In the last article we began to look at some of the forces that are restraining the development of law practice succession planning. We addressed restraining forces such as denial, deteriorating faculties as we grow older, procrastination, day-to-day distractions of the practice of law and inadequate retirement savings.
Another restraining force to developing a law practice succession plan is an easy one to remedy: ignorance of the possible options. There are several options for senior attorneys in law practice succession planning:
1. Law firm – transition greater responsibilities to newer partner(s) or associate(s);
2. Merge law practice with another attorney or law firm;
3. Transition to “of counsel” role in a law firm;
4. Mentor junior attorney and transition law practice for value over a period of years;
5. Sell their law practice (or part of it) outright to an experienced or established attorney or law firm;
6. Contract with a junior attorney or attorneys who can provide legal services for their clients; or,
7. Wind down and close law practice.
In a future article we will discuss these options in detail. For now, we will discuss restraining factors as they impact these as viable options for our futures.
The thought of mentoring junior attorneys can be a restraining force in itself. Some of you are probably thinking, “Been there, done that!” having invested in a junior attorney (or more than one) who then opened their own practice, joined another practice or wasn’t a good match after all. I completely understand. It can be exhausting to think about starting over with someone else. These bad experiences make it challenging to consider making mentoring a junior attorney part of a senior attorney’s succession plan. But even given what seems like a daunting task, it can be done.
Last year I was talking with Jack O’Drobinak who has practiced 57 years in northwest Indiana. Jack told me that over those 57 years he practiced with 15 or 16 attorneys before he found the one who best fit with his estate planning, probate and trust practice. Jack didn’t give up. He kept mentoring a junior attorney as a viable option. In addition to contributing to his own succession plan, Jack contributed his considerable experience to the growth and development of Indiana’s legal profession by investing his time and experience in these junior attorneys — another reason to mentor junior attorneys in our profession. Mentoring junior attorneys is my preferred option when discussing succession planning with senior attorneys.
Another restraining factor is that there are fewer law students graduating and passing the bar exam. Law school applicants are trending down. In 2015, law schools graduated nearly 10 percent fewer students than in 2010. Law students are often graduating from law school with enormous debts. Based on the U.S. News & World Report’s 2017 Best Law Schools, those attending Indiana law schools have an average loan debt of more than $116,000. According to an article in the August 23, 2017, issue of The Indiana Lawyer, “More than 85 percent of law students (in the U.S.) borrow” to attend law school. Junior attorneys often must pay off these loans over many years. This not only restricts their choices for post-graduation employment, but seems to limit their ability to buy into or purchase the law practices of senior attorneys until they have worked in the profession for a significant period of time.
Even though there are fewer law students graduating from law schools, the ones who do are facing a tighter job market. Much of what they are asked to do are administrative tasks in order to learn the trade, and while technological changes are making law practices more efficient, they are also reducing the need for support staff, including junior attorneys.
Finally, attracting those good junior attorneys with means to transition into a senior attorney’s practice in some Indiana communities can be a daunting task. Some parts of the state have strong economies, cultures, schools and services, but other parts of Indiana do not. Recently, I talked with an attorney who has practiced nearly 50 years in a small, rural farming community. He pointed out the difficulties of making a good living as an attorney in his part of the state without working in the county prosecutor’s office, serving as a judge or working as a public defender. Farming income has been on the decline over the past few years. Farmers, as well as other members of our rural communities, may struggle to pay for needed legal services. From my own experience and in conversations with attorneys in many smaller communities in Indiana, the practice of law has changed significantly since I started practicing in a small county 44 years ago. Senior attorneys who serve these communities are on the front lines of these changes and will need help passing on these challenges and benefits to the next generation.
In our next article, we will look closely at Rule 1.17 of our Rules of Professional Conduct on the sale of a law practice. While there are good reasons for this rule, it can also be a restraining force in developing law practice succession plans. We need to carefully study this rule if we are considering selling a law practice.•
• 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. Opinions expressed are those of the author.