Thoughts on Succession Planning
How is your firm planning to deal with its future?
For many firms, coming to terms with aging and retirement, and identifying transition candidates, can be a difficult process. But, this is essential for all firms, small and large, because the failure to plan and develop a timeline for transitioning can have major repercussions including losing clients, losing talented associates or potential leadership, instability within the firm, among others.
Because most firms do not have a succession plan in place, here are a few tips and considerations:
1. A succession strategy and plan should be incorporated into every strategic plan and partnership, operating or shareholder agreement. It is never too early to start thinking about succession planning.
2. If any sole-owner firm, or when any partner in a multi-owner firm, is age 50 or older, it is important that the firm get started on developing a succession plan.
3. Remember, the succession plan and transition will take time. Solo practitioners will have a significant challenge because there is no obvious person to whom the practice will transition. Thus, the practitioner may need to hire and groom an associate who could buy the firm or become a partner and eventually buy the partner’s interest.
4. A succession plan should start no less than five years from the retirement or exit date of the owner/partner. For some, less time is sufficient. Think through your circumstances, talk with your partners, develop a plan that works for you and your situation, and then take action.
5. “Write down the plan and timeline because what is written down, what is measured, what is calendared, is what gets done. Effective management of the succession planning process takes discipline and accountability. Once it is written down it is in the form of a “project plan” with due dates, start dates, tasks and action items, required resources and names of those responsible for different tasks and action items. Unless attorneys approach their retirement like a case or project and develop a succession/transition/exit plan with calendared timelines, the project will likely experience fits and starts, timeline drift and the needed momentum may not materialize”.
 Olmstead, J. Are You Prepared for Your Exit? Your ABA Newsletter. Apr. 2017.