Canadian Lawyer

40 O C T O B E R 2 0 1 8 w w w . c a n a d i a n l a w y e r m a g . c o m properly compensated throughout their career and that they have good retirement plans in place. Most firms will tell you, "We don't want to get involved in our partners' personal financial affairs," but the reality is that partners who have well-planned retirements are more likely to retire. And that's a big part of transitioning talent pools from one generation to the next. Nicoló: Based on our own experience at RSM and years of working with law firms, we have found that it's important to create a culture and process around succession planning that develops the next generation of partners. Set out standards on how partners are expected to involve junior professionals in meetings with clients, in the management of files and responsibility for seeking new business from existing clients. Creating an environment that is focused on developing leadership skills of the firms' top talent is key. Formal training and coaching work well. Shadowing is also a great way for people to see how others do it in action. Review the partnership agreement and your compensation models to ensure that they don't include clauses that act as a disincen- tive for senior partners to engage in succes- sion planning. Partner compensation in the years immediately prior to retirement as well as the pension payout, if one exists, should also be tied to the successful transition of cli- ent relationships. If succession has not been addressed, put together a plan. At a minimum, the plan should focus on partners' exit strategy, client transition and the devel- opment of future partners. Sole practitioners and smaller firms should actively develop existing employees to take over. They should also be in communication with larger firms about trans- ferring clients. Sole practitioners should implement a practice continuation agreement as this will ensure your practice is transferred to another firm or individual in the event of your disability or death. Wilbur: One of the things our readers indicated that they are considering for succession planning is training their young lawyers in marketing and business development. How can law firms do that effectively? Nicoló: RSM research has found that there are three effective strategies. First, formal coaching and training. Partners should provide guidance to associates on effective ways to engage in marketing. For example, partners should encourage associates to maintain their contacts from undergraduate school and from law school, and nurture and sustain these relationships over time. These contacts might be tomorrow's Fortune 500 General Counsel or potential referral sources. Second, shadowing. As helpful as coaching and training are, watching someone who is good at something is an even better way to learn. For example, a partner could take an associate to a client meeting, lunch or social event. And lastly, involve them in activities. Another valuable way to impart marketing and business development skills is for partners to give associates opportunities to collaborate on activities. For example, partners should invite associates to participate in formal pitch meetings with prospects. Firstly, this will show the prospect that the firm values its associates and considers them vital par- ticipants on the team. And secondly, by playing a role in the meeting, an associate will gain first-hand experience on how to pitch business. Khorasanee: People are going to do what they're incented to do. So, you really need to ensure that you don't have any disincentives built into your organization pre- venting people from doing the right thing. That's step one. Step two I believe is that you need to consciously build into the system incentives for senior partners to do the right thing. So, that means allowing them to have time to mentor junior partners and connecting these more junior partners with their network. Many senior partners don't need to pound the pavement anymore to meet their business targets; the calls are coming to them, whereas junior partners are pounding the pavement. You bridge that by ensuring that the compensation models build in a factor of mentorship and future firm sustainability. Wilbur: What other changes should law firms consider for succession planning? Nicoló: Law firm leaders should really quantify the risk to see what is at stake. Many firms don't have a clear idea of the risks and exposure to potential loss from the looming retire- ment wave. Determine the amount of the firm's revenue that is tied to each partner and estimate how much of this revenue would be lost with the partner's departure. Create incentives for partners to support succession planning. Once a clear suc- cession planning process is established, there should be finan- cial rewards for partners who meet recognized milestones. It is important that junior partners buy into the plan and that senior partners help junior partners grow the practice. The managing partner must champion succession planning. We have found that, in most law firms, few initiatives happen, "Most law firms agree that [succession planning is] an issue and they talk about it on the surface. But it's rare that firms are going through a step-by-step process to evaluate what they can do better." Hasan Khorasanee, Director of Commercial Banking at CIBC

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