Succession in Leadership

Many firms that were formed in the late 1960s through the early 1990s are now facing a transition from their founding leadership to a younger generation. There are many problems and benefits that will be associated with this transition. This article discusses the issues and the approaches that a firm may take to make the transition effective and efficient with minimal disruption.

Culture, Values and Vision

Too many times I have heard lawyers lament that they wish the old founder/benevolent despot were still there so the partners did not have to deal with management and compensation. The founder made all the decisions, and now the partners are having to deal with an executive committee they may not trust to put the firm first. But the transition will be based not on other models, but on the culture, values, and vision of the firm. Organization must always be based on these three factors. Before moving forward, here are some definitions. Culture is the prevailing, historical approach a firm has used in delivering legal services and in working as a unit. This includes demographics, interpersonal dynamics, client mix, and client loyalty. Values represent the core principles by which people in the firm interact with one another ' e.g., mutual respect, ethical behavior, accountability and a team approach. Vision is that statement that defines where the firm is headed and what the firm wants the world to recognize as its purpose.

What are the issues? Suppose you are the founder/entrepreneur and are now looking at setting up a plan to transition out of the chair/managing partner position. You are getting pressure to set up a plan in case you retire, are disabled, or die. Most of the first- and second-generation lawyers received their work from you and other founders, and have sought to keep that work under their control. The third generation of attorneys has most of the leadership talent because they have had to build their own practices. Some partners are putting together models they have seen in other firms and are sending you memoranda on their approaches. Unfortunately, you know that you do not want those models to become the focal or starting point because it may cause a disruption or even protracted arguments for and against a specific model. For example, they may want an immediate election of a managing partner or an election of three managing partners to handle the attorneys, the finances, and marketing. In your firm and your culture, you may end up with some of the issues listed in the next paragraph.

Executive Committees

You have an executive committee, but its members do not know nor do they care to know the intricacies of running a law firm. In addition, some may be on the executive committee for the following reasons:

• They want to protect their compensation.
• They represent a certain constituency in the firm.
• They control a significant amount of business and control who in the firm gets to work on it.
• Although popular, they do not conform to the core values of the firm.
• They do not understand the vision of the firm and seem to go on “rabbit trails” in their suggestions to the executive committee.

You would like to have a clean start so that the attorneys and employees know the culture, values, and vision of the firm. You want them to understand collaboration and accountability so that whoever becomes the managing partner will not drown under the weight of decisions pushed up to him or her by people who should be able to empower themselves to perform in their respective positions of leadership responsibility.

In one particular firm in California, the executive committee, composed of second- and third-generation partners, used a presentation method for vetting various candidates. If in the future of your firm an election was acceptable, the following questions might have to be answered by the candidate to the partners.

1. What is your attitude toward the circumstances facing the legal industry, including the growth of national and international firms and the firm's ability to compete with firms that are larger, more profitable, and invading the firm's market?
2. What is your attitude toward the growth of the firm, including willingness to seek out or entertain an appropriate merger that fits the culture, values, and vision of the firm?
3. What is your attitude toward lateral hires and law school recruiting?
4. What will you do to build confidence in the executive committee and support from all the attorneys?
5. What is your attitude regarding the way partner compensation is now determined?
6. Given the dramatic changes in the legal industry over the last five years, what do you see as the bedrock, fundamental cultural issues that will sustain the firm?

Providing a Vision

You can create a smooth, effective, and efficient transition by acting like an entrepreneur. Think of it as starting a new firm, although with an old culture and vision that must be understood and clarified. With a vision for what the firm should be, and a set of values that will sustain the success of the firm, what people should be in what positions of leadership to ensure success? Who are the people that demonstrate accountability to the firm rather than their own best self-interest? For example, who acts responsibly in their client relationships and the groups they lead? Who are the people who promote “team” activity and demonstrate collaboration? (For a reminder on the word “collaboration,” the definition is “a group of people with a common vision who are accountable to one another for the fulfillment of that vision.” Collaboration, then, is not collegiality.) Finally, the vision is to set up subjective and statistical metrics to meet the firm's expectations. For example, what should each partner heading a group be expected to do to meet the financial, training, and turnover reduction objectives in his or her group?

