As many baby boomers delay retirement while the next generation of leaders knock at the partnership door, succession planning has never been more crucial for law firms.
On average, baby boomer lawyers are working longer than previous generations, and not all firms have been consistently promoting new talent through the ranks. Those that have neglected to do so face a looming succession crisis.
“Some firms are struggling to retain their next generation of talent as they see entrenched partners above them giving no indication of go,” says Minter Ellison Rudd Watts managing partner Mark Weenink.
“I think some senior practitioners are reluctant to give up the control of being a part owner of the firm,” says Sam Bassett, director at Moore Stephens Markhams who consults to small and medium-sized firms in Auckland. “I think there is a perception that there will be less money by bringing in new blood. But in my experience, increasing the size of the cake rather than worrying about how the existing cake is going to be sliced up works every time,” he says.
In Bassett’s experience, it is easier for a partner in their 30s and 40s to build new client relationships than it is for older partners. “Clients will tend not to refer new clients to a senior practitioner who is in their mid-sixties, generally because there is a perception that that individual is just by their nature not going to be a practitioner for too much longer,” he says.
At Minter Ellison Rudd Watts, the average partner age is 46. While the firm did not have a specific strategy to make its partnership younger, Weenink says that during the GFC his firm saw an opportunity to do things differently to some of the more traditional top tier firms. “Part of that was ensuring our partnership attracted new talent and recruiting partners so that across our partnership we have partners that reflect the age and stage of our clients,” he says.
All about diversity
Although the impending retirement of baby boomer solicitors has brought the succession question to the fore, Bassett emphasises that the discussion is about having a mix of ages around the partnership table: “[It’s] healthy and good that practitioners stay involved at firms but I am dead against them continuing to hold equity slots into their late 60s. I just see that time and time again that does not assist with the overall growth and development of a small to medium-sized firm,” he says. “You do not want a situation in a firm where everyone is within a year or two in age amongst the partner mix – it is useful to a firm to have a range of ages.”
Weenink agrees. “More important is diversity of thought,” he observes.
Although bringing through the next generation of talent to partnership is important, retaining the experience of older partners is also crucial. Consultant roles are becoming an increasingly common way for firms to retain the skills and experience of senior lawyers when they are no longer partners. “These ex partners add huge value to our offering for clients in a way that suits their changing personal ambitions,” says Weenink. “They maintain relationships and provide confidence to long standing clients.”