Today's Law Firm Leadership Crisis: Where Is Your Next Generation of Leaders?

Do you know who your firm's next leader will be? Do you have a short list of viable partner candidates? If your answer to these questions is no, you are not alone.

In the course of our recent work at Hildebrandt International with law firms across geographic markets, we have observed a disturbing trend: A growing number of law firms today face an alarming void in their next generation of leaders. In management meetings across the country, partners in law firms are looking around at one another and frighteningly acknowledging that no one person is prepared to step forward and take up the leadership helm. Despite the fact that a number of these firms have provided the right opportunities for young practitioners to transform into respected and admired mid-level partners, they are now confronting the reality that these individuals are either unprepared or unwilling to lead the firm. The reasons for the void in firm leadership are numerous and varied, and most are tied to the large number of disincentives to partners considering the leadership path. And unfortunately for firms, the consequences of a leadership vacuum are severe: With no clear successor in sight, firms experience increased instability and often enter into a state of strategic drift, putting the firm's clients and its practice at risk.

Drivers of the Leadership Void

Why are so many firms currently experiencing a void in available leadership resources? We have identified two primary drivers behind the lack of next-generation leaders in law firms:

1. A lack of individuals with the ability to lead the firm, and

2. A lack of individuals with the willingness to lead the firm.

Lack of Ability

In some firms, particularly those where the founders continue to practice, a habit of dependency has inhibited younger partners from emerging as potential successors: The first generation has become a tough act to follow. As a large number of small and mid-sized firms see their founders nearing retirement, the lack of individuals “ready” to take on leadership roles poses heightened risk to the firm's future. Founders in these firms express concerns about the firm's competitors, practice mix, pricing, compensation systems, and whether it is finally time to consider the persistent merger inquiries. The hard reality is that most of the issues somehow tie back to the fact that the firm has relied heavily on the founders' ability to generate work, distribute partner profits fairly, and benevolently manage the firm's operations. In many cases, no one else in the firm is seen as someone with the credibility, the judgment, or the fairness to make significant decisions on behalf of the firm.

Lack of Willingness

In other instances, firms have identified several individuals exhibiting the core skills and aptitude necessary to succeed in a leadership position. But unfortunately for the firm, these individuals also appear to lack the commitment or desire to fill a leadership role and meet its requirements. Increasingly, partners with leadership potential are citing the disincentives to entering law firm leadership roles: the enormous professional and personal costs associated with being in a leadership position, and the fact that the “leadership rewards” simply don't compensate.

In most firms, individuals typically tapped for leadership positions demonstrate the traits of a well-rounded partner: They are intelligent and talented, respected by their peers, and in demand by their clients. Consequently, they have a variety of career opportunities available to them. They also understand that there are challenges associated with law firm leadership, and recognize that leadership opportunities in a law firm are unlikely to be as lucrative or as stable as client-development opportunities. A problematic reality is that in most law firms, partners who develop a significant book of business are offered greater financial rewards, career success, and longevity than those in leadership positions. While this makes sense from a business growth and generation perspective, it acts as a disincentive to those talented and rare individuals capable of pursing either a major “rainmaker” or “firm leader” path. Unfortunately, given the growing size, complexity, and management demands of law firms today, few individuals are capable of being both ' firm leader and major rainmaker, and thus the choice between a leadership or rainmaker career path becomes even more critical and distinct.

In addition to career path and related financial disincentives to taking on a leadership role, talented, mid-level partners also identify a personal disincentive. In many cases, mid-level partners are at a stage in life where they have children still living at home, and thus family commitments are both weighty and time consuming. Very often, these individuals are interested in maintaining a form of professional-personal balance, and have observed how family commitments are often sidelined as managing partners and firm leaders face the time pressure and competing demands of both clients and firm management requirements.

A final nail in the coffin on the pitch to partners considering leadership positions is the sheer challenge and headache associated with attempting to lead a law firm. Structural characteristics of law firms such as “consensus-based management” inhibit efficient and effective decision-making and drive ongoing partner political hurdles and internal negotiations. All too often, mid-level partners perceive the difficulty associated with making decisions and driving progress in highly democratic partnerships and conclude that the stress of managing such a group is too personally taxing and burdensome.