Accomplishing a Smooth Transition

What is the strategy for accomplishing a smooth and seamless transition? Starting with the executive committee and key units of firm management, first confirm the culture, values, and vision of the firm that will sustain future success. Second, those items must be clarified and put in writing so everyone on the executive committee and other leaders understand them and covenant to uphold them. Next, the leadership group above will start the same process with attorneys and employees until the items are understood and in writing for the entire firm.

Current Leadership

The actions required for the current leadership include clarification of the culture, values, and vision plus the following: 1) Each partner should nurture other partners and others in the firm along the path to transition; and 2) Each should provide praise and support to others for accomplishments along the path to greater collaboration and accountability.

There is a case for naming the transition period as a potential crisis situation for the firm. The transition is a critical time. The firm cannot afford a false start. A false start erodes the credibility of the firm's decision process and its leadership. For example, one firm promoted one of the three members of its executive committee to managing partner. He then tried to implement some very important changes within the groups managing the firm. He was rebuffed and eventually kicked out because he did not have the credibility to implement the changes. It took the firm almost five years to get a credible managing partner, during which time the former managing partner had to step back in. The next managing partner will need to have a very strong base of credibility among all the partners in order make tough decisions that affect each and every partner. The firm cannot afford failure because of the disruptions and divisiveness that could be the result.

Avoiding Quick Fixes

If the transition process is not done properly, the firm could get caught up in quick fixes that do more harm than good. It is common knowledge that a quick reorganization is just a band-aid that usually causes more problems and disruptions than it solves. The model may not reflect the culture, values, and vision of the firm, and may be very inappropriate for its future profitability and success. Quick fixes may put a new managing partner in a position of having to deal with an exponential number and diversity of decisions, which will bog down the decision process. Why is this detrimental to the firm? When a firm knows its culture, values, and vision, the managing partner can put issues in priority. For example, in one firm in Boston, the managing partner put the vision on a presentation board. At each meeting of group leaders, he asks how a suggestion supported the vision. If the answer is unresponsive, they move on. If the answer is responsive and conformed to the vision, they drill down to find out how it can help the firm.

The Role of the Founder/Managing Partner

The founder and current managing partner must identify and promote people who have credibility to appeal to all generations in the firm. At the above-mentioned firm's forum for managing partners, they agreed that the person must value the firm more than his or her current clients or personal self-interest. Some examples are as follows: One managing partner has formally been in charge of the financial relationships with banks and clients for 15 years; another has been involved with a task force and has proven that she can perform and meet objectives set by the firm; and a third has been active in determining the future of the firm based on current trends within the planning committee or an attorneys' training committee.

Benefits of a Smooth Transition

So what are the benefits to the firm of performing the transition appropriately? There will be a base line of accountability and collaboration for running the firm to maximize leadership time and talent. Second, there will be a smooth, effective and efficient transition for the firm. Third, there will be a resurgence of energy and focus within the firm based upon the understanding of the culture, values, and vision of the firm. People in this firm will care more about their firm and will go to the mat for clients and others in the firm.

Conclusion

• The culture, values, and vision determine the approach a firm should take in transferring the managing partner responsibility.
• The firm must document for understanding the culture, values, and vision. Everyone must understand and become part of this covenant.
• If the firm does not go through the process, there are critical crisis issues that the firm must address.
• There are great benefits to a smooth transition. It creates an environment for the new managing partner that will avoid division and disruption in the future of the firm.
• A proper transition creates an environment for the new managing partner to be effective and efficient in his or her new role, which will in turn propel the firm to a new and sustainable future.
• A new firm will evolve with greater energy and focus that will add to its success model.

This article first appeared in Law Firm Partnership & Benefits Report, a sister publication of this newsletter.

William C. Cobb is the managing partner of Cobb Consulting (WCCI, Inc.), based in Houston. E-mail: [email protected]. Web site: www.cobb-consulting.com.

