Vampire partners: The risks of ignoring succession planning

Do you have vampire partners? ?If you have partners who sleep ?in coffins full of earth or hang upside down from the rafters to avoid the daylight then you really do have problems. You will need Dr. Van Hesling with his garlic, crucifixes and pointed sticks rather than any advice that you can find in Managing Partner.

But you can have other problems that are just as challenging if you have partners who are sucking the lifeblood out of your business. They can do this by overstaying their welcome or refusing to bring on young talent. One of the key responsibilities of management is to pump new blood into the heart of the business. Without proper succession planning, the strength of the business will be sapped.

In an ideal world, ambitious associates and new young partners would be expanding the business so that individual shares of the firm's profits do not get smaller. Inevitably, the reality is usually different. The associates that you identify as potential partners will often need support, both before and after their promotion. That support will include inheriting clients and contacts from your older partners.

But, do your older partners understand this? Do they relinquish work and introduce clients to other, younger members of the firm? Or do they hug every client close to them and show no interest in the future of the business or working towards their retirement? Those that do have become vampire partners. This article analyses the problem and suggests some solutions that you will not find in the works of Bram Stoker.

Clinging to equity

There are many reasons why partners cling to their equity. Whilst in the UK we do not find the 'die with his boots on' mentality which is common in the US, there are some lawyers who simply love their work and do not wish to give it up. This may be because they have never really thought about what they are going to do if they do not get up and get on the commuter run in the morning.

Partners need to be trained to think about their future and what they are going to do after they retire. They also need to be trained to think about how retirement works and to plan the process in conjunction with the firm's management. In reality, many can still maintain ?a relationship with the firm by getting involved in other organisations that are potential clients. Partners make take ?up a role such as a non-executive directorship at an existing client and thus protect the goodwill.

Money worries are often the reason why perfectly sensible partners can turn into vampire partners. Some will have started a second, or even third, family which they have yet to pay for. Some will have suffered a reduction in their income during the recession which will have undermined their financial planning.

Annuity rates have collapsed and returns on investments have been disappointing, meaning that the money ?put away for retirement is not going to ?go as far today as it used to. So, they feel the pressure to carry on for longer, to put more money away for their families and for their retirement.

But the problem is not just about when a partner retires; it also about the attitude of that partner as he reaches a certain age. If a vampire partner is concerned about earning as much as possible, then his attitude towards investment in the business is likely to be coloured by that need.

Older partners may worry that every penny of investment comes off the bottom line and may not benefit them personally before they retire. However, you, in planning the long-term future of your business, will need to encourage investment, some of which may only benefit the next generation.

Vampire partners can also have an impact on the clients of your firm. Major clients may be looked after by a partner over a substantial period. Younger members of the firm will resent this approach by older partners and wonder ?if they will ever be allowed access to ?the important clients of the firm. Allowing a senior partner to cling to control of an important client is not only 'bed blocking' but may also damage the firm's relationship with the client and lead to the deterioration or even loss of work.

Addressing the problem

So what can you do? When Peter Cushing was worried about meeting a vampire, he filled his pockets with cloves of garlic and clung to his crucifix. If you fear that you may find a vampire partner in your office, there are steps that you can take that are more practical than those used by the Hammer school of management to deal with Christopher Lee (see box).

Most of these tips are short-term suggestions to help you to deal with a problem that has been allowed to fester and has not been dealt with by past management. The real, long-term solution is to put succession planning at the heart of your business. It should be a part of firm strategy, not something that is addressed at the last minute. Planning and openness are key.

But, if all else fails, you may need to start sharpening a stake.

The worse thing that you can do is to ignore the problem. Hiding your head under the covers and pretending that vampire partners do not exist creates a number of real risks that will threaten the survival of your firm.

Firms that do not take action (and there are too many) will end up with a top-heavy partnership that can destroy the motivation of younger talent. That talent will eventually leave. Then, when one or two of the senior partners finally leave, having sucked everything that they want out of the business, the firm may collapse because it has become reliant upon those partners, who have not passed the goodwill on to the next generation.

Alternatively, the firm may begin a slow spiral of decline because there is no prospect of succession to keep the business going. If there is a small group of partners hugging the equity and trying to draw as much cash out of the business as possible in their final years, then their actions will sap the strength of the business, discourage investment and stifle growth. Those partners will want to hang onto the status quo and avoid and oppose any change. Their motivation will be to secure several years' more distributions. They will not be thinking about the future of the firm and will unwittingly put it in jeopardy.

Do you have the strength to put a stake through the hearts of your vampire partners to save your business?

 

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Antidote or stake? Eight ways to deal with vampire partners

1. Beware of creating lose-lose situations. Many vampire partners will still retain control over significant amounts of work and may be respected across the firm. They are likely to be very sensitive about their position: proud of being a senior, powerful and respected partner, possibly worried by financial pressures, but also aware that they should be considering the needs of the business as well as their own futures. This is a combustible mix which, if handled badly, could result in a conflagration. A confrontation will only damage the business; you will need to be patient and to develop a strategy to address these issues.

2. Appreciate differences of opinion. There will be a divergence of views and ambitions between the business as a whole and the individual. Respect those views and the contribution that a vampire partner will have made to the firm. Without losing sight of the needs of the business, be prepared to talk through the issues at a pace that is comfortable for all of the parties involved.

3. Put a process in place. Vampire partners flourish in an atmosphere that does not encourage accountability. A common failing is for the firm to either have no appraisal structure or to have appraisals that are not conducted openly and honestly. If you do not discuss with your partners their future and agree career milestones with them, then it will be no surprise if they simply hang around. Objectives should be set for both the appraisee and the appraiser, with a view to working together for the benefit of the business. You may need to provide support, such as pension or financial advice. Coaching may be appropriate, perhaps in order to help a partner to let go of clients and embed them with other colleagues.

4. Lead by example. If senior members of the management team are not prepared to be open about the planning for their exit and succession, then other partners will not accept that they have to be open with the firm’s management about their future.

5. Stop the infection from spreading. Your ambitious young partners must be confidant that you are dealing with any difficult issues that they perceive as threats to their careers. Talk to them about these issues and share your strategy with them. Not only will they then understand that you are supporting them, but they will also understand the responsibilities to the business that they have as they approach retirement. But, be wary of internal politics – the vampire partners may want the young partners to join their twilight world, and so may sneak up on them in the dead of the night...

6. Get the support you need. Larger firms should have within their senior management team an HR professional who is experienced in dealing with succession issues. If you do not have these skills within your organisation, do not be afraid to seek external advice. While it may not be tactful to delegate the sensitive task of discussing with senior partners their future with the firm, having support and sharing that burden is vital.

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?Guy Vincent is a partner and the former managing partner at UK law firm Bircham Dyson Bell (www.bdb-law.co.uk). He specialises in legal and management issues facing law firms.