Firms proceed at their peril if they assume that will always be the case.

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Succession planning is a critical aspect of ensuring the longevity and continuity of a business. As businesses evolve, having a well-crafted succession plan is not only a strategic move but also a legal imperative. 1. Importance of Succession Planning: Emphasize the significance of succession planning in preserving the legacy of a business, ensuring a smooth transition of leadership, and mitigating potential legal issues. 2. Long-Term Vision: Encourage businesses to view succession planning as part of their long-term vision, aligning leadership transitions with strategic goals and the company's overall mission. 3. Buy-Sell Agreements: Discuss the legal implications of buy-sell agreements in the context of succession planning. 4. Family Business Transfers: Discuss considerations such as estate planning, tax implications, and addressing potential conflicts among families. 5. Estate and Gift Taxes: Discuss strategies for minimizing tax burdens through careful planning. 6. Estate Planning for Business Owners: Discuss the legal aspects of estate planning specific to business owners, including the use of trusts, wills, and other instruments to ensure a seamless transfer of assets. 7. Role of Legal Counsel: Stress the importance of seeking legal counsel throughout the succession planning process. Discuss how legal professionals can guide compliance with relevant laws and regulations. For personalized legal guidance on business succession planning, our experienced team is ready to assist.🤝 ✨ 👤 📞 205.322.6060 #estateplanning #estateplanningattorneys #businesslaw #cloudandwillis #birminghamlawyers #legalsuccess #lawfirm #yourtrustedpartners