News
Succession Planning for Solicitors
20 Feb 2025
Securing Your Legal Practice’s Future
Effective succession planning is key to ensuring a legal practice thrives beyond its current leadership and is increasingly hard to manage.
Whether current legal practice owners are retiring, moving on or selling the firm, a well-thought-out succession strategy supports a seamless transition, protecting and safeguarding clients’ interests and preserving a legacy.
Why is succession planning important?
Succession planning is essential for many reasons. Here are some key benefits and some important steps we would recommend:
- It protects the solicitor, their firm, staff, and clients.
- It keeps the practice running smoothly without major disruptions.
- It makes it easier to transfer ownership to a new solicitor or entity.
Key steps in succession planning
- Identify key roles and future needs.
- Create job profiles for critical positions.
- Identify a successor(s), either from inside or outside the firm.
- Formally document a buy-in and pay-out model.
- Document the succession plan; and manage the process in practice.
Succession planning options
A significant challenge law firms encounter during succession planning is identifying and developing potential successors. Some smaller law firms often postpone planning until it becomes urgent, and sometimes too late. Here are a couple of options to consider:
- Internal succession: Promote a current employee into a leadership role.
- External sale: Sell the practice to a larger firm or private equity.
- Merger: Merge with another firm.
- Utilising former staff: Approaching staff who may have left the firm to return in a leadership role.
- Employee Stock Ownership Plan (ESOP): An employee stock ownership plan is a benefit program that allows businesses to provide employees with an investment opportunity or serve as an incentive to boost engagement and loyalty.
- Liquidation: Close the business and sell its assets, although this could be a last resort for most practices. This is often unaffordable due to large insurance run-off liabilities, redundancy costs and potentially property leases.
Transferring Ownership
Even when a potential successor to the current leadership team has been identified, integrating them to their new position must be carefully managed.
Early identification and a formal buy-in/ pay-out model is crucial to a seamless transfer of ownership, as this allows constructive discussions to be held in the run-up to sale or exit.
Merging Or Selling
If a successor(s) cannot be identified, it may be that a third-party sale or a merger is the only feasible option.
Merging With Another Practice
Merging can provide a seamless way to transfer your client base to the new practice. A phased merger allows you to remain involved during the transition, helping to introduce clients to the new team.
Mergers come with challenges. Identifying a suitable firm to merge with is critical as it’s important to ensure the other firm shares your business culture, values and ethos and protects your employees from redundancies.
Selling The Practice
Selling to a third party could yield a higher financial return. However, it may not offer the flexibility or staff protections that a merger could provide.
It may also lead to a serious shift in the firm’s culture, depending on who the firm is sold to.
How We Can Support
We are dedicated to helping solicitors safeguard their firm’s legacy through our expert succession planning. We can help you ensure a smooth leadership transition with our proactive approach. Get in touch with our team to see how we can support you on 08000 664 664 or email: hello@wrpartners.co.uk.
