More and more these days, I find myself wondering about the legacy I’ll leave behind. For so long, my focus has been on building Vista, ensuring it thrived, and serving our clients with the best legal operations consulting in the business. For close to two decades, I’ve focused on developing strategies and a product line that helps law firms deliver more efficient and effective services, thus helping them reach their goals (profitability, scalability, growth, etc.). But as I’ve crested into a season of life where time feels more finite, the thought of what happens next has started taking center stage. The question in my head?
How can I ensure that my hard work outlasts me, providing for my family, my team, and the community I’ve served for decades?
There's a truth many of us prefer not to think about: we're all mortal, and many of us want our companies to survive beyond us. Confronting that reality is fundamental to securing both peace of mind and the future of the business. In spite of this unavoidable reality, I've observed that succession planning remains one of the most overlooked aspects of running a successful plaintiff law firm.
After three decades in this business and helping countless firms optimize their operations, I've learned that succession planning is really about building a more valuable, sustainable business that can thrive whether you're at the helm or not. In this first blog of a two-part series, I want to share why every firm owner should prioritize succession planning and provide you with a practical roadmap to get started.
Succession planning is the strategic process of preparing your law firm to transition smoothly under new leadership when the time comes. The goal is to create a holistic roadmap for the future of your firm, regardless of changes in leadership.
Effective succession planning includes several key components. First, it involves identifying potential future leaders within your firm or assessing external candidates who align with your firm’s values and vision. It also includes ensuring that your firm's operational systems are well-documented, efficient, and scalable. Financial planning plays a critical role, as you'll need to assess the financial health of the firm and set up processes for a seamless transfer of equity or ownership stakes. Finally, it allows you to protect the legacy of your firm by retaining client relationships, maintaining staff morale, and ensuring continuity in the quality of services you provide.
It's important to note that succession planning isn't just needed when preparing for retirement or a worst-case scenario like a sudden death. Transitions happen for various reasons...whether it's stepping back to explore other interests, scaling your firm to take on new opportunities, or even deciding to merge with another practice. By thinking about and preparing for these possibilities early, you set your firm up to respond effectively to change, rather than being caught off guard.
Investing time and effort into succession planning today ensures that your firm can thrive tomorrow, no matter what the future holds. The goal is to build a business that isn’t entirely dependent on you, but is positioned to prosper regardless of who is at the helm.
I often tell firm owners, "Buses run every day." It's not meant to be morbid, but rather a wake-up call. According to the National Safety Council, the lifetime odds of dying in a motor vehicle accident are 1 in 101. Add in other unexpected health events, and the statistics become even more sobering.
When tragedy strikes an unprepared law firm, the aftermath is devastating for everyone involved. Neglecting succession planning often leads to significant challenges, especially in two critical areas.
From a purely financial perspective, the lack of succession planning can be devastating to your estate's value. Without a clear transition plan, the only value attributable to your estate may be the quantum meruit—the reasonable value of services already performed—on cases under your roof at the time of tragedy.
This presents a significant problem. Quantum meruit calculations typically focus on the work completed to date, not the full potential value of resolved cases. A case that might eventually settle for $500,000 after two years of work might only show $50,000 in quantum meruit value if the tragedy occurs early in the process. Your estate receives a fraction of what that case portfolio could have been worth.
Consider this: if your firm typically maintains 100 active cases with an average potential value of $150,000 each, your total case portfolio might be worth $15 million upon successful resolution. However, the quantum meruit value of those same cases might only be $3-5 million, depending on their stages. That's a potential $10-12 million loss to your estate. Think of it this way: That money that could have secured your family's financial future. Too, the cost of experts to assist in computing these quantum meruit value estimates plus the work of potentially tracking down cases that leave the firm upon a tragedy, would also erode the estate’s value.
The financial implications are staggering, but the human cost is equally important. I've watched families torn apart by the stress of managing an unprepared firm's dissolution. Very important strategic and legal decisions will need to be made by spouses or executors/executrix at a time of emotional fragility. This not only exacerbates the pain felt by the loss of a loved one, but can lead to hasty and poor decision making. Estate lawyers become very wealthy in these situations, but your family pays the price...both financially and emotionally.
Your loyal employees, who may have worked with you for decades, may find themselves suddenly unemployed with little notice. Clients who trusted you with their most important legal matters feel abandoned. The reputation you spent years building can be damaged in a matter of weeks if cases aren't handled properly during the transition.
It doesn’t have to be this way. By taking the time to plan and put strong systems in place, you can protect your firm, your clients, and your legacy.
The best time to start thinking about succession planning is long before you're ready to step away. Ideally, you should begin planning as soon as your firm is stable and thriving. Waiting too long...or until your hair turns gray...could leave you or someone else scrambling in a high-stakes situation with little time to ensure a smooth transition.
Here are some key benefits of starting your succession planning process early in your career:
By starting early, you can build a timeline, mentor potential successors, and solidify systems that will keep your firm running efficiently without you at the helm. Good planning today is the difference between a graceful exit tomorrow and a chaotic rush out the door.
Succession planning is an ongoing process that should evolve as your firm grows and your personal circumstances change. But the most important step is simply facing it. Here's how to get started:
Succession planning is ultimately about legacy...the financial legacy you leave your family and the professional legacy you leave your clients, your employees, and your industry. A well-planned succession ensures that the relationships you've built, the cases you've worked on, and the expertise you've developed continue to benefit others long after you've moved on.
With proper planning, your eventual transition (whether planned or unexpected) can be a testament to the professionalism and foresight that defined your career.
The time to start planning isn't someday in the distant future when retirement seems imminent. The time is now, while you're healthy, engaged, and able to make thoughtful decisions about your firm's future. Your family, your employees, and your clients are depending on you to plan ahead.
Don't let them down.
