In the ANR this morning I mentioned one of the accounting profession's big worries: hiring and retaining talented people. A related worry that these same accounting firms have are with succession planning; firms that can't hire and retain good people aren't going to have much a succession plan. A recent whitepaper from Crowe Horwath stated that only 37% of accounting firms have a formal succession plan in place, so I suspect the hand-wringing will not abate any time soon.
Leaders in accounting firms should not fret, however. Their lawyer friends are in the exact same predicament:
Rising associates in the millennial generation, worried about the future, are pushing up against the current law firm leaders, who are almost uniformly older men intent on staying for a few more years to top off very successful careers.
If any discipline is a window into the debate about balancing short-term profits over long-term survival, it is the legal profession, one of the most traditional businesses in the world. Forward-looking firms are revamping how they find new business and how to deliver the results more efficiently to their clients; some are experimenting with giving associates more leeway in building their own practices. But the largest portion of firms, by far, are holding firm to a time-honored business model in which associates climb a ladder to partnership over many years. It is a model, some who study the legal profession say, that could lead to a wave of firms splintering when current leaders retire.
Sound familiar? The good news for accounting firms is that while enrollment in accounting programs keeps going up so the talent pool is large. Law schools? Not so much.
But the article discusses an interesting idea that we haven't explored here before. That is, what if firms let you build out your own practice within the firm? Here's what Nixon Peabody is trying:
A few firms are looking to secure their futures by creating a more entrepreneurial environment that allows associates to carve out practices in areas that interest them. That idea is being tried by Nixon Peabody, an 800-lawyer firm based in Boston.
“Lawyers almost always look backward,” said Andrew I. Glincher, the firm’s managing partner. “We are focusing on the next leadership level, urging people to attend trade events, to know what laws and regulations change client business and to learn and anticipate what affects the client.
Of course this wouldn't work for everyone. Some people don't want to build a new client base and all the legwork that comes with that. And that's fine, accounting firms weren't going to retain those people anyway. But I wonder how many firms allow or even encourage this sort of thing?
Mr. Glincher of Nixon Peabody said he remained committed to the idea of encouraging entrepreneurial associates like Joseph A. Carello, who has a growing practice providing legal services to craft breweries.
Mr. Carello, 33, joined the firm’s Rochester office after law school to practice employment law in 2007. He realized the boom in upstate New York breweries and distilleries created issues concerning trademark protection, packaging and labeling, safety, real estate and environment regulations.
Although he was not a craft brew expert, he said, “I did a lot of research, including on social media, and went to beer festivals and networked.”
He began working with the New York State Brewers Association, and soon he was attracting clients like Black Button Distilling in Rochester.
“I love what I do as an employment lawyer,” said Mr. Carello, “but craft brewing is a $4 billion industry and growing, so I have hopes that it will become a significant component of my practice.”
There would be a lot of details to sort out with this kind of arrangement, of course, but if leaders talk to associates and managers who express interest in building niches, that could provide a much easier path to partnership for the employee and a succeeding owner for the firm.
The primary obstacle, of course, is the firm itself. If the culture within a firm is bill, bill, bill, bill, then the leaders probably aren't interested in an associate or manager spending time to research a new industry, networking and trying to build a new niche.
Which brings us back to aforementioned "debate about balancing short-term profits over long-term survival." The firms that are really concerned about their future may just want to dial down the pressure on billing, so their successors can emerge on their own.