An Orderly CFO Succession

When I announced my intention to retire from a 25-plus year career as CFO at an AmLaw 200 law firm, the firm began a process to search for and select a replacement. Because I had been with the firm for such a long time, we took the opportunity to start more or less from square one in determining what the firm wanted in a CFO. I had evolved my position from that of Controller as the firm grew, and its management and its needs changed.

Redesigning the Job

The first thing I did was to update my job description. What I had been hired to do all those years ago bore little resemblance to what I was doing now.

My specific responsibilities had evolved to fit the firm's needs and my own background and experience. Our Executive Director, Managing Partner and I then reviewed this in detail. We looked especially at whether these responsibilities were what the firm now felt a CFO should have. We added some. We delegated some things to subordinate staff. We looked at the challenges we felt the firm faces now, and what new challenges we expect in the future as the firm continues to expand both geographically and in certain practice areas.

We looked carefully at the role of a person new to the firm in this position, and the relationship of that person to the firm's lawyer and non-lawyer management team. Both the chemistry and the qualifications had to be right. Our Financial Partner is a practicing lawyer who is expected to devote a limited time to firm management. We therefore wanted a highly qualified person as CFO who could step in fairly quickly, and develop the contacts and rapport in the firm and in the community necessary to function in a top management role. Given that the Financial Partner's role is limited, we felt we could recruit an individual who could be assured of the clout necessary to function as I had done. The range of compensation we were willing to pay was set with that in mind.

Given this, we then drafted a tentative job description for the new CFO. I hesitate to place too much emphasis on a job description. It is useful for hiring in that it focuses the hiring team on what the new person is expected to do when they walk in the door. But, a formal job description by its nature tends to limit the role of the person filling the job; if followed too rigidly, it can become a barrier to needed innovation as the needs of the firm change. A job description is only a starting point.

Contemplating Credentials

For a position like this, we considered a college degree essential. But, a degree in what? Accounting? Economics? Finance? Management? All of the above? Did we need an MBA? A CPA? Both? What about experience? Obviously, we would have loved to get someone who had filled a role similar to what we had in mind at another law firm, or at least at another professional firm such as an engineering or accounting firm.

In the end, we tried to leave our statement of qualifications as open as possible, without limiting ourselves to particular credentials. We wanted a highly qualified individual, preferably both an MBA and a CPA; yet we left the door open to someone with lesser formal credentials but outstanding and relevant experience – and who fit in with our culture. Besides the obvious technical qualifications, we were looking for someone with the ability to manage people effectively, which is not easy to find in a financially oriented individual, and someone who had a strong sense of the need for timely, accurate and credible performance.

Only after going through this thought process with the firm's management team were we ready to let the world know we were looking for someone. I feel that any firm that is changing its CFO for whatever reason, or is considering hiring its first CFO, should go through a similar exercise, time-consuming though it is. It serves to focus both management's and the candidates' minds on the position, and delineates it from other management team members. Both the firm and the new CFO will benefit from that.

Selecting a Candidate

We let our Director of Human Resources screen the resumes first. Neither our Executive Director (who in our management structure is the CFO's supervisor) nor I wanted to go through a stack of resumes from people who were obviously not qualified, or whose compensation or other requirements were outside our ability or willingness to meet. Perhaps one of these seemingly unqualified people would have been Mr. or Ms. Right, but we were willing to take that chance. After the initial screen, the Executive Director and I culled the list down to a few candidates to interview.

Who should conduct the interview? We wanted neither to overwhelm the candidates nor to tie up inordinate lawyer time with a large interview panel. The Managing Partner was involved in all of the initial interviews, with either the Executive Director, the Financial Partner, or me, or perhaps two of us. The finalists were asked back for a second interview with the team members they hadn't met initially, plus the Chair of the Management Committee. This final interview was intended mainly to determine who of the finalists would best fit in with our culture and our management style.

Once we selected the candidate we wanted, agreed on a compensation package and cleared potential conflicts, we would be ready to get on with the actual transition. The new person would, of course, have to give notice to his or her present employer.

The Transition

We were able to fill the position about two months before my announced retirement date, thus allowing time for an orderly transition. That was long enough. We didn't want to send mixed signals to the staff: the new person would have his own management style, and would want to get on with it reasonably quickly after arriving.

We were able to meet with the new CFO before his actual starting date, to pass on background material and information he needed to know at the outset.

Obviously, there was no way to pass on the accumulated knowledge of 25 years in 2 months, or in any other reasonable time frame. But there was enough time in two months to pass on the basics of how the firm and its major systems operate, and to introduce the new CFO to the firm and to the bank and other critical contacts.

From the perspective of a few subsequent months, I'm satisfied that the transition went well. The new CFO has settled in. I am enjoying retirement (while contemplating consulting projects), and have been called only a few times to answer questions or provide background where it wasn't obvious or readily available elsewhere.