So, given this array of disincentives that law firms create for those partners considering leadership positions, it is really no wonder that firms are facing a void in future leaders.

The question is: How can firms begin to address the leadership vacuum they are facing and start identifying individuals who will one day be both willing and able to take on a leadership role?

Solving the Problem

For firms that have already entered a leadership crisis, the situation may appear particularly dire. However, there are a variety of opportunities for firms to begin to correct their course and re-establish a clear leadership future for the firm. If your firm is at a point where it needs to focus on overcoming a void in leadership, consider the following options:

• Identify a successor to the firm's current leader and put him or her on the job immediately: Recognizing that no one person may be a “perfect” fit, you need to identify your best available future leader resource and put him or her in a position of responsibility for the firm today. This individual should begin shadowing the current firm leader, attending critical management meetings, and putting him or herself into the role of the firm's future Managing Partner. Consider adopting (possibly temporarily) a Chair/Managing Partner structure, whereby the firm appoints a leader successor to begin taking on some responsibilities for the firm as Managing Partner, while retaining the current leader in the role of the firm's Chair. This shared responsibility model serves as a testing ground for leaders. It also alleviates some of the burden associated with taking on the role, gives young leaders visibility among the partner group, and eases the transition of a partner into a firmwide leadership position.
• Creatively reshape the firm's governance structure: Look at alternative management structures that may offer better use of your existing leadership talent pool and available resources. Consider utilizing an adapted management or executive committee structure in the short term, with roles that leverage the strengths and round out the weaknesses of the firm's current pool of available leaders. Instead of trying to force the right people into the wrong roles, build roles around those with leadership talent, making leadership positions work for available partners with skills based on each individual's management abilities and leadership strengths.
• Recruit a non-lawyer executive as a leader of the firm: While few firms have effectively and entirely replaced lawyer leadership with non-lawyer executives, many firms have succeeded in establishing experienced non-lawyer executives in roles of broad-based professional operational and managerial responsibility. In many cases, high-powered professional leadership roles assist firms in leadership transition periods, helping firms to seamlessly bridge gaps in strong partner leadership talent by providing continuity and stability through high-level and talented professional leadership.
• Realign leadership incentives: Although most firms' compensation systems give some amount of consideration to leadership contributions, there is more that needs to be done to ensure that the firm's compensation system supports individuals willing to give up opportunities to develop client relationships in order to run the firm. The long-run impact of this sacrifice on an individual's career can be substantial, and thus it is critical that firms ensure that individuals with an array of opportunities available to them are appropriately and fairly compensated for their commitment and leadership contributions.

For perceptive firms whose existing leadership recognizes the lack of available resources to fill leadership positions in the future, additional opportunities exist to circumvent a true leadership crisis. If your firm has spotted a lack of leadership capability deeper in your ranks, taking the following actions now could help you avert serious instability down the road:

• Develop a profile for lawyer-leaders in your firm: Define the qualities, skills, and attitudes that a lawyer must demonstrate in order to effectively lead others within the firm while successfully working within your firm's culture. This profile will serve as a useful framework in spotting future leaders among your existing lawyers and can even be incorporated into your recruiting efforts to assess the leadership capabilities of potential new hires. By screening new candidates for leadership capabilities, firms ensure that they are hiring individuals who are not only smart and potentially good lawyers, but may also contribute to the growth and direction of the firm over the long run.
• Identify lawyers at various levels to begin filling in the leadership ranks over time: Increasingly firms are recognizing the need to work with lawyers at early stages in their careers to elicit their leadership potential and begin honing the skills necessary to one day become a firm leader. Firms must dig deeper into the firm's ranks to identify future potential leaders at all stages of their careers and then provide the guidance and development opportunities required for these individuals to mature. This requires that current leaders communicate directly with junior lawyers to let them know that they have been identified as an individual with future leadership potential. Communication between current and potential future leaders is a critical tool in forming a relationship with the firm, ensuring that those with leadership potential are identified and begin to receive the guidance that they will need to mature into strong leaders down the road.
• Begin coaching junior lawyers on their role as firm owners and leaders: Create the context to convert lawyers from an “employee” mentality to an ownership mentality. This is the critical step for developing a future leader or any highly productive partner in a law firm. We have seen a notable difference in the pool of leaders in firms where expectations of “owner” behavior are set and communicated early on. Firms that continually impress upon junior lawyers the importance of taking advantage of opportunities to build a career turn out a much higher percentage of leaders than those firms that enable junior lawyers to slide by with a passive approach to practicing and advancement.
• Implement a structured leadership-development program: These programs are not reserved for training of current leaders (although that is certainly one component of this much-needed process), but are targeted at identifying and developing junior partners as future leaders of the firm. The programs often consist of identifying 10-20 rising stars with true leadership potential. These individuals are then immersed into an intensive six-to-12 month leadership program, aimed at developing their skills as leaders and
  testing their ability to deal with challenging leadership situations.

