Richard Rosenbaum
Richard Rosenbaum (Rick Kopstein)

On Richard Rosenbaum’s first day as CEO at Greenberg Traurig in 2010, he started talking about who his own successor would be.

“Some people actually said, ‘You have only been at this job a day, why are you thinking of this?’ ” said Rosenbaum, 59. “From the first day I had this position, I considered one of the most important things the future of the firm and how the firm would be operated after my time was up.”

To say that Greenberg Traurig has a strong sense of succession is a bit of an understatement. The firm has identified the next generation of leaders, appointing people like Hilarie Bass, Brad Kaufman and Brian Duffy to leadership positions, and started looking for yet another generation of leaders.

Two years ago, the firm appointed about 40 junior shareholders—mostly 30- and 40-somethings—to a group called the Communications Forum. The group gives top leaders input on firm issues and policies, but its other purpose is to allow the firm to groom future leaders.

“There are stories of CEOs staying in the job too long,” Rosenbaum said. “I always think about baseball and basketball players who were once really great and they played too long and are now at the end of their careers. You say I wish that guy had retired earlier. I don’t want to be that guy.”

Succession planning involves handing the reins of leadership to a younger successor as well as transitioning clients to younger partners. Most large firms hire consultants to devise formal succession plans, while smaller firms often ignore the issues to their detriment, experts say.

Successful planning can ensure the long-term survival of a law firm while failure to plan for a change in leadership can spell disaster—or dissolution. For larger firms, the task is finding a new generation of leaders. For small firms, a merger can be the solution, ensuring jobs for younger lawyers and staff, smooth client handoffs and a payout for firm founders.

Succession planning often goes hand in hand with retirement policies. Some law firms, primarily those in New York and in London’s Magic Circle, have mandatory retirement policies. Others eschew age-driven rules following federal lawsuits and a change in recommendations from the American Bar Association.

The Zeughauser Group, Chicago-based law firm consultants, are often hired to consult with law firms on succession, said company vice president Kent Zimmerman.

“In some firms there are a number of candidates to be managing partner, in other firms it’s not clear,” he said. “We are not asked to pick the next leader. We are asked to help the partners come to some consensus.”

However, many high-performing firms take succession planning seriously, Zimmerman said.

In fact, Pittsburgh-based Reed Smith, with more than 1,800 lawyers, takes it so seriously the firm has an organizational chart that lists a successor for every category of leader at the firm “in case someone retired or got hit by a bus,” he said. “In my view, that’s definitely wise to do.”

Final Option

Law firm succession planning is equally important for clients, according to Zimmerman and other legal experts. Transitioning clients to junior partners—with the goal of not losing clients when senior partners retire—begins when partners turn 60 at Kirkland & Ellis, he said.

Numerous sources said a lack of succession planning led to the recent dissolution of Miami law firm Tew Cardenas. A legal consultant who did not want to be identified said he approached firm co-founder Thomas Tew for five years asking if he wanted to discuss succession or a possible merger and was repeatedly told no.

After Tew became gravely ill, the firm pursued a merger with Fox Rothschild. The idea fell apart at the 11th hour due to Fox Rothschild’s insurance carrier’s unwillingness to cover Tew Cardenas’ malpractice cases, sources said.

Co-founder Al Cardenas defends the firm’s actions, saying Tew Cardenas wanted to honor Tew in his last year of life by keeping the firm alive but at the same time pursued merger options.

When asked why the firm did not have a succession plan in place, Cardenas paused and said, “Well, we can second-guess anything.”

Out To Pasture

Kendall Sharp, a legal recruiter with Search for Excellence in Fort Lauderdale, sees smaller firms lagging on the planning front.

“My observation has been that many of the smaller and midsize firms do not appropriately or in a timely fashion address succession planning issues,” she said. “At the most basic level, I believe this is about an absolute resistance to change. Someone who founded a firm many years ago is reluctant to give up control, or even admit that an amazing run may need to come to an end or change forms.”

Aaron Podhurst of Podhurst Orseck is not one of those people. He’s making sure the complex litigation boutique he founded 47 years ago does not go away and insists his firm will last “forever.”

While Podhurst is still managing partner and practicing law at 77—and has no plans to step down—he said the firm has lined up a successor, 52-year-old Steven Marks, who has the partners’ stamp of approval. The firm also has a second potential leader just in case, Peter Prieto, who was recruited from Holland & Knight several years ago.

“Everyone wants me to be here as long as I want to,” Podhurst said. “I don’t feel like I’m the guy being put out to pasture. I feel like I’m welcome. If God forbid I have a heart attack tomorrow, we have a plan in place, and that’s what every firm should do.”

