Law firm worst-case scenarios for partner departures

PARTNER DEPARTURE LAW

Last month, we identified a few worst-case scenarios for partners and groups departing a law firm, including the potential bad outcomes that could be avoided, or at least mitigated, with advance planning. Law firms reacting to partner or group departures also should plan ahead to avoid the potential negative effects of partner departures.

Many law firms believe that their firm culture will prevent partner or group departures from the firm, or at least blunt the negative impacts. It is true that in a law firm culture where the partners feel a strong connection to the firm, and believe that they are getting good value from their partners and from the firm that they cannot easily get at a different firm, partners can be less likely to seek out new opportunities. But as the business of law firms evolves, and as economic pressures at law firms rise, the ties that bind may not bind quite so tightly as they once did. Over time, even the most steadfast partners may see a brighter future elsewhere.

That is not necessarily bad news for the firm, of course. In the right situations, the departure of partners or groups whose practices are not profitable, or not profitable enough, for the firm can be a positive development for the bottom line. The same is true of the departure of partners or groups whose practices are not priorities in the firm's long-term strategy. And few law firms will mourn the departure of partners who are difficult personalities, who complain too much, who take out more than they put in, or who don't put in their fair share of time on administrative matters. The right partner or group departures also might clear the path for rising partners to advance at the firm, and to bring a fresh perspective and renewed energy to the practice.

So, partner or group departures can be a good thing for a law firm, if the right partners or groups leave. But it's not safe to assume that the only partners eyeing the door are the ones you want to leave. It's just as likely that the partners or groups that are critical to the firm could be considering an exit. As we approach the year-end, when the firm's financial performance is becoming clear, star partners or groups may also be closely analyzing what the firm has done for them, lately. It's wise to consider the effects if a valued or critical partner or group departs the firm.

A star leaves the firm. Departing partners and groups who are the most valuable on the open market tend also to be partners and groups who are most valuable to the firm. Great lawyers who are also smart, personable, profitable, and collegial are naturally in high demand all the time. You may believe that the firm's stars are the last likely to leave the firm. But in reality, they may be most at risk of departing, because they can.

A core practice leaves the firm. Similarly, what if one of the core practices, critical to the firm's strategic plan for the future, walks out the door? That may seem unlikely at first glance, but is it? If the firm has identified a particular practice as a strategic priority, it likely is because that practice is profitable, maybe very profitable, and growing, and perhaps even high-profile and prestigious. These attributes are desirable to your firm, and to other firms too. Paradoxically, the practices that any firm identifies as strategic priorities may also be the most at risk for defection, since other firms likely have the same priorities.

The departure kills morale. It's not too far a leap to see how significant departures of partners or groups can affect morale at the firm. For junior attorneys, including junior partners, and for staff, the health of the firm is an important contributor to work satisfaction. Law firm work is serious, has important consequences, and can be tedious and quite stressful. Yet it also can be tremendously satisfying to work at a law firm that is successful and growing, with bright and accomplished colleagues, and challenging work. If a partner or group departure takes away any of these ingredients, or even raises serious questions about these elements, morale is likely to suffer.

The departure cascades. Similarly, partner or group departures can create a vicious cycle in which the departures make other partners more likely to leave, because of real or imagined dimmed prospects at the firm. Because law firm culture is a relatively delicate thing, that cycle can accelerate quickly, leading to a cascade effect. The more partners leave, the worse things get, or appear to get, at the firm, and the more the remaining partners want to leave.

The departure creates an existential threat. Any partner and group departure also generally means firm revenue is also departing. Declining revenues at a law firm can mean that life is worse for everyone who is left, in real dollar terms. That could mean cutbacks, layoffs of attorneys or staff, closing offices, considering mergers, or worse. The legal news is replete with stories of law firms whose decline was swift, at least at the end. For any partner or group departure that is unanticipated or left untended, the firm bears the risk that it could snowball to an existential threat.

All is not lost, at least not yet. These dreaded effects are not inevitable, of course, and there are many ways that law firms can prevent them, or at least make them much less likely. That requires advance planning, however. We call it a risk assessment for partner departures. If you wait until the partner or group announces a departure, you are already behind. And playing catch-up on these issues only increases the risks of the worst happening.