Transition planning requires a deliberate approach and a sustained focus to be effective. This is often difficult for administrators and lawyers who must manage daily business demands. To best ensure the planning process remains focused and deliberate, a law firm needs outside support to work in conjunction with in-house resources.
Management and staff should be participants in the planning process since they have a stake in the outcome of the process. We have found that a firm’s management personnel often shares many of the concerns of younger partners, associates, and staff. Their awareness of the business continuity issues typically comes from their experience and direct input from the individual lawyers and other employees.
Objective third party advice can enable a less risky communication process from not partner participants.
A typical transition planning process takes six months to a year to complete and involves an in-depth analysis of the following areas:
- Work Life timelines and capacity planning;
- Marketing and Business Development;
- Attorney development;
- Compensation and incentives;
- Transition and buyout compensation;
- Policy formulation;
- Partnership or operating agreement provisions;
- Orderly transfer of ownership interests;
- Financial Considerations;
- Platform building;
- Staff Development; and
- Implementation plan, schedule and process.
Taken together, these areas of concentration inform a firm’s highest priorities. The broad purpose of each analysis as follows:
- Work Life timelines provide a planning horizon;
- Marketing effectiveness indicates the firm’s ability to meet revenue goals;
- Attorney development is essential to skill set continuity;
- Recruiting effectiveness enables a firm to address capability and capacity weaknesses;
- Compensation and incentives can attract high-profit laterals, ensure partners practice profitably, and incent senior partner transitions;
- Policy development is essential for promoting consistency and building trust among partners, associates and staff;
- A partnership or operating agreement ensures that necessary actions have the weight of a legal agreement;
- Perpetuating a law firm requires a process for transferring equity without controversy;
- Quantifying the potential impact the firm's profits and ultimately the income of the partners informs plan development;
- Technology can promote efficiency, provide a competitive advantage and bind clients to the firm;
- Creating a platform that elevates the success of the lawyers and staff builds value;
- A trained and motivated staff can support the knowledge transfer process; and
- Ensuring that process moves from planning to implementation is vital to the long-term interests of the firm.
The goal of the transition planning process is to develop a set of thoroughly analyzed and ready to implement action steps. We will review the various steps in detail in future blog posts.
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