Can Technology Improve Your Partner Retention and Succession Strategies?aderantuser
This article was first published in Bloomberg BNA’s Big Law Business and is reprinted here with permission.
It was nearly ten years ago that a Law Practice Today story noted that “The reality is that the Boomer generation is slowly beginning to depart law firms… And this trend will accelerate sharply in the coming years. Many firms, regardless of size, have not prepared for this transition. Many have not even thought about it.” It’s hard to argue that much has changed. A 2014 NAWL Survey reported that 95% of firms have not identified their next managing partner, and only about 30% have a formal succession planning process.
In many firms, an exiting partner will be quickly replaced by a lateral hire via the usual hiring process. And regardless of the lateral’s resume, client book and interview success, the risk to the firm is significant. The former partner may be taking valuable clients with them, and the value of the incoming replacement may take years to assess. Put simply, firms are often lacking key insights when making these critical personnel decisions.
Lateral hires are now an important option for firms in response to increased partner mobility. In their report on the 2014 Lateral Hiring market, Above the Law noted “A sustained upswing in the lateral partner market over the past three years, with the vast majority of big law firms pursuing lateral hiring as an important part of their growth strategy.” In fact, more than 75% of the largest firms have hired 10 or more lateral partners in the past five years.
Since lateral hires and key partner retention are now critical to the bottom line for many firms, better records could improve such decisions. If a firm must decide between letting a partner walk versus fighting for their retention, for example, technology could take some of the guesswork out of that process. Some of the latest applications that offer matter transparency to clients could be utilized for partner retention and succession decisions, since these applications examine real-time information on fees, costs and work-to-date profitability. The insights can also be parsed at the attorney level, so a firm could more accurately measure a partner’s true value to the firm (or the impact of new lateral hires).
While firms likely won’t be relying solely on data analytics for their partnership-level hiring decisions any time soon, advancements in business intelligence technology is providing some additional key metrics for this process. These technologies may not guarantee success, but could certainly save your firm from a costly mistake.