Succession planning – it’s not too early to think about it

20 Aug 2015

There will come a point for all of us when we don’t want to work any more. Stopping working, something we have spent the majority of our lives doing will seem alien and unsettling. Sooner or later though, thoughts inevitably begin to turn to sandy beaches and English gardens, among other leisurely pursuits. 

For employees the process is relatively straightforward, let people know, set a date and (maybe) receive a nice watch. For law firm owners however, it can be complicated and elongated process, requiring careful planning and thought.

Many firms approach the idea with such trepidation that it is constantly pushed back, an ignored problem looming on the horizon. As a consequence planning is then left far too late in the day, when the principles of the firm are already keen to begin their retirement. It seems the ‘planning’ part of succession planning can often be forgotten.

Of course, this is a recipe for disaster. A successful plan is absolutely vital for the firm to maintain current levels of operations. Long-term clients will of course be impacted if the partner they have dealt with for a substantial amount of time is set to leave the business. Impact can be offset with a well thought through plan, transferring their custom to a new partner, or new company entirely. It will however become more than apparent to the client if the plan has not been well thought through.

Several elements come to mind when succession planning. Whilst the impact on clients is certainly important, an internal focus at the outset is a must. Firm principles must clearly identify their aims and timescales to enable the rest of the process to flow naturally. Without this knowledge base, the position becomes so unclear that planning is virtually impossible. Be honest about where you want to be, not just tomorrow, but at your retirement point, possibly several years into the future.

A valuation is also a necessity. Of course, this may change as you progress towards your ideal leaving date, but knowing the value of your firm allows you to plan for possible succession routes, as well as put together your personal plans that may impact your retirement date.

Consider also internal management procedures. Often firms can focus extremely well (as they should) on their clients, whilst the succession of internal management is ignored. These procedures enable understanding of how internal management works to be given to the next generations, this is another must have part of the plan.

Succession planning is a subject that can get complicated for legal firms, but it need not be difficult as well. Put simply, address your goals early; both those of your firm and you personally, then implement the plan that will get you moving towards them.

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Succession planning is only an issue when done incorrectly or avoided until it is too late. Unsure where to begin or need some advice, simply Contact Us