By Brenda Barnes, of Valium Visa
Compensation – or lack thereof – drives many if not most succession plans. The most obvious reason for a succession plan is to compensate principals fairly for the firm they’ve built with their entrepreneurial spirit, including the physical assets and intellectual property they own, and for the money they’ve invested in their businesses.
How to select successors?
You will need to asses the next generation of partners and identify those who are ready and willing to take the lead on building and sustaining client relationships. Selecting successors involves three simple steps:
- Understand their career goals. Avoid assumptions by sitting down with each lawyer to discuss their career aspirations. These conversations will help you to identify the lawyers who are keen to take on leadership and client development roles and those whose priorities lie elsewhere. Now you can focus your energies on those who want to take the lead.
- Give them the skills they need. Business development skills are traditionally not taught at law school. And not all lawyers are rainmakers. But these skills can be learned, so take the time to invest in business development training.
- Create opportunities for greater client interaction. Once you have given them the skills, you need to provide them the opportunities to take the lead on new matters. Let them initiate relationship building activities with the clients. You can observe and give feedback on their development to prepare them for transition.
How do you motivate the retiring attorneys & the successors?
Compensation plans will play a key role in motivating both the retiring attorneys and their successors. For this reason, compensation plans should be directly linked to a successful transition. To prepare and negotiate a compensation plan, you will need to understand the lawyer’s motivations and circumstances. Financial rewards are an obvious solution, but if you dig deeper there may be other factors that need to be considered when putting together a compensation plan. To understand each of your lawyers’ motivations, have them answer the following questions:
- Are my personal and professional goals in alignment?
- How do I want to be compensated for the additional client responsibility?
- Am I ready to take over the reins – do I need help to do that?
For Retiring Attorneys:
- What does the next phase of my life look like?
- How much money do I need to achieve that?
- Am I ready to hand over the reins – do I need help to do that?
A professional consultant can help you clarify each lawyer’s motivation which will be crucial to successfully negotiating you compensation plans. Start at least 5 years out, 10 years is best. Firms that can do strategic financial planning around deferred compensation programs will be ahead of the curve!
Identifying successors and understanding their motivations pave the way for successful compensation negotiations. Involving clients in your succession plans will make your firm stand out from the crowd.