The Magnified Importance of Leadership in Today's Economic Environment

There has been no shortage of reporting on the fact that many firms are feeling the impact of the stumbling economy. In today's challenging environment of flattening or declining firm revenues, some current leaders might decide that now is not the time to worry about developing a successor. This is a mistake. Now is precisely the time to take proactive measures to shore up the firm's future.

If your firm truly has a future leadership void, the lawyers in the firm know it, some of your competitors know it, and some of your clients might even know it. With recent high-profile law firm failures and numerous reports of law firm layoffs, lawyers question whether their own firm is taking necessary steps to ensure long-term strength. A firm that is making a clear effort to address the leadership-void problem is sending a message about its long-term commitment to its lawyers, staff, and clients. In addition, tumultuous times often require very active leadership and a series of critical decisions. The current leader will make better decisions if he/she begins to rely on input from the next generation with a significant stake in the long-term viability of the organization. Identify a successor and begin to use him/her as a sounding board. This is the beginning of the development process. And the time to start is now.

Kristin Stark, a member of this newsletter's Board of Editors, is a consultant in Hildebrandt International's Strategy group. She advises clients on strategy development, organizational management and structure, and talent development and retention. She is based in the company's San Francisco office. John Childers, also a Hildebrandt International consultant, works with law firms throughout the United States and Canada, assisting with strategy development, mergers and acquisitions, and leadership and organization development.

Do you know who your firm's next leader will be? Do you have a short list of viable partner candidates? If your answer to these questions is no, you are not alone.

In the course of our recent work at Hildebrandt International with law firms across geographic markets, we have observed a disturbing trend: A growing number of law firms today face an alarming void in their next generation of leaders. In management meetings across the country, partners in law firms are looking around at one another and frighteningly acknowledging that no one person is prepared to step forward and take up the leadership helm. Despite the fact that a number of these firms have provided the right opportunities for young practitioners to transform into respected and admired mid-level partners, they are now confronting the reality that these individuals are either unprepared or unwilling to lead the firm. The reasons for the void in firm leadership are numerous and varied, and most are tied to the large number of disincentives to partners considering the leadership path. And unfortunately for firms, the consequences of a leadership vacuum are severe: With no clear successor in sight, firms experience increased instability and often enter into a state of strategic drift, putting the firm's clients and its practice at risk.

Drivers of the Leadership Void

Why are so many firms currently experiencing a void in available leadership resources? We have identified two primary drivers behind the lack of next-generation leaders in law firms:

1. A lack of individuals with the ability to lead the firm, and

2. A lack of individuals with the willingness to lead the firm.

Lack of Ability

In some firms, particularly those where the founders continue to practice, a habit of dependency has inhibited younger partners from emerging as potential successors: The first generation has become a tough act to follow. As a large number of small and mid-sized firms see their founders nearing retirement, the lack of individuals “ready” to take on leadership roles poses heightened risk to the firm's future. Founders in these firms express concerns about the firm's competitors, practice mix, pricing, compensation systems, and whether it is finally time to consider the persistent merger inquiries. The hard reality is that most of the issues somehow tie back to the fact that the firm has relied heavily on the founders' ability to generate work, distribute partner profits fairly, and benevolently manage the firm's operations. In many cases, no one else in the firm is seen as someone with the credibility, the judgment, or the fairness to make significant decisions on behalf of the firm.

