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Designing meaningful career paths – to take account of changes in the structures of law firms

Designing meaningful career paths – to take account of changes in the structures of law firms. www.peterscottconsult.co.uk. Designing meaningful career paths. Career paths for associates when fewer partnership options available Succession planning – alternative career options?

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Designing meaningful career paths – to take account of changes in the structures of law firms

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  1. Designing meaningful career paths – to take account of changes in the structures of law firms www.peterscottconsult.co.uk

  2. Designing meaningful career paths • Career paths for associates when fewer partnership options available • Succession planning – alternative career options? • Exit strategies • Does the ABS open up opportunities? PETER SCOTT CONSULTING

  3. Developing career paths for associates when fewer partnership options are available • High performance by people is key to gaining competitive advantage • High performance requirements , tough economic times and smaller ‘ownership pools’ mean more demanding ‘gateways’ to partnership - the bar is higher. • The challenge is how to manage career expectations - and avoiding unnecessary disillusionment • Has it ever been any different? PETER SCOTT CONSULTING

  4. Do law firms ask their people what they want from their careers? • Firm – wide surveys to uncover reasons for staff losses or disillusionment • 360 degree feedback as part of a development and assessment process • For longer term succession planning • Exit interviews PETER SCOTT CONSULTING

  5. Investment in your people to realise their financial value to your business • For high achievers who want partnership - transparent and fair selection processes so people know what they need to do • Tailored programmes which support their development and groom them for success • Intensive fast track coaching programmes for those identified as having greater drive and potential • Job sculpting – to help mould roles to match the people available PETER SCOTT CONSULTING

  6. Investment in your people? Who has a ‘partner development programme’ designed – • To bring people through to partnership? • Which continues throughout partnership? PETER SCOTT CONSULTING

  7. Retaining talent where partnership is not available? • Not everyone wishes or is suited to becoming a partner • External ownership is likely to increase at the expense of partner numbers • How can law firms motivate such people and persuade them that there is still a very worthwhile career in the firm? • The experience of the large surveyors and accountants? • No easy answers PETER SCOTT CONSULTING

  8. Managing career expectations • Is partnership still the ‘holy grail’? • No stigma to not being a partner • How to make your firm the place where people want to work? • Ask them PETER SCOTT CONSULTING

  9. Succession planning - for not being a partner anymore Planning is the key – for both the firm and partners • Economic pressures to reduce equity • Mandatory retirement ages falling • Lack of career prospects • Loss of talent • Repayment of capital issues • Pension issues PETER SCOTT CONSULTING

  10. What not to do…. “Don’t put your head in the sand” PETER SCOTT CONSULTING

  11. Aim of succession planning? To ensure the current and future well being of a firm by reconciling the interests of - • Older partners • Managing partners • Younger partners • Clients PETER SCOTT CONSULTING

  12. What should a plan aim to do? To make optimum use of all productive resources within a firm – because lack of people resource is a problem for smaller firms Firms need to creatively think how best to use what they have – examples? • Risk and compliance roles? - Others? PETER SCOTT CONSULTING

  13. Older partners As part of a plan towards retirement - • Make them feel valued • harness their skills and experience • Match contribution to reward • Agree financial arrangements PETER SCOTT CONSULTING

  14. ManagingPartners • Need for career paths / parachutes • Return to fee earning? • Change of career? • Is there now a market within the law for managing partners? PETER SCOTT CONSULTING

  15. Clients Firms forget clients at their peril PETER SCOTT CONSULTING

  16. Preparing for tomorrow – younger partners - does the firm have a future? • What to put in the place of retiring partners? • Focusing on younger partners highlights future issues • Does the firm have the ‘people resources’ to achieve its future objectives / survive? PETER SCOTT CONSULTING

  17. Differentiate succession planning from partner culling Compare – • Partners who - still have hunger and energy - and are fully contributing • Partners who have taken their foot off the accelerator PETER SCOTT CONSULTING

  18. Exit / de-equitisation strategies for partners • Performance related culling ‘Tell us why you should continue to be a partner in this firm’ • Age related culling ‘Now that you are 50, tell us why you consider you should continue to enjoy a full profit share’ PETER SCOTT CONSULTING

  19. Exit / de- equitisation strategies – the impact of reward structures on a firm’s options • The potential restrictions imposed by lockstep • The potential flexibility created by performance – based reward structures NB – using reward structures is not a substitute for dealing with partner under-performance PETER SCOTT CONSULTING

  20. Particular techniques • Out – placement? • External counselling? • Help them to set up in practice? PETER SCOTT CONSULTING

  21. Alternative Business Structures – opportunities to create entrepreneurial roles for partners? Do you need an ABS for a partner to be entrepreneurial (or more entrepreneurial)? A need to differentiate between types of ABS for this purpose – • The ABS with an external investor • The MDP owned by different professionals • The traditional law firm which takes in non – lawyers into management positions PETER SCOTT CONSULTING

  22. One view is … • There are many very entrepreneurial and successful partners in existing traditional law firms - why do you need an ABS? • Many law firms are already run along corporate lines, and with a limited number of owners and high leverage, providing opportunities for the entrepreneur lawyer to flourish. • And, for the right type of firm which is appropriately structured, there are opportunities for the entrepreneurial partners to build and realise capital. PETER SCOTT CONSULTING

  23. Another view is that … • Access to external capital and resources in an ABS owned (or partly owned ) by an external investor can provide the ambitious entrepreneurial partner with far greater horizons and opportunities , including building capital. • The MDP may open up interesting avenues for successful future professional practice which do not exist at the moment PETER SCOTT CONSULTING

  24. There are also other views … • Private equity looks to management to grow value in its investment – what are their views about lawyer managers? • In MDPs – will the accountants expect to run the business? • Only time will tell whether the ABS will create the competitive changes in the legal profession envisaged by Clementi and provide greater opportunities for entrepreneurial partners. PETER SCOTT CONSULTING

  25. Questions? PETER SCOTT CONSULTING

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