Why Succession Planning Matters for Your Law Firm’s Future

For leaders of contingency fee law firms, few questions carry more urgency than why succession planning matters. Right now, many firms are answering that question with silence.

The data is clear: a Thomson Reuters survey found that only 37% of law firms have a formal succession plan in progress¹, while ALM Legal Intelligence reported that fewer than 30% have a formal², documented plan in place to manage leadership transitions. Even more recently, research still points to only 34% of law firms having an effective succession plan.

This gap exists not because firm owners lack the discipline to run complex businesses, but because succession planning sits at the uneasy intersection of financial strategy, personal identity, and the reality that every practice will eventually outlive its founder or close with one.

Tom Lenfestey, founder and CEO of The Law Practice Exchange, has built his career helping law firm owners navigate that intersection. His assessment of where most firms stand today is blunt.

Watch the video for important insights from Tom.

Most Law Firms Are Not Prepared

“Are law firms prepared for a succession plan? I would say the answer is absolutely not,” says Tom. Two barriers reinforce each other: emotional reluctance tied to the idea of retirement and a fear of losing control over what the founder built. “Retirement is a scary thing to them,” Tom notes. “It can be an emotional block to actually taking those steps for succession planning.”

Even firms that have engaged with the subject may not have addressed it with enough depth, simply setting a mandatory partner retirement age and stopping there, without building the deeper infrastructure required to transfer relationships, leadership, and institutional knowledge. According to Tom, that’s not a succession plan; it’s a calendar entry.

Why Succession Planning Matters as a Control Strategy

The most useful reframe for firm owners who have deferred the work is this: succession planning is not an exit event. It is a discipline that, when built into a firm’s ongoing strategy, preserves more control than it surrenders. “Succession planning is really about you taking control now to prevent loss of control later,” says Tom.

This reframing shifts the exercise from a passive end-of-career event to a proactive leadership decision. Firm owners who engage early decide who leads next, how the brand is positioned for transition, what the financial terms look like, and when the transition happens. Firm owners who wait have those decisions made for them, by circumstance, illness, or market pressure, risk the gradual attrition of clients whose primary relationship was tied to the leader.

There is also a competitive dimension that receives less attention. Firms with a defined path to partnership, built as part of a broader framework, can attract talent in ways firms without one cannot. Showing a prospective associate a clear ownership pathway “is an awesome recruitment tool and a strategic advantage,” says Tom.

The Risks of Failing to Plan

When firm leaders think about succession risk, the instinct is to frame it as a financial problem. It is, but it is also considerably more than that. “If you don’t really plan for a succession, you risk mainly losing the legacy of what your firm is,” Tom notes. For attorneys who founded their practices, that distinction matters. “My law firm is part of me. My legacy? It’s part of my personal value, my attachment to it,” says Tom.

The erosion of law firm valuation during an unplanned wind-down is real. So is the loss that reaches past the balance sheet: the clients left without continuity, the staff left without a defined future, and the community that depended on that firm’s representation. As Tom describes it, an unplanned closure is “a loss to the community that you serve, to the industry that you serve, to the employees that you have, [and] to the clients.”

The Right Time to Start Is Now

For firm owners who see retirement as years away, Tom’s advice is straightforward: start succession planning now if you have built a firm and do not yet know what comes next. Owners who are not ready to step away can still explore options. A strategic partnership, for example, can let them continue practicing while transferring ownership and management. Law firm mergers and acquisitions can also be structured so owners remain active well after a formal ownership transition. Firms that build that infrastructure now control the terms of every transition that follows; firms that defer simply hand that control to circumstance.

Succession planning should be an ongoing operational discipline. When approached with enough lead time, law firm owners gain the leverage to define their own terms, protect their people and preserve the institutional value they built over decades. Understanding why succession planning matters is the starting point; building a defined process around that understanding separates firms positioned for continuity from those that leave the outcome to chance.

For more than 20 years, Esquire Bank has partnered with contingency fee law firm leaders on the financial decisions that drive growth, transition and long-term operational planning.

¹ https://legal.thomsonreuters.com/blog/thinking-about-a-succession-plan-for-your-law-firm/

²Source: ALM Legal Intelligence Survey.