Talent Acquisition and Management

Author: John G. Fraser - Lexpert (April 2005 at p. 104)

The demographic profile of all professional services firms is changing. The baby boomers are moving up, the founding partners are moving on. For many firms across Canada, most of the partners are in the mid to senior levels with an insufficient number of younger partners and associates coming up the ranks. This gives rise to questions about the future sustainability of the practice as well as the very practical concern of whether sufficient growth and income will be generated to pay out the capital of the retiring partners.

The retirement of founding partners can be quite traumatic. There are concerns about the value that the founding partners represent as this "value" departs with them.

The baby boomers have been in management for a long time, either as managing partners or practice leaders. As one client recently put it, “A hard crust has formed.” Law firms have not done a good job of identifying and grooming their replacements. Usually it’s a last minute affair and people are surprised to find that good replacements are few and far between.

Some firms have a mandatory retirement age. Others don’t. The firm obviously benefits in the short term if senior partners can go on producing, earning and generating new business well past the usual retirement age. The baby boomers can carry on and many of them want to. But there are several downsides to having no mandatory retirement age. The firm is able to put off making tough decisions about who will provide the leadership for the next generation of partners. More importantly, insufficient attention is given to retaining key clients and transitioning them to new client relationship managers. A focused, albeit flexible, retirement program forces a firm to renew itself, and to remain a “going concern”.

Irrespective of whether or not mandatory retirement exists, all firms need to find a way to motivate senior partners to transition their clients to the next generation of partners. Some firms achieve this by paying a retirement income out of the partnership’s current income. It is thus important for the senior partner to ensure that the firm retains his or her clients in the firm to generate continued income.

Firms have concerns about associate retention. The national norm for partner-to-associate ratio is 0.7 associate for every partner. This ratio is not good and many firms are below the norm. When adjusted on an hourly basis it becomes even worse, because partners often work longer hours than associates. Nearly 75% of associates leave their firm before becoming partner. Firms are struggling with attracting and keeping the students/associates/partners they want. While these are not new issues, the current demographics highlight the need to get it right.

Finally, mobility is up with lawyers changing firms, or rumoured to be changing firms every week. Old rules no longer apply. Firms are more aggressive and proactive about targeting and recruiting a specific lawyer they need to fill a gap. Firms without an “acquisition” plan should be careful about the firms that do have “acquisition” plans. Such initiatives typically address:

market share objectives, and the talent profile and resources needed to lead the firm to a sustainable, competitive and profitable market position;

the gaps that exist between the desired talent profile and the existing talent profile;

the appropriate timing for the acquisition / attraction of lawyers at the partner, associate and student levels; and

the management processes required:

to eliminate unwanted associate turnover;
to target, attract and retain the desired students /associates /lateral partners;
to help associates acquire capabilities for business development, client relationship management, leadership and competence in their respective practice areas;
to identify and groom future leaders for the firm; and
to identify early warning signals when issues arise.

Armed with a plan like this, a firm can gradually eliminate that demographic bulge in its talent profile.

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