Succession planning consists of identifying essential jobs within your business and generating action plans for people to fill those positions if they become vacant. Taking a comprehensive perspective of the present and future goals, this form of planning ensures that people have the right roles when you transition out of your firm temporarily, permanently, abruptly, or as scheduled.
It doesn't matter where you are in your legal career; law firm succession planning is essential for business longevity. However, only 37% of legal firms have an established succession plan - according to a 2018 Thomson Reuters poll. But why is this? Is your firm guilty of avoiding succession planning too?
Why is law firm succession planning avoided?
The key to successful succession planning for law firms is to address the subject at the right moment. Although preparing ahead is the best course of action, firms sometimes avoid doing it. However, this is a huge mistake.
The lack of planning is usually due to the fear of losing billable hours and the fact that developing an effective plan can take the managing partners a significant amount of time. But those fears should not limit you from getting the long-term benefits of having a succession plan.
Why is succession planning important for law firms?
As a law firm owner, you can't just get up and leave whenever. After all, you've built a team, client base, and a good life for yourself from this business.
However, it doesn't mean you can't leave. When reaching retirement age, falling ill, or perhaps leaving to pursue a new personal or professional goal, you can leave; there's just a right and a wrong way of doing it.
The most suitable method is to plan a succession. Here's why:
1. Generational wealth
It's never too early to start planning your succession as a business owner. Protecting your family's financial future requires knowing who will operate your firm after you have stopped working there.
It seems easy to pass the family company down to the next generation. However, you must consider other choices if your children are unwilling to take on this duty. This is because the complex process can cause equity, legal, financial, tax, and even emotional issues.
2. Clients and employees
Planning for your law firm's succession is essential for your clients, employees, and anyone who interacts with your organization. You don't want to leave your staff rushing to deal with angry clients and impatient creditors while they're putting together crucial paperwork for open job positions.
3. Expected and unexpected events
Many law firm owners typically think they only need a succession plan when considering retirement. However, it would be best if you also prepared for unexpected events such as a sudden sickness or death in the family, which would require an immediate shift in leadership. Even though it's difficult to consider, you don't want to leave your clients and staff in the dark if any of these situations occur.
Planning for the future
After reading this blog, you should take away two important lessons; why law firms avoid succession planning and why they shouldn't. Begin planning and create a solid succession plan that leaves you, your loved ones, employees, and clients protected and in a good state of mind when you leave.
At DesCPA Business Advisory, we can help. Whether you're looking for better insights into your company or an exit strategy, our expert team is ready to help. For more information about what we offer, visit our website or schedule an introductory call.