Six Strategies for Transitioning a Firm's Client Base from Senior to Other Partners

Allowing your partners to increase their exposure to and relationship with your clients can increase the risk that a departing partner will take some of them with him or her. But if two or three partners are responsible for and are in contact with the client, then when a lawyer leaves, the task is to preserve existing links, not create new ones, and that is much easier to do.

Joel A. Rose, a member of this newsletter's Board of Editors, is president of Joel A. Rose & Associates, Inc., a firm of management consultants headquartered in Cherry Hill, NJ. He may be contacted at [email protected] or 856-427-0050.

In many of the more financially and professionally successful law firms, the opportunity of the firm to profit from the transition of clients from a departing senior partner to other partners at the right time has been well established. In these firms, client transition has become a function of management and client development opportunity rather than the age of the departing partner.

Every client, no matter how large or small, usually has one point person who has the greatest role in selecting and retaining the law firm. And every law firm, regardless of size, is usually connected to each of its clients by one person, almost always a partner, whose links are a little stronger than anyone else's.

The underpinning of these links most often include: 1) producing high-quality work in a timely manner at fees that are fair to the client and the firm; 2) shared attitudes toward the client's important issues, i.e., clients whose futures are affected by major social and political issues prefer lawyers who share their values, not merely advocate them, no matter how effectively the lawyer does so; and/or 3) personal ties based on family relationships, shared community interests, and personal friendships.

Since there are plenty of competitor law firms that can and do produce high-quality work in a timely manner, at fees that are fair to the client and the firm, successful transitioning of client work from senior to other partners involves numerous components that have to be planned and implemented in an effective and timely manner.

Types of Client Transitions

There are four types of client transitions: 1) the non-competitive, planned type; 2) the non-competitive, unplanned type; 3) the competitive, planned type; and 4) the competitive, unplanned type.

The Non-competitive, Planned Transition

Usually this transition occurs because the departing lawyer is retiring from the firm and is eager and willing to help. From the firm's perspective, this transition has the potential to be the most favorable type in terms of client retention. The retirement may be complete, or it may be a career change to teaching, the bench, a house counsel position, or a non-legal position. Occasionally, a partner might leave to start an in-house legal department for a client. In that event, some of the firm's work for the client will inevitably be lost to the newly created legal department, but the firm should be well-positioned to retain whatever work it was doing, and that which will continue to be outsourced.

The Non-competitive, Unplanned Transition

The non-competitive, unplanned transition is almost always because the departing partner may have died or become disabled. It typically results from a sudden event. While the specifics of this type of transition cannot be anticipated, general preparations for the sudden loss of a partner should include some contingency planning for client transition.

The Competitive, Unplanned Transition

Competitive, unplanned transitions are situations in which a lawyer is voluntarily withdrawing from the firm, and he or she knows it before the firm is aware. In this scenario, the withdrawing lawyer may have the upper hand in the planning process, although the firm's loss of the partner's clients is not inevitable. The relationship the departing partner has with the firm and the continuing relationship of that partner and his or her client will usually determine the feasibility of the partner's retention of that client.

The Competitive, Planned Transition

Competitive, planned transitions may occur because a departing lawyer has been asked to leave the firm, and he or she likely will continue to practice elsewhere within the community. Although senior partner terminations are rare, they do occur, and the firm may have to compete with its former member to retain clients. Usually the firm knows the lawyer will be terminated before the lawyer knows it, and therefore, management can plan client-retention strategies accordingly.

Role of the Departing Partner

The role the departing partner played while servicing his or her clients will affect, to a significant extent, the firm's ability to retain those clients. For example, if the partner managed his or her client relationships so that other partners performed legal work for the clients, and the clients felt comfortable calling and referring work to the other attorneys, the likelihood of retaining these clients is considerably better than if the partner retained personal control over clients, served as the principal conduit between clients and the firm, and was the sole communications link with the clients' executives. The following examples describe various partner/client relationships and their influence on transition:

Primary Personal Contact, Family or Personal Ties: The departing partner is the brother-in-law, next-door neighbor, fellow lodge member, or personal friend of the person in charge of legal affairs at the client. In many, perhaps most cases, the personal relationship predates the professional one. This personal relationship may be irrelevant in non-competitive partner departures, and may be insurmountable in competitive ones. Sometimes, however, even a non-competitive departure may give the client an opportunity it has been waiting for: to change firms without offending the contact partner.

Personnel Responsible for Producing the Client's Work: If the departing partner enjoys the respect of the client, and is the one the client looks to when the work is done, then the firm must be prepared to send another quarterback into the game immediately. Ideally, the client contact already knows the replacement, has worked with him or her, and has confidence that the firm can continue to provide the same level of quality service.

Sole Authority on the Client's Important Concerns: If the client manufactures widgets in Chile to export to Kenya, and the departing partner wrote the Chilean-Kenyan trade treaties, then substituting a new lawyer from the firm to handle the client business will be much more difficult. Except when it is just impossible to do otherwise, a depth of one in a key position at the firm is no depth at all.

Six Transition Strategies

1) Plan Ahead: Anticipating the impact of a key partner's departure should begin when a client first comes to the firm. Client transition should be a function of management, firm culture, and development opportunity, rather than the age of a senior partner. The senior partner and lawyer management should develop a plan for the orderly transition of his or her clients (and networking relationships). It should be agreed upon by the partner and the client, so that all are aware which partners will be responsible for making it happen. Ideally, if a client is of sufficient size and financial importance to justify the investment of lawyers' time, there should be at least two partners ' a client team ' who have a personal relationship with the client's key person or people. Introduce these partners at an early point and do not keep “rotating” faces. If those lawyers are several years apart in age, the continuity will be natural and easier to maintain. When a lawyer retires from the firm, the linkage with someone else will already be in place, and the likelihood of the client leaving will be reduced.

