3 March 2022 By Victoria Tomlinson
Succession planning is one of those things that too often goes to the back burner, according to Ronnie Fox, partner in Fox and Partners.
Over the last five years, I have been working with hundreds of professionals, especially lawyers, as they transition into unretirement. This book highlights many of the challenges and offers tips and some solutions. Written for a global audience, the reader needs to watch out for local variations – an example being August Aquila who says that many partnership agreements have a mandatory retirement age, “which is usually 66 to 70”. This is the case in the United States but my experience in the UK is that most law firms require partners to retire by 65 if not earlier – borne out by Law.com’s research that few firms have any partners aged over 64.
The issue of succession is one of the most important challenges of any firm and I have chosen three chapters where the issues overlap with retirement, which of course is where my expertise and experience lies.
Jaap Bosman of TGO Consulting writes the chapter on rainmakers in firms – partners whose revenue is in the upper ten percent of their firm. Because their income is so important, he says partners make concessions to them and “allow disproportional influence on the strategy, special or extra compensation, or exception to retirement rules”. He says rainmakers go to great lengths to ensure files are in their name and that they don’t make partners who are better or equally as good as themselves.
Rainmakers are a real challenge when it comes to their retirement. The worst story I heard was where a firm spent a year trying to get a partner to hand over their clients until, a week before Christmas and the retirement date, he was locked in his office until he had handed over his clients. When you know the name of this firm, you are left stunned that they did not have a better succession plan than this! Presumably the partner thought the firm could not manage without him and would make him a consultant so he could continue working.
Jaap Bosman’s answer to dealing with rainmakers is to start addressing the issue ten years before the retirement date, “preventing partners being put on a rainmaker pedestal” and fostering a collaborative sharing culture among partners. He makes a number of other suggestions including being very strict on maintaining any set retirement age to prevent bad behaviour being rewarded ie if you allow one partner to continue beyond the prescribed age, this can set a trend for others to follow.
August Aquila’s chapter looks at how to compensate retired and retiring equity partners. He says that retiring partners “will be reducing their workload in the next two to three years”. I have to say I held four individual partner coaching sessions last month, all in one firm, and all four said they had never worked and billed more hours than they were currently doing. And they were months or a year off retirement. Next-Up had been running a pre-retirement programme in the previous six months, including a health session by Dr Sarah Hattam. She had stressed the importance of seven hours good sleep for good health – which all the partners felt was rather ironic given their workloads!
August Aquila makes the point that you do not want partners at odds with their firm when they are retiring! He says to ensure this, make sure that compensation and retirement plans do not conflict. As an example, “if the firm is continuing to compensate a retiring partner on his or her billable production, but wanting the partner to transition clients without any compensation reward”.
He outlines a clear handover process, focused on communicating with the client upfront and then regular, six-monthly reviews with the client to ensure they are happy.
I spoke to a partner based in Sweden recently – he had been on one of our workshops and was struck by former partners saying how difficult their handovers had been. In this case two former partners had given a year’s notice to retire and started the handover process almost immediately from then. However, they both said that as soon as they announced their retirement, they became the ‘walking dead’. Clients wanted the new partner on board and colleagues didn’t give them new projects.
My Swedish partner said he thought this could be done better and set out to achieve an exemplary handover, setting up 3-1 meetings to ensure clients were introduced to all the teams. He was clearly proud of this and had been asked by his firm to advise what they could learn. It struck me that putting a partner on a pedestal for a really fantastic handover might be the way to encourage good behaviours?
Ronnie Fox writes a chapter Why Lawyers and Law Firms Find it Difficult to Deal with Retirement and Succession: Overcoming the Obstacles. He outlines five reasons as to why lawyers and their firms are uncomfortable planning for retirement
To be honest, I am not sure about this last point. I think ten or more years ago, when a partner retired, their options were generally ‘golf or non-executive director role’. Now, people see themselves as having another – I hesitate to say ‘career’ – but another go at some kind of work life, though very few know what that might look like.
This is where our workshops come in. I don’t think people are facing up to their mortality when they come on them. We generally bring in around 20 external speakers including a panel of people doing all sorts of interesting things in unretirement. On our panels we include people such as a former CEO growing flowers for weddings when people want to avoid air miles; someone starting a small business helping graduates to get City jobs; becoming a lecturer; the rather more obvious consultant and various trustee type roles; and volunteering overseas …. And many more. These days their choices are enormous. And it means they can plan a to be active for at least five to ten years and maybe many more before facing up to their mortality.
Ronnie’s chapter has some eminently sensible advice for individuals and law firm. He says to recognise that planning ahead is a mature and sensible thing to do. Then think about how you want to be remembered – your legacy. Do you want files to be in a mess and unhappy clients? Then imagine the kudos for your name if you make a success of handing over clients – I guess our Swedish partner is the perfect example.
He then mentions a reason why he thinks American firms are having such success in London – they recognise the experience and achievements of their older partners as an advantage to the firm, rather than forcing expulsion of partners in their fifties.
He goes on with a salutary point – to consider yourself extremely fortunate if you have reached maturity in your legal career and still enjoy the work that you do. He says, “There are no extra points or credits awarded to those who die at their desk”.
This book is excellent in raising the many issues around retirement and succession planning. However, I would have loved to write the final chapter! This would be about getting partners to spend one or two days thinking about themselves, with one of our workshops (of course, I would say that, wouldn’t I?!).
But this really helps partners to be positive about the next stage and start a constructive discussion around succession planning. One partner came on our two-day workshop and at the dinner said to me, “You know, I haven’t told anyone – not even my wife – that I am coming on this workshop. But I now realise that is daft, I should start discussions now, get good succession plans in place and really think about what next. You know, I am now really excited about this next stage.”
And he is not alone. More than 80% of partners coming on our workshops are excited about their futures – typically from around just 30% before this.
They also have been setting up their own WhatsApp groups from the workshop so they can share pre-retirement ideas and issues. This way, the whole process is constructive and helpful – for the individual, certainly, but also clients and the firm.
Victoria Tomlinson is chief executive and founder of Next-Up. Next-Up supports employers with a range of services for directors, partners and employees to help them understand the impact of retirement on mental health and create a plan to use their skills and experience in new ways to ensure wellbeing. A key part of our role is to inspire people with ideas and contacts, beyond traditional expectations. A former director of EY, she is an international speaker on unretirement, personal branding and using LinkedIn strategically as well as on leadership and women on boards. She mentors chief executives and directors, start-up businesses and ex-offenders. Victoria is Honorary Teaching Fellow at Lancaster University and chaired an advisory board for University of Leeds.