Many firms that were formed in the late 1960s through the early 1990s are now facing a transition from their founding leadership to a younger generation. There are many problems and benefits that will be associated with this transition. This article discusses the issues and the approaches that a firm may take to make the transition effective and efficient with minimal disruption.

Culture, Values and Vision

Too many times I have heard lawyers lament that they wish the old founder/benevolent despot were still there so the partners did not have to deal with management and compensation. The founder made all the decisions, and now the partners are having to deal with an executive committee they may not trust to put the firm first. But the transition will be based not on other models, but on the culture, values, and vision of the firm. Organization must always be based on these three factors. Before moving forward, here are some definitions. Culture is the prevailing, historical approach a firm has used in delivering legal services and in working as a unit. This includes demographics, interpersonal dynamics, client mix, and client loyalty. Values represent the core principles by which people in the firm interact with one another ' e.g., mutual respect, ethical behavior, accountability and a team approach. Vision is that statement that defines where the firm is headed and what the firm wants the world to recognize as its purpose.

What are the issues? Suppose you are the founder/entrepreneur and are now looking at setting up a plan to transition out of the chair/managing partner position. You are getting pressure to set up a plan in case you retire, are disabled, or die. Most of the first- and second-generation lawyers received their work from you and other founders, and have sought to keep that work under their control. The third generation of attorneys has most of the leadership talent because they have had to build their own practices. Some partners are putting together models they have seen in other firms and are sending you memoranda on their approaches. Unfortunately, you know that you do not want those models to become the focal or starting point because it may cause a disruption or even protracted arguments for and against a specific model. For example, they may want an immediate election of a managing partner or an election of three managing partners to handle the attorneys, the finances, and marketing. In your firm and your culture, you may end up with some of the issues listed in the next paragraph.

Executive Committees

You have an executive committee, but its members do not know nor do they care to know the intricacies of running a law firm. In addition, some may be on the executive committee for the following reasons:

• They want to protect their compensation.
• They represent a certain constituency in the firm.
• They control a significant amount of business and control who in the firm gets to work on it.
• Although popular, they do not conform to the core values of the firm.
• They do not understand the vision of the firm and seem to go on “rabbit trails” in their suggestions to the executive committee.

You would like to have a clean start so that the attorneys and employees know the culture, values, and vision of the firm. You want them to understand collaboration and accountability so that whoever becomes the managing partner will not drown under the weight of decisions pushed up to him or her by people who should be able to empower themselves to perform in their respective positions of leadership responsibility.

In one particular firm in California, the executive committee, composed of second- and third-generation partners, used a presentation method for vetting various candidates. If in the future of your firm an election was acceptable, the following questions might have to be answered by the candidate to the partners.

1. What is your attitude toward the circumstances facing the legal industry, including the growth of national and international firms and the firm's ability to compete with firms that are larger, more profitable, and invading the firm's market?
2. What is your attitude toward the growth of the firm, including willingness to seek out or entertain an appropriate merger that fits the culture, values, and vision of the firm?
3. What is your attitude toward lateral hires and law school recruiting?
4. What will you do to build confidence in the executive committee and support from all the attorneys?
5. What is your attitude regarding the way partner compensation is now determined?
6. Given the dramatic changes in the legal industry over the last five years, what do you see as the bedrock, fundamental cultural issues that will sustain the firm?

Providing a Vision

You can create a smooth, effective, and efficient transition by acting like an entrepreneur. Think of it as starting a new firm, although with an old culture and vision that must be understood and clarified. With a vision for what the firm should be, and a set of values that will sustain the success of the firm, what people should be in what positions of leadership to ensure success? Who are the people that demonstrate accountability to the firm rather than their own best self-interest? For example, who acts responsibly in their client relationships and the groups they lead? Who are the people who promote “team” activity and demonstrate collaboration? (For a reminder on the word “collaboration,” the definition is “a group of people with a common vision who are accountable to one another for the fulfillment of that vision.” Collaboration, then, is not collegiality.) Finally, the vision is to set up subjective and statistical metrics to meet the firm's expectations. For example, what should each partner heading a group be expected to do to meet the financial, training, and turnover reduction objectives in his or her group?

