Law Firm Succession Planning: What are the driving forces in law firm succession plans?

In the last article, we looked at why law practice succession planning is needed. Based on the Practicing Law in Indiana Survey conducted by The Indiana Lawyer, attorneys throughout Indiana saw law practice succession planning as one of their greatest challenges. We looked at several other reasons law practice succession planning is needed including the need to protect our clients and their interests, as well as facing the realities that our legal careers will eventually end, or we will be forced to do something due to ill health. We also looked at the demographic realities of having so many baby boomer attorneys practicing law in Indiana. We recognized that junior attorneys are looking for opportunities to manage and lead law practices. All these reasons are forces driving the need to address law practice succession planning. In this article we will identity other driving forces.

Many Indiana communities have recovered from the Great Recession of 2007 and 2008 and have strong and growing economies. Cities and regional areas are incubators of economic growth. Those include Indianapolis and surrounding counties, northwest (Lake and Porter counties), northeast (Fort Wayne and surrounding counties), north (South Bend, Elkhart and Goshen), northcentral (Lafayette, West Lafayette and Kokomo), southcentral (Bloomington, Columbus and Greensburg), southwest (Evansville, Princeton and Jasper), and south (Jeffersonville and New Albany).

These communities’ stronger economies are pushing the need for increased legal services in many areas — e.g., business planning and transactions, employment law, estate planning, litigation, family law, creditor-debtor, etc. Life and relationships create many joys, but also problems that require legal solutions. Because attorneys are problem-solvers, our services are in ever-increasing demand.

Many of us baby boomers and our parents are living longer and facing many living options in our retirements, as well as health issues. For the past several months, my wife and I have been providing care for her 90-year-old mother because of some serious health issues. Even though I’m an attorney, I’ve found it very challenging to navigate in the world of senior health care. Trying to decipher rehabilitation options, carefully consider assisted living and home health care choices and understand long-term health insurance eligibility requirements while under intense time pressure and, at times, profound stress, have been overwhelming. I have seen firsthand the need for attorneys who can guide families through this morass. As we and our parents live longer and need to deal with health issues, elder law will be a necessary growth area in our profession.

Another driving force for law practice succession planning is the continued numbers of men and women choosing to pursue careers in law. While law school applications are declining, and law schools are graduating fewer students, law students continue to graduate into a healthy but tight, legal job market. The class of 2015’s employment rate is 86.7 percent. The class of 2016 is slightly lower. While law school graduates can and do pursue jobs outside of the direct practice of law, most take and pass the bar exam so they can practice law. This continuing influx of new attorneys will be needed as demand for our legal services remains strong and as many “baby boomer” attorneys begin to retire. These new attorneys can be part of the solutions for many senior attorneys’ law practices and their succession plan challenges.

Change is a driving force. Change, in general, drives the need to plan and adapt to those changes. Most changes come at us as we go through life and work. For example, technology alone drives many changes. When I started practicing law in 1974, the IBM Selectric typewriter was the latest in technological advances in our small law firm. When I managed a legal services office in Lafayette, we paid more than $20,000 for one of the first-generation memory typewriters. The pace of technological change has significantly increased over the past 20 years or so. Computers, smartphones, the internet, the cloud and electronic filing have all impacted how we go about our work as attorneys. While we have choices as to if or how much we adapt to these changes, continuing change is inevitable. Again, junior attorneys with greater exposure to technological advances may be part of the solution for many senior attorneys’ law practice succession plans.

An area of significant change in Indiana’s legal profession came about 30 years ago when mediation became an approved way to settle legal disputes. Attorneys were proactive and helped to set up rules that would allow them to receive training and become both civil and family law mediators. Many Indiana attorneys today have expanded their practices to include mediation. Some attorneys are using mediation as a part of their “semi-retirement” plan. This is a good example of our profession being early adopters of change and experiencing its benefits while serving Indiana citizens.

Online legal service providers such as Avvo, LegalZoom and LawDingo are changing the landscape of practicing law. Initially, these online legal service providers focused on generating legal documents. They now are matching clients with attorneys. As direct competitors, they are here for the foreseeable future, and we will have to adapt to the changing legal landscape. On the positive side, more clients are being served, and if problems are created by these online legal service providers, we can help solve those problems.

Change and these other driving forces push us to make up our minds on how we will respond. When we are proactive, we have time to understand change and the options available to us. We can plan for our responses. When we are reactive to change, we have less time and fewer options to consider, and planning a response is much harder. We have different capacities for change, and as we get older, our capacities for change may shrink. Do we resist? Do we adapt to these changing realities? For some of us, we may choose to hold up our hands and say, “I give up! I’ll leave it to others to adapt.” Hopefully, we will decide to be proactive and develop a law practice succession plan that fits us.

In our next article, we will begin to look at the forces that restrain us from developing a succession plan.•

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• Don Hopper is founder of Hopper Legal Consulting Services and a partner at Harrison & Moberly LLP. His focus is serving solo and small law firms in developing law practice succession plans that will continue their legal legacies in their Indiana communities. The opinions expressed are those of the author.