Succession of founding partners
On Tuesday May 10, Britain's heir-to-the-throne Prince Charles took center stage at the opening of parliament, replacing the 96-year-old Queen Elizabeth who missed the grand set-piece event for the first time in almost six decades.
The 73-year old Prince Charles has been prepared to one day succeed his mother since the day he was born. While such extensive preparation is a basic routine for a future king or queen, outside the world of hereditary heads-of-state, leadership succession is haphazard.
Succession of the leadership in a family run business commonly comes with challenges. In this context it is absolutely worth watching HBO’s ‘Succession’ (cast pictured above). This series centers on the fictional Roy family, the dysfunctional owners of Waystar RoyCo, a fictional global media and entertainment conglomerate, who are fighting for control of the company amid uncertainty about the health of the family's patriarch, Logan Roy. The leadership transition does not go well. Drama assured, leaving the company in a free fall.
The transition of fashion label Gucci from the 2nd to the 3rd generation became a well documented non-fictional leadership disaster. The plot even involves a murder and the Gucci family ultimately lost control of the company.
Founding partners’ challenges
While the majority of law firms still bears the name(s) of the founding partner(s), these partners left the firm long ago. In the legal industry most of the elite law firms have long been institutionalized. However, there is a number of firms where the founding partner(s) is/are still present. The majority of these founding partners are set to retire in the next five years or so.
The succession of founding partners today cannot be compared with the succession of founding partners before the year 2000. The main difference is the way in which the legal industry has professionalized. Sullivan & Cromwell was founded in 1879 by Algernon Sullivan and William Cromwell. Skadden was founded in 1948 in New York by Marshall Skadden, John Slate and Les Arps. Kirkland & Ellis was founded back in 1909 in Chicago.
I could easily go on, but you will get the general idea. All these firms had their leadership transition from their founding partners decades ago when the legal industry was still in its infancy. For any founding partner who is retiring in the near future, things could not be more different. The stakes are unmistakably higher and the business climate is far less forgiving.
It must have been during the 90’s era, when the legal industry truly reached adulthood.
Revenue and profits exploded and law became a business. The last decade of the 20th century created many new opportunities. It was during this era that a number of today’s most successful law firms around the world were founded. It is precisely this group that will be facing the transition challenges that come with the unavoidable departure of their founder(s).
One only has to take a look at the legal directories like Chambers or Legal500, to realize that many founding partners as a lawyer have a tier-1 reputation in their field. Commonly founding partners are not just respected lawyers, but they are also visionaries and successful entrepreneurs. It is the rare combination of these qualities that forms the foundation for their firm’s reputation and success.
While founding partners may have this characteristic in common, the way in which they are leading their firms is far more pluriform. On both ends of the spectrum we know founding partners that have a demanding and overwhelming personality and that want everything done exactly their way (imagine the lawyer equivalent of Apple founder Steve Jobs) and those who have the ability to unite and inspire new talent around them (perhaps more like Google). The later has the ability to let thousand flowers blossom while the former is more a big tree in which shadow it is hard to grow.
There are multiple roads to building a successful law firm. Regardless the road, the leadership succession when the founding partner departs, will leave the firm vulnerable and it might trigger the firm’s downfall.
Preparing for leadership transition
Back to Prince Charles. Monarchies teach us that it is of vital importance to thoroughly prepare the future leader (and a group of spare leaders, just in case). The example also shows that the heir-apparent may in the end not be the best choice. Prince Charles and his wife Camilla are not very popular and some suggest that it might be better to skip them in favor of William and Kate.
Law firms are not known for preparing their future leadership. Commonly newly appointed managing partners have no clue of what it really takes to day-to-day lead a multimillion dollar highly professional organization with hundreds of employees. That is why at TGO Consulting we have our law firm leadership program by which we help our clients to prepare partners for a future leadership role (managing partner or practice group leader). It makes good business sense to educate your partners on how to run a successful professional law firm.
Prince Charles' example not only shows us the importance of preparation. It also illustrates to keep an open mind as it comes to leadership succession, especially when it concerns the founding partner(s). Typically founding partners surround themselves with a small group of partners that they have worked with since the early days. Together they have gone through the ups and downs and between them there is a high level of trust. It seems no more than logical to choose the successor from this small group.
While understandable, it might not be what is the best for the firm. The partners that helped build the firm, may not be the ones that are best poised to lead the firm into the future. Maybe the future does not require continuation but change? Sometimes the best choice is not the obvious choice. It is important to at least keep an open mind.
At TGO Consulting we help our clients figuring out what profile is needed to continue the firm’s success over the years to come. We help overcome the political sensitivities and personal disappointments that may come with this process.
Mutatis mutandis, all of the above also applies to any firm where one strong charismatic leader has been at the helm for more than a decade. While not founding partners these managing partners often have characteristics with founders in common.
As a parting shot, I would like to point at the most radical of all succession strategies: just leave from one day to the other and let the firm sort it out without you. I know it sounds like a crazy idea, but we are all mortal and there is always at least a theoretical possibility of a founding partner getting a stroke or being hit by a train. Luckily in reality this rarely happens. However in the handful of cases where it did happen, the firms were just fine. Disaster unites and an acute urgency mutes the ubiquitous political games.
Don’t let it come to that. We recommend founding partners and their firms start thinking about leadership transition early on. We will be happy to support you during this process.