Lack of Willingness

In other instances, firms have identified several individuals exhibiting the core skills and aptitude necessary to succeed in a leadership position. But unfortunately for the firm, these individuals also appear to lack the commitment or desire to fill a leadership role and meet its requirements. Increasingly, partners with leadership potential are citing the disincentives to entering law firm leadership roles: the enormous professional and personal costs associated with being in a leadership position, and the fact that the “leadership rewards” simply don't compensate.

In most firms, individuals typically tapped for leadership positions demonstrate the traits of a well-rounded partner: They are intelligent and talented, respected by their peers, and in demand by their clients. Consequently, they have a variety of career opportunities available to them. They also understand that there are challenges associated with law firm leadership, and recognize that leadership opportunities in a law firm are unlikely to be as lucrative or as stable as client-development opportunities. A problematic reality is that in most law firms, partners who develop a significant book of business are offered greater financial rewards, career success, and longevity than those in leadership positions. While this makes sense from a business growth and generation perspective, it acts as a disincentive to those talented and rare individuals capable of pursing either a major “rainmaker” or “firm leader” path. Unfortunately, given the growing size, complexity, and management demands of law firms today, few individuals are capable of being both ' firm leader and major rainmaker, and thus the choice between a leadership or rainmaker career path becomes even more critical and distinct.

In addition to career path and related financial disincentives to taking on a leadership role, talented, mid-level partners also identify a personal disincentive. In many cases, mid-level partners are at a stage in life where they have children still living at home, and thus family commitments are both weighty and time consuming. Very often, these individuals are interested in maintaining a form of professional-personal balance, and have observed how family commitments are often sidelined as managing partners and firm leaders face the time pressure and competing demands of both clients and firm management requirements.

A final nail in the coffin on the pitch to partners considering leadership positions is the sheer challenge and headache associated with attempting to lead a law firm. Structural characteristics of law firms such as “consensus-based management” inhibit efficient and effective decision-making and drive ongoing partner political hurdles and internal negotiations. All too often, mid-level partners perceive the difficulty associated with making decisions and driving progress in highly democratic partnerships and conclude that the stress of managing such a group is too personally taxing and burdensome.

So, given this array of disincentives that law firms create for those partners considering leadership positions, it is really no wonder that firms are facing a void in future leaders.

The question is: How can firms begin to address the leadership vacuum they are facing and start identifying individuals who will one day be both willing and able to take on a leadership role?

Solving the Problem

For firms that have already entered a leadership crisis, the situation may appear particularly dire. However, there are a variety of opportunities for firms to begin to correct their course and re-establish a clear leadership future for the firm. If your firm is at a point where it needs to focus on overcoming a void in leadership, consider the following options:

• Identify a successor to the firm's current leader and put him or her on the job immediately: Recognizing that no one person may be a “perfect” fit, you need to identify your best available future leader resource and put him or her in a position of responsibility for the firm today. This individual should begin shadowing the current firm leader, attending critical management meetings, and putting him or herself into the role of the firm's future Managing Partner. Consider adopting (possibly temporarily) a Chair/Managing Partner structure, whereby the firm appoints a leader successor to begin taking on some responsibilities for the firm as Managing Partner, while retaining the current leader in the role of the firm's Chair. This shared responsibility model serves as a testing ground for leaders. It also alleviates some of the burden associated with taking on the role, gives young leaders visibility among the partner group, and eases the transition of a partner into a firmwide leadership position.
• Creatively reshape the firm's governance structure: Look at alternative management structures that may offer better use of your existing leadership talent pool and available resources. Consider utilizing an adapted management or executive committee structure in the short term, with roles that leverage the strengths and round out the weaknesses of the firm's current pool of available leaders. Instead of trying to force the right people into the wrong roles, build roles around those with leadership talent, making leadership positions work for available partners with skills based on each individual's management abilities and leadership strengths.
• Recruit a non-lawyer executive as a leader of the firm: While few firms have effectively and entirely replaced lawyer leadership with non-lawyer executives, many firms have succeeded in establishing experienced non-lawyer executives in roles of broad-based professional operational and managerial responsibility. In many cases, high-powered professional leadership roles assist firms in leadership transition periods, helping firms to seamlessly bridge gaps in strong partner leadership talent by providing continuity and stability through high-level and talented professional leadership.
• Realign leadership incentives: Although most firms' compensation systems give some amount of consideration to leadership contributions, there is more that needs to be done to ensure that the firm's compensation system supports individuals willing to give up opportunities to develop client relationships in order to run the firm. The long-run impact of this sacrifice on an individual's career can be substantial, and thus it is critical that firms ensure that individuals with an array of opportunities available to them are appropriately and fairly compensated for their commitment and leadership contributions.

