Exit Strategy for Senior Partners – Small to Medium Size Firms

August 20, 2015

What kind of lawyer are youWhen asked what major problems they face, we often hear Managing Partners say “senior partners. They want to hold on to their clients and not share origination or management credits.”  The potential loss of revenue is significant.  Failure to deal with this is a common million dollar blind spot for the typical law firm.

Often, these near-retirement lawyers are producing less and taking more.  They seem to offer strong resistance to transitioning clients and/or sharing origination credit, even when members of their teams have been directly supporting the clients for years.  The desire to build their own revenue credits for the last couple of years, in order to add more to a retirement package, is in direct contrast to a firm’s desire to build sustainable revenue in the future.

A named partner in a 20+ attorney firm developed his own transition plan without any discussion or input from his executive committee.  Every couple of months, he cut back his workload by one day per week.  He did not tell clients his plans for retirement and did not introduce his colleagues to the clients.  Yet, they were often the ones completing most of the client assignments.  I asked him when he would be making his announcement and transitioning work directly to his colleagues.

The response was stunning.  “I’ll let everyone know 2 weeks before my retirement date.”  He continued reducing his work days from 4 per week, down to 2 per week.  Then he announced he would be “on call.”  While there were a few complaints from executive committee members, and the lawyers who would be expected to pick up the work, no one was willing to tackle this head on.

Within months after he left, the firm revenue dropped 20%.  Two of his “top” colleagues took what business they could and lateraled to another firm.  There was no client transition policy in place and made part of the firm’s culture.

Attempting to build a lost–client-recovery-program in this situation would not have worked.   By this one senior attorney’s lack of action until the last minute, competitors were ready to seize the opportunity for themselves.  Law firm executive committees must take a proactive role by understanding the “life-time” value of a client from the present into the future and building a

CONTINUATION PLAN

  • What is the identity capital senior attorneys have developed with clients?
  • How could this have been built into an entire client service team long before retirement?
  • Has active transition planning been assigned to one person who will advise, coach, and direct individual exit strategies?
  • Have other lawyers in the firm, who have also served the same clients with other practice area services, been linked into client preservation?

Advance planning of exit strategies is critical to long term sustaining of revenue.