Podhurst Orseck won’t consider a merger and wants to remain a small firm that runs like a family, Podhurst said.

Another Miami firm, Jorden Burt, merged with Carlton Fields on Jan. 1 as its succession plan.

As a tax and estate lawyer who runs a small family law firm, Barry Nelson of Nelson & Nelson in North Miami Beach, helps clients with succession planning. It’s an issue he is just starting to grapple with himself.

Nelson considered a merger offer from a top Miami firm but abandoned the idea when his staff “had a mutiny,” refusing to move to downtown Miami.

Now, Nelson has decided to “transition from within,” starting to transition clients to his two associates and hoping his daughter, a first-year law student at Emory University, will someday take over.

“I think it’s very common for older lawyers to have a succession plan which is, ‘When I die, the law firm will be dissolved,’ ” Nelson said. “That’s not a good plan because lawyers have an asset to sell, which is their client base. They’re not helping their clients that way, and they’re not helping their staff, and they’re not helping their families.”

Gradual Process

With its three managing partners in their 60s, Greenspoon Marder is addressing the succession issue, said Gerry Greenspoon, 61, one of the managing partners. The others are Michael Marder, 63, and Gene Glasser, 66.

The Fort Lauderdale-based firm is partially motivated by its younger partners, who want to know a plan is in place, Greenspoon said.

“We’ve built a great company that we want to continue long beyond any individual,” he said.

The firm has identified five or six potential next-generation leaders who will work closely with the three existing leaders.

“Planning is a gradual process because we believe it will take some time for training,” Greenspoon said. “The new group will take over while the senior group stays in place, so it will be gradual and orderly.”

In transition planning, firms also must address transitioning clients from older to younger partners.

Holland & Knight has no mandatory retirement policy but starts a dialogue with partners in their 50s, said managing partner Steven Sonberg.

“It’s not an easy conversation,” he said. “We have to recognize that it’s not an even playing field. Some people at 65 are very valuable and some aren’t. We try to handle it on an ad hoc basis.”

Shutts & Bowen has a mandatory retirement age of 65. Last year, the firm instituted a policy requiring partners to convert from equity to contract lawyers at 65 with room for exceptions, said firm chairman Bowman Brown. Four conversions took place last year.

Partners took the conversion surprisingly well, he said.

“It’s been a relief for some of them to have a little less pressure, a little more certainty,” he said. “No one has fought it. We discuss it with the partners, and they know when their productivity has fallen off and when it’s time to convert.”

Mandatory retirement, however, is waivable by a partnership vote, which occurs frequently, he said.

But the firm doesn’t wait until partners are 65 to begin client succession planning, Brown said. The firm exposes clients to teams so they are familiar with more than one firm lawyer.

“The idea is when partners get older and retire or slow down, getting their clients handed off to a next generation of lawyers is very critical,” he said. “We’ve managed to hang onto our clients that way.”

Mandatory Retirement

Hunton & Williams has a mandatory retirement age of 65 for leaders. Marty Steinberg, who founded Hunton’s Miami office, left the firm in 2012 for Bilzin Sumberg Baena Price & Axelrod after turning 65 and being bounced as office managing partner.

At the time, Juan Enjamio, the firm’s new Miami managing partner, defended the retirement policy.

“That’s a policy that’s important to us as a law firm,” he said. “That’s what has kept our law firm successful for 100 years. It’s not about one person being a leader. It’s about transitioning those roles.”

Mandatory retirement policies, however, are contrary to a 2007 recommendation by the American Bar Association that age-based policies should be discontinued and law firms should “evaluate senior partners individually consistent with the firm’s performance criteria.”

The ABA acted after Chicago mega-firm Sidley Austin reached a $27.5 million settlement in an age discrimination lawsuit brought by the Equal Employment Opportunity Commission on behalf of 32 partners demoted from equity status.

In 2010, Kelley Drye & Warren dropped its policy of removing older lawyers from equity partnership after being sued by the EEOC for age discrimination on behalf of a 79-year-old lawyer who was de-equitized after 40 years with the firm.

Since those cases, law firms are increasingly moving away from mandatory retirement or de-equitization policies for partners, although for leaders they still exist, said James Matthews III, a labor and employment partner at Fox Rothschild. Older partners may be finding the tradeoff is not worth it.

“The flip side is be careful what you wish for,” he said. “Now you can stay as long as you want to stay. But if you want to stay as a full equity partner, understand you are going to be held to the same productivity and other standards as a 45-year-old partner, and do you really want to do that at 65 or 70? Most don’t.”