In this blog written by Tim McKey, CEO of  Vista Consulting, he explains why one of the biggest threats facing law firms today is a lack of succession planning.

“I’ve spent years in the trenches with law firm owners, and one of the most profound conversations we have isn’t about a landmark case or a record-breaking quarter,” notes Tim. “It’s about the future. Specifically, what happens to the firm you’ve poured your life into when you’re no longer at the helm?” It’s a conversation many law firm leaders put off, but succession planning is not an end-of-career task; it’s a core business strategy.

The Elephant in the Room: An Aging Industry

The legal industry is facing a quiet but significant challenge: a large portion of its leadership is nearing retirement age. According to a 2023 survey by the American Bar Association, the average age of lawyers continues to trend upward (over 67% are over the age of 40), reflecting an aging legal profession (Source: Law.com). In 2023, nearly 14% of all lawyers were reported age 65 or older, double the percentage of the general U.S. workforce (U.S. Census Bureau and the Bureau of Labor Statistics). This reality necessitates proactive succession planning to ensure the continuity of law firms.

Yet, a surprising number of firms have no formal succession plan. According to a survey by ALM Legal Intelligence, a third of law firms lack succession plans for leadership or client relations. This isn’t just an oversight; it’s a risk. Without a plan, law firms risk instability, a decline in client confidence, and the potential loss of the legacy built over decades. The question isn’t if leadership will change, but how the firm will handle it when it does.

When Should You Start Succession Planning?

The best time to start thinking about succession planning was yesterday. The second-best time is now. “I’ve seen firms begin this process 10, even 15 years before a planned exit,” says Tim. “This isn’t because they are rushing to the finish line. It simply gives the law firm time to thoughtfully identify and groom the next generation of leaders, align the financial transition, and ensure the firm’s culture remains intact.” The worst time to start succession planning is waiting until you’re a year or two out from retirement. This delayed approach creates urgency and pressure, which often leads to poor decisions.

4 Key Considerations for Effecting a Smooth Transition

Effective succession planning is more than just naming a successor. It involves several critical components:

• Identifying Future Leaders: Who has the skills, the vision, and the respect of the team to take over? Don’t just look for legal talent. Look for business acumen and leadership potential.
• Financial Planning: How will the transition be structured financially? This includes valuing the law firm, outlining buy-in/buy-out terms, and ensuring the plan is fair to both the outgoing and incoming leadership.
• Client and Team Communication: How will you manage the transition of key client relationships? A gradual hand-off ensures clients feel secure and confident in the firm’s future. Similarly, your team needs to understand and feel good about the path forward.
• Knowledge Transfer: The wisdom you’ve accumulated over your career is one of the firm’s most valuable assets. A long-term plan allows for mentorship and the transfer of this institutional knowledge.

Creating Your Succession Planning Roadmap

Building a succession planning roadmap doesn’t have to be complicated. Start by asking the hard questions: What is my vision for the firm after I’m gone? Who on my team has leadership potential? What financial outcome do I need?

From there, you can begin to outline the steps. This might involve creating a leadership development program, bringing in financial experts to help with valuation, and starting to gradually shift responsibilities. The goal is to make the transition a seamless process, not an abrupt event.

“I’ve had the privilege of walking alongside many law firm owners as they navigate this journey,” notes Tim. “It’s a deeply personal process, but one that brings incredible peace of mind.” Planning for your firm’s future is one of the greatest services you can provide – to your clients, your team, and the legacy you’ve worked so hard to build.

Learn More About Law Firm Succession

Looking to gain more insights into the importance of law firm succession planning and how to approach your firm’s plan?

Read our blog “Law Firm Growth and Succession Planning: 4 Considerations”.