Friday, February 6, 2015

Finding the Silver Linings in Partner Departures

In 2014, lawyer departures reached another record year, up 7 percent over the prior year to more than 2,700 moves, according to The American Lawyer's 2015 Lateral Report. While nearly 3,000 lateral moves in one year may seem like a lot, it represents only a fraction of the total head count of U.S. law firms. Still, it's a troubling trend that's fraught with challenges for firms and one that is, most likely, just in its infancy.

For the law firm losing an important partner, the notice often comes as a shock. Questions swirl within the firm's leadership as well as among the partnership: Who else will leave? Why are they really leaving? Why didn't we see this coming? Which clients will follow them? Do they know something I don't know about the financial health of this firm? Should I be looking too? In many cases, the impulse is to circle the wagons and ease any concerns.

Take a Step Back

But the departure of a partner can also be a strategic opportunity for law firms. Departures can be good timing to reassess the practice group's strategy, improve communications, demonstrate client focus, provide opportunities to younger talent, improve practice group and firm financials and learn more about how clients value the firm. At their core, partner departures offer a unique opportunity to reassess the firm or practice group. It's a chance to deepen your understanding of the firm's culture and its competitive advantage, and it provides a unique and timely opportunity to communicate this both internally and outside the firm.

Take a Hard Look in the Mirror

The reasons a partner leaves a firm are as varied as the lawyers themselves. Despite what many would have you believe, it's not all about the money. Money is important, to be sure. But compensation is more often a symptom than the cause. Changing law firms is a huge risk for an established practitioner. A move to a new firm more often than not must solve several challenges for the lawyer. It's the job of firm leadership to unravel those motivations regardless of where they may lead. The health of the firm demands that you be objective, dig deep and take the time to understand the lessons to be gleaned from the partner's departure.

Demonstrate Client Focus

Acting quickly and decisively to assure clients of a smooth transition regardless of their decision to stay with the firm or go with the attorney can do wonders for client goodwill. Take the opportunity to learn as much as you can about how the client views the firm, the attorneys who have worked with the client, what alternatives the client is considering and their legal needs going forward. These interviews should be conducted by the managing partner of the firm or the practice group leader. The goal here is to convey to the client that the firm is focused on what is best for the client.

Assign a new relationship attorney but choose the succeeding partner carefully. Make sure you understand the client's needs and preferences and select an attorney that will enhance the relationship. Sometimes that can be a younger partner who will reenergize the relationship with better support and servicing.
A partner's departure represents an opening to competitors. Clients who plan on staying with the firm and who know a firm's leadership is listening, attentive and proactive can help protect the firm from poaching attempts by other firms.

Clarify the Firm's Strategic Direction

In some cases, the exit of a partner offers an opportunity to clarify and reinforce the strategic direction of the firm. Sometimes the practices of departing partners are outliers to the firm's core growth strategy. Other times, the practice may lack the bench strength or client base to warrant a reinvestment in the practice. Often times the partner does not take as many clients as they had planned to take, leaving the firm with an opportunity to improve the financials a bit. Conversely, the lawyer's practice may have been focusing on an emerging area of law that represents an important growth opportunity for the firm. In that case, reinvestment makes sense. Regardless, the decisions by firm leadership and how they respond to the departure can help crystallize the strategic direction of the firm.

Culture is the glue that holds a partnership together. An attorney's book of business that can easily be unbolted from the firm is an indicator of at least one underlying problem in the firm's culture. Departures present an opportunity to talk openly about difficult issues such as the lack of cross practice servicing of clients and explore what to do about those challenges. Tolerating territorialism in the firm has very real and damaging cultural and financial implications, as that experience can so aptly demonstrate. Getting to the root causes of this behavior is difficult but essential to the long term health of the organization.

It's hard to find a silver lining in a partner leaving the firm, but an objective look at the situation and asking some tough questions can reveal opportunities for law firm leaders to benefit from an otherwise difficult separation.