Retirement and succession planning aren’t common topics of conversation in law firms. In fact, you could say that they’re taboo. But at TPC Leadership we’re all about asking the difficult but important questions.
We recently discussed this subject with two of TPCL’s experts. Ingrid Van Berkel is a former co-managing partner at Evershards-Sutherland Dutch offices and now a TPC Leadership executive coach and facilitator. Annelieke Jense is TPC Leadership’s managing partner and head of the Dutch office.
To begin with, they outlined the reasons why law firms need to invest more in preparing themselves and partners for retirement. These businesses need to protect against losing a partner’s clients in a painful exit and ensure the team that remains is well prepared to step up.
In today’s post, we’re looking at the insights Ingrid and Annelieke brought to the question of how law firms can actually put those plans into practice.
Have the conversation as early as possible
As we’ve already mentioned, one of the key problems with retirement and succession planning in the legal sector is that the topic just isn’t broached enough. The first step, therefore, is to start normalising them as just another part of the career. And the sooner that plan is put in place the better.
“In fast-moving consumer and corporate sectors, people have been asked about their successor on their first day in a new job,” Annelieke says. “It’s to raise awareness that you’re only in the company for a period of time – you are just a passerby – and to make you feel responsible for the future of the firm.”
When succession is brought up from the very beginning, plans can be made to make that transition as smooth as possible.
One major law firm uses a “partner survival training” scheme for newly appointed partners and also prepares partners in the years before their retirement for the next step in their careers. Another sends partners on a mandatory three-month sabbatical. Not only does that make retirement less of a sudden lifestyle change, but it also helps their clients get introduced to the rest of the firm ahead of time.
Let’s talk about financial rewards
It’s not unfair to suggest that the legal profession is strongly driven by financial reward. It’s a competitive space – many would go so far as to say macho, even obsessive – with lawyers putting in extremely long hours and huge amounts of hard work to get to the top of their game and establish their position as the alpha.
This sort of pressure to perform is difficult enough when you’re in your 20s, but potentially more so as you head towards retirement.
“It’s really hard,” says Ingrid. “At some point, especially if you’re not working with a very large team, it will become very difficult to contribute as much as you did before.”
Asking those same ambitious individuals to think about the day when they’re no longer bringing in the big bucks is a big deal. But what if it was less of a sudden shift and more of a gradual transition?
Annelieke suggests that there may be a number of senior leaders who would happily trade a percentage of their annual income for the chance to ease off the gas slightly.
“If you were to give me 80% of my salary and tell me that I didn’t have to do so many billable hours, then I would feel less pressure,” she says.
Again, having this conversation early, setting the expectation for this gradual change and embedding it into the culture of a law firm, is key to its success.
Performance measures need to shift
The system of remuneration by billable hours not only favours the young and energetic but, perhaps more crucially, it dismisses the value of non-fee earning activities.
Mentoring a group of junior lawyers, for example, may not directly bring in any money for the business. But if those junior lawyers all go on to be even 5% more successful as fee earners themselves, then it is time well invested.
Ingrid says: “Lawyers record their time every six billable minutes. So if you’re doing something which is not captured in billable minutes – like developing others, or developing know-how, or networking – it’s really difficult to give that a value in the financial system. These activities should be extremely well valued and appreciated, but they’re not.”
Annelieke suggests a system like that used in many consultancy firms could be part of the answer.
“In some consultancies you can get credit points for developing IP, you can get credit points for coaching internally,” she says. “By doing that you acknowledge the value that is being given by an individual. Otherwise, the only thing you see is a decrease in profits and turnover.”
This approach could help tackle the issue of financial reward by creating tangible value in areas where it’s less easy to measure the direct impact on a firm’s profitability.
“If you want people to have different conversations,” says Annelieke, “if you want people to have much more of a team perspective on clients – it’s not my client, it’s the firm clients – the incentives need to change accordingly. The new aspirational behavior needs to be rewarded.”
The importance of cross-generational understanding
In order to help make this shift towards seeing greater value in non-profit generating activities, Annelieke and Ingrid suggest that there is a pressing need for greater cross-generational understanding. If people in their 20s better understood people in their 30s and people in their 30s better understood people in their 60s.
“Because you’re in such a different life stage and such a different career state, and even in a very different contributing state to the firm,” says Annelieke.
“If I would have a conversation with somebody who was close to retirement, perhaps instead of thinking ‘Why isn’t he bringing in enough money?’ I might understand what he put in 30 years ago for the firm and I would value what he’s adding now through non-profit-making activities.”
Ingrid agrees: “If you could build up teams consisting of younger partners and older partners working together, understanding together, supporting each other in a team, that would support the broader business as well.”
Continued career development
Another factor that would help ease the process of retirement and succession planning would be a greater emphasis on the career development journey as a whole.
Before being appointed partner, seniors in law firms need to go through an extensive preparation process to get them to the skill level they need. From their entrepreneurial sense to client relationship development, the investment in turning a lawyer into a partner is huge.
“But once they’re appointed partner, that seems to stop,” Ingrid says. “The position is more or less about clients and billable hours. In general, there’s not really much personal development for young partners in law firms even though that might be the longest tenureship of their career.”
While revenue generation is obviously essential for every firm, not investing in personal development after entering the partner rank seems somehow absurdd. Taking care of the people behind the fee-earner machine seems the human thing to do. And in the context of this blog, career development and retirement are closely interlinked.
If the focus during their time as partner is only on how they will grow the firm, and not also on how it can help them grow, then it’s almost inevitable for retirement to feel like being forced out after giving all your hard work to the business.
But if partners are given the opportunity to continue to develop personally, they’ll be better equipped to reflect on their next steps and what they want to do after retirement. Again, it’s about normalising retirement as another career stage, not an unwelcome cutoff point.
This will all need a shift in culture
Of course, all of this will take a transformational cultural shift, one that will need ambassadors to drive forward the agenda and help people get used to it.
Because succession isn’t just about finding someone to take over from a retiring partner. It’s about finding a healthy way for both the partner and the firm to move on. But that can often be at odds with the competitive nature of the legal sector, leading to strained exits in which both parties look to protect their own interests and not to support each other.
Avoiding that sometimes takes a change in mindset – not just towards retirement, but the firm as a whole. “Lawyers are very individualistic people,” says Annelieke. “The word ‘team’ is not mentioned a lot with the law firms we talk to. Their goal is for their practice to be successful, not always for the firm to be successful.”
Again, this is something that has to start as early as possible. When TPC Leadership works with law firms, we aim to foster a collaborative, cross-silo mindset that values team success and the sharing of expertise. We also pair up different generations for mentoring, as both sides benefit from each other’s perspectives and experience.
“If you start early, you stimulate that behaviour and mindset from the beginning,” says Ingrid. “Then when you’re growing as a partner, it becomes part of your DNA to be less individualistic, to work with your team, and to focus on the broader interests of the firm.”
When a culture focuses less on individual success and more on team performance, it’s much easier to think of succession in terms of finding the best way forward for everyone.
Looking to make a collaborative and cultural impact in your department or firm? Get in touch to find out how TPC can help.