2) Pay Attention to the Client's Signals and Messages: Client entertainment is not a one-way street. If your client seems to favor one of your lawyers by inviting him or her to the superbox at the stadium or to a charity gala, then clearly this lawyer is your relationship manager, or one of them, regardless of what you or your other partners think.

3) Start the Transition Before the Client Realizes You Are Doing So: When you know the relationship partner's plans for retirement, commence the transition process at least a year or two in advance, selecting the replacement. The likely new relationship partner should be included in the luncheons, golf outings, and other client-relation events, as well as present at important meetings involving the client's legal work. Observe carefully how the candidate and the client respond to each other. If the personal chemistry is not working, you may need to try a second or third candidate until the right person is identified.

4) Keep the Current Relationship Partner Anxiety-Free: He or she must be your willing ally in the transition process, not a reluctant or resistant foe. To that end, add rather than substitute a relationship partner. Both the existing and the new relationship partners should continue in those roles, even after you believe the new person is securely established. The partner who knows that he or she is training an addition to the role instead of his or her own replacement will be much more cooperative and helpful. Certainly, the original relationship partner sees what is happening (if he or she is so naive that he or she does not see it, he or she would not be in that role), but his or her eventual departure should be (or appear to be) on a mutually acceptable timetable.

5) Avoid Negative Consequences for the Outgoing Partner: Compensation is an important component affecting the transition process. Do not reduce compensation because the relationship partner spends less time at his or her task. You want him or her to spend less time so that the new person has the opportunity to work at the relationship. In fact, we are proponents of rewarding the responsible partner for making the successful transition happen. Give that partner a goal to transition by a certain date and provide a bonus or other incentive if the transition goes well. Do not take away the perks that the relationship partner truly enjoys. Buy an extra ticket to the ballgame or the theater so that the relationship partner does not experience a tangible and possibly embarrassing reduction in his role in the firm.

6) Select the Right Replacement Partner, Based Not Only on Personal Qualities, But Also on Experience in Legal Practice Areas: The most capable and charming “creditors rights” practitioner may be a poor choice as a relationship partner for your “Silicon Valley” or “entertainment industry” clients. While it is not necessary that the relationship partner also be primarily responsible for the client's legal work, it is essential that the partner do at least some of it and be somewhat knowledgeable about the practice area. The new relationship partner can succeed only if there is some common ground with the client. This is most often true when the first relationship partner, or the originating attorney, had such experience.

Depth of Personnel

If the client is big enough, consider having two or even three relationship partners, preferably with two or three decision makers at the client. The originating attorney should maintain the relationship with the original contact partner at the client, and the partner responsible for doing the work should establish his or her own contact person ' perhaps general counsel or the client's CFO.

Direct contact between the client's staff and the lawyers doing the work should be encouraged. Every contact point between the lawyers and the client can strengthen the relationship. Different partners should entertain and socialize with the client at appropriate times. The original relationship partner can take the client to the ballgame and play golf with him, but the partner who is on the museum board should escort the client to the gala new exhibit opening (with the invitation brokered by the relationship partner).

Establish and maintain multiple linkages wherever possible. If the client and one of your lawyers are both on the Little League board, or active in the Chamber of Commerce, that lawyer should, if possible, have some relationship responsibilities for the client.

Client Relationship As Part of the Firm's Culture

The firm's lawyers should be educated about how much easier and cheaper it is to retain a client than to replace one. Every member of your staff is part of the client retention-transition team. Often your secretaries and other staff will have meaningful interaction with your clients, and in smaller firms, may even be the “originators” for some clients. Therefore, encourage and support lawyers and other employees who are establishing both personal and professional ties to clients ' even those who are not part of the official relationship team.

'Share' Clients

Partners should be encouraged to involve a second attorney during initial client meetings and continuing thereafter, with the objective being to have a second attorney in the firm with whom the client would interact on a regular basis, wherever and whenever practicable. To address the non-billable concern of involving a second attorney early on, if that concern is an issue, consider advising the client that billing for the meetings will be at a “blended” rate, somewhere above the senior partner's rate and below the combined (two) rates. Depending upon the nature of the matter and the potential revenue to be derived from that client/matter, it may be advisable for the firm to absorb the cost of the second attorney attending initial meetings.

Compensation methods should encourage originating partners to spread the work around, and not hoard it. Therefore, at least some fee credit should go to the originating partner, no matter who does the work. Further, the compensation system should reward partners for delegating work to others, especially to those who possess expertise in different practice areas, rather than overemphasizing revenue from the personal production of partners, which frequently leads to the hoarding of work outside their areas of expertise and limiting the exposure of clients to other partners in the firm.

Allowing your partners to increase their exposure to and relationship with your clients can increase the risk that a departing partner will take some of them with him or her. But if two or three partners are responsible for and are in contact with the client, then when a lawyer leaves, the task is to preserve existing links, not create new ones, and that is much easier to do.

Joel A. Rose, a member of this newsletter's Board of Editors, is president of Joel A. Rose & Associates, Inc., a firm of management consultants headquartered in Cherry Hill, NJ. He may be contacted at [email protected] or 856-427-0050.