When I announced my intention to retire from a 25-plus year career as CFO at an AmLaw 200 law firm, the firm began a process to search for and select a replacement. Because I had been with the firm for such a long time, we took the opportunity to start more or less from square one in determining what the firm wanted in a CFO. I had evolved my position from that of Controller as the firm grew, and its management and its needs changed.

Redesigning the Job

The first thing I did was to update my job description. What I had been hired to do all those years ago bore little resemblance to what I was doing now.

My specific responsibilities had evolved to fit the firm's needs and my own background and experience. Our Executive Director, Managing Partner and I then reviewed this in detail. We looked especially at whether these responsibilities were what the firm now felt a CFO should have. We added some. We delegated some things to subordinate staff. We looked at the challenges we felt the firm faces now, and what new challenges we expect in the future as the firm continues to expand both geographically and in certain practice areas.

We looked carefully at the role of a person new to the firm in this position, and the relationship of that person to the firm's lawyer and non-lawyer management team. Both the chemistry and the qualifications had to be right. Our Financial Partner is a practicing lawyer who is expected to devote a limited time to firm management. We therefore wanted a highly qualified person as CFO who could step in fairly quickly, and develop the contacts and rapport in the firm and in the community necessary to function in a top management role. Given that the Financial Partner's role is limited, we felt we could recruit an individual who could be assured of the clout necessary to function as I had done. The range of compensation we were willing to pay was set with that in mind.

Given this, we then drafted a tentative job description for the new CFO. I hesitate to place too much emphasis on a job description. It is useful for hiring in that it focuses the hiring team on what the new person is expected to do when they walk in the door. But, a formal job description by its nature tends to limit the role of the person filling the job; if followed too rigidly, it can become a barrier to needed innovation as the needs of the firm change. A job description is only a starting point.

Contemplating Credentials

For a position like this, we considered a college degree essential. But, a degree in what? Accounting? Economics? Finance? Management? All of the above? Did we need an MBA? A CPA? Both? What about experience? Obviously, we would have loved to get someone who had filled a role similar to what we had in mind at another law firm, or at least at another professional firm such as an engineering or accounting firm.

In the end, we tried to leave our statement of qualifications as open as possible, without limiting ourselves to particular credentials. We wanted a highly qualified individual, preferably both an MBA and a CPA; yet we left the door open to someone with lesser formal credentials but outstanding and relevant experience – and who fit in with our culture. Besides the obvious technical qualifications, we were looking for someone with the ability to manage people effectively, which is not easy to find in a financially oriented individual, and someone who had a strong sense of the need for timely, accurate and credible performance.

Only after going through this thought process with the firm's management team were we ready to let the world know we were looking for someone. I feel that any firm that is changing its CFO for whatever reason, or is considering hiring its first CFO, should go through a similar exercise, time-consuming though it is. It serves to focus both management's and the candidates' minds on the position, and delineates it from other management team members. Both the firm and the new CFO will benefit from that.

Selecting a Candidate

We let our Director of Human Resources screen the resumes first. Neither our Executive Director (who in our management structure is the CFO's supervisor) nor I wanted to go through a stack of resumes from people who were obviously not qualified, or whose compensation or other requirements were outside our ability or willingness to meet. Perhaps one of these seemingly unqualified people would have been Mr. or Ms. Right, but we were willing to take that chance. After the initial screen, the Executive Director and I culled the list down to a few candidates to interview.

Who should conduct the interview? We wanted neither to overwhelm the candidates nor to tie up inordinate lawyer time with a large interview panel. The Managing Partner was involved in all of the initial interviews, with either the Executive Director, the Financial Partner, or me, or perhaps two of us. The finalists were asked back for a second interview with the team members they hadn't met initially, plus the Chair of the Management Committee. This final interview was intended mainly to determine who of the finalists would best fit in with our culture and our management style.

Once we selected the candidate we wanted, agreed on a compensation package and cleared potential conflicts, we would be ready to get on with the actual transition. The new person would, of course, have to give notice to his or her present employer.

The Transition

We were able to fill the position about two months before my announced retirement date, thus allowing time for an orderly transition. That was long enough. We didn't want to send mixed signals to the staff: the new person would have his own management style, and would want to get on with it reasonably quickly after arriving.

We were able to meet with the new CFO before his actual starting date, to pass on background material and information he needed to know at the outset.

Obviously, there was no way to pass on the accumulated knowledge of 25 years in 2 months, or in any other reasonable time frame. But there was enough time in two months to pass on the basics of how the firm and its major systems operate, and to introduce the new CFO to the firm and to the bank and other critical contacts.

From the perspective of a few subsequent months, I'm satisfied that the transition went well. The new CFO has settled in. I am enjoying retirement (while contemplating consulting projects), and have been called only a few times to answer questions or provide background where it wasn't obvious or readily available elsewhere.