Retiring Baby Boomers pose big challenges for law firms. The aging-out of the generation, which began when the first baby boomers turned 65 in 2011, will affect most of Big Law. So much so, that the subject is receiving wide coverage in the trade media. In just the last two months The American Lawyer published an article in which author Julie Triedman called the anticipated retirement of baby boomer lawyers The Graying of The Am Law 200. In an Altman Weil Survey of Am Law firms, two-thirds of firm respondents attributed 25% or more of the firms’ revenue generation to partners over age 60.
Still, far too few firms are addressing succession planning in any formal or concrete way. Here are 4 reasons we think that may be happening:
- Firm management is suffering from The Ostrich Syndrome. They’ve decided – either consciously or unconsciously — that there is no problem or that it will somehow work itself out in an as yet to be disclosed way.
- Baby Boomer rainmakers won’t cooperate. Existing rainmakers may view succession planning as a way to ease them out and take their clients. That attitude could be justified if your firm has signaled that they will receive reduced compensation, and maybe even reduced stature, as they turn control of client relationships over to other partners. If Boomers perceive they are being pushed out, holding on tighter may feel like their only option.
- It’s expensive. Hiring laterals with the necessary, redundant skills to back up aging-out Boomers could look like an expensive proposition. This is particularly true if those laterals don’t have a full book of business of their own. However, opting for someone with the excess capacity to take on those soon-to-be-orphaned clients is essential. Of course, if you think that’s too expensive it could mean you’re focused on the wrong set of numbers. The cost of hiring laterals pales in comparison to what it would cost to replace clients when they are scooped up by your competition because your firm had no plan for a smooth transition.
- You don’t know where to start. We know – it looks daunting, it looks complicated. But there are some simple tools and a few guiding principles that we would be more than happy to share.
TMG’s Take is a regular e-mail advisory produced by The McCormick Group. The company’s Legal, Government Affairs, and Law Firm Management groups combine the expertise of more than 15 Consultants to help law firms fulfill all of their lawyer and administrative recruiting needs. TMG’s Take covers topics across the spectrum of law firm management, including associate and partner compensation, growth strategies, marketing and business development, operations and facilities management, finance and accounting, professional development, and technology. Please direct all inquiries to Steve Nelson, Managing Principal at (703) 841-1700 or firstname.lastname@example.org.