Accomplishing a Smooth Transition

What is the strategy for accomplishing a smooth and seamless transition? Starting with the executive committee and key units of firm management, first confirm the culture, values, and vision of the firm that will sustain future success. Second, those items must be clarified and put in writing so everyone on the executive committee and other leaders understand them and covenant to uphold them. Next, the leadership group above will start the same process with attorneys and employees until the items are understood and in writing for the entire firm.

Current Leadership

The actions required for the current leadership include clarification of the culture, values, and vision plus the following: 1) Each partner should nurture other partners and others in the firm along the path to transition; and 2) Each should provide praise and support to others for accomplishments along the path to greater collaboration and accountability.

There is a case for naming the transition period as a potential crisis situation for the firm. The transition is a critical time. The firm cannot afford a false start. A false start erodes the credibility of the firm's decision process and its leadership. For example, one firm promoted one of the three members of its executive committee to managing partner. He then tried to implement some very important changes within the groups managing the firm. He was rebuffed and eventually kicked out because he did not have the credibility to implement the changes. It took the firm almost five years to get a credible managing partner, during which time the former managing partner had to step back in. The next managing partner will need to have a very strong base of credibility among all the partners in order make tough decisions that affect each and every partner. The firm cannot afford failure because of the disruptions and divisiveness that could be the result.

Avoiding Quick Fixes

If the transition process is not done properly, the firm could get caught up in quick fixes that do more harm than good. It is common knowledge that a quick reorganization is just a band-aid that usually causes more problems and disruptions than it solves. The model may not reflect the culture, values, and vision of the firm, and may be very inappropriate for its future profitability and success. Quick fixes may put a new managing partner in a position of having to deal with an exponential number and diversity of decisions, which will bog down the decision process. Why is this detrimental to the firm? When a firm knows its culture, values, and vision, the managing partner can put issues in priority. For example, in one firm in Boston, the managing partner put the vision on a presentation board. At each meeting of group leaders, he asks how a suggestion supported the vision. If the answer is unresponsive, they move on. If the answer is responsive and conformed to the vision, they drill down to find out how it can help the firm.

The Role of the Founder/Managing Partner

The founder and current managing partner must identify and promote people who have credibility to appeal to all generations in the firm. At the above-mentioned firm's forum for managing partners, they agreed that the person must value the firm more than his or her current clients or personal self-interest. Some examples are as follows: One managing partner has formally been in charge of the financial relationships with banks and clients for 15 years; another has been involved with a task force and has proven that she can perform and meet objectives set by the firm; and a third has been active in determining the future of the firm based on current trends within the planning committee or an attorneys' training committee.

Benefits of a Smooth Transition

So what are the benefits to the firm of performing the transition appropriately? There will be a base line of accountability and collaboration for running the firm to maximize leadership time and talent. Second, there will be a smooth, effective and efficient transition for the firm. Third, there will be a resurgence of energy and focus within the firm based upon the understanding of the culture, values, and vision of the firm. People in this firm will care more about their firm and will go to the mat for clients and others in the firm.

Conclusion

• The culture, values, and vision determine the approach a firm should take in transferring the managing partner responsibility.
• The firm must document for understanding the culture, values, and vision. Everyone must understand and become part of this covenant.
• If the firm does not go through the process, there are critical crisis issues that the firm must address.
• There are great benefits to a smooth transition. It creates an environment for the new managing partner that will avoid division and disruption in the future of the firm.
• A proper transition creates an environment for the new managing partner to be effective and efficient in his or her new role, which will in turn propel the firm to a new and sustainable future.
• A new firm will evolve with greater energy and focus that will add to its success model.

This article first appeared in Law Firm Partnership & Benefits Report, a sister publication of this newsletter.

William C. Cobb is the managing partner of Cobb Consulting (WCCI, Inc.), based in Houston. E-mail: [email protected]. Web site: www.cobb-consulting.com.