For perceptive firms whose existing leadership recognizes the lack of available resources to fill leadership positions in the future, additional opportunities exist to circumvent a true leadership crisis. If your firm has spotted a lack of leadership capability deeper in your ranks, taking the following actions now could help you avert serious instability down the road:

• Develop a profile for lawyer-leaders in your firm: Define the qualities, skills, and attitudes that a lawyer must demonstrate in order to effectively lead others within the firm while successfully working within your firm's culture. This profile will serve as a useful framework in spotting future leaders among your existing lawyers and can even be incorporated into your recruiting efforts to assess the leadership capabilities of potential new hires. By screening new candidates for leadership capabilities, firms ensure that they are hiring individuals who are not only smart and potentially good lawyers, but may also contribute to the growth and direction of the firm over the long run.
• Identify lawyers at various levels to begin filling in the leadership ranks over time: Increasingly firms are recognizing the need to work with lawyers at early stages in their careers to elicit their leadership potential and begin honing the skills necessary to one day become a firm leader. Firms must dig deeper into the firm's ranks to identify future potential leaders at all stages of their careers and then provide the guidance and development opportunities required for these individuals to mature. This requires that current leaders communicate directly with junior lawyers to let them know that they have been identified as an individual with future leadership potential. Communication between current and potential future leaders is a critical tool in forming a relationship with the firm, ensuring that those with leadership potential are identified and begin to receive the guidance that they will need to mature into strong leaders down the road.
• Begin coaching junior lawyers on their role as firm owners and leaders: Create the context to convert lawyers from an “employee” mentality to an ownership mentality. This is the critical step for developing a future leader or any highly productive partner in a law firm. We have seen a notable difference in the pool of leaders in firms where expectations of “owner” behavior are set and communicated early on. Firms that continually impress upon junior lawyers the importance of taking advantage of opportunities to build a career turn out a much higher percentage of leaders than those firms that enable junior lawyers to slide by with a passive approach to practicing and advancement.
• Implement a structured leadership-development program: These programs are not reserved for training of current leaders (although that is certainly one component of this much-needed process), but are targeted at identifying and developing junior partners as future leaders of the firm. The programs often consist of identifying 10-20 rising stars with true leadership potential. These individuals are then immersed into an intensive six-to-12 month leadership program, aimed at developing their skills as leaders and
  testing their ability to deal with challenging leadership situations.

The Magnified Importance of Leadership in Today's Economic Environment

There has been no shortage of reporting on the fact that many firms are feeling the impact of the stumbling economy. In today's challenging environment of flattening or declining firm revenues, some current leaders might decide that now is not the time to worry about developing a successor. This is a mistake. Now is precisely the time to take proactive measures to shore up the firm's future.

If your firm truly has a future leadership void, the lawyers in the firm know it, some of your competitors know it, and some of your clients might even know it. With recent high-profile law firm failures and numerous reports of law firm layoffs, lawyers question whether their own firm is taking necessary steps to ensure long-term strength. A firm that is making a clear effort to address the leadership-void problem is sending a message about its long-term commitment to its lawyers, staff, and clients. In addition, tumultuous times often require very active leadership and a series of critical decisions. The current leader will make better decisions if he/she begins to rely on input from the next generation with a significant stake in the long-term viability of the organization. Identify a successor and begin to use him/her as a sounding board. This is the beginning of the development process. And the time to start is now.

Kristin Stark, a member of this newsletter's Board of Editors, is a consultant in Hildebrandt International's Strategy group. She advises clients on strategy development, organizational management and structure, and talent development and retention. She is based in the company's San Francisco office. John Childers, also a Hildebrandt International consultant, works with law firms throughout the United States and Canada, assisting with strategy development, mergers and acquisitions, and leadership and organization development.