January 5, 2007
Law Firm Continuity–Life after the Founders
David Maister was asked how one sustains a personal service organization (that is what most law firms are) after the founder and key people are gone. He found a way to drive home the key in just 20 words.
“……the founders can either extract the maximum sales price or leave behind a vibrant institution, but they can’t do both.”
Partners are business owners and deserve to receive the value of their ownership shares upon leaving the firm. Some extract payment through continuing origination credit or some other form of compensation. Another approach is to follow the morepartnerincome suggested alternative for valuing partnership shares, an approach similar to that followed by closely held businesses in the commercial world. Regardless of method, the departing generation must, as David Maister says, “leave money on the table to hand the business off to the next generation.”
Backbreaking unfunded obligations usually do not stand. The remaining partners dissolve the partnership, go their different ways, or move across the hall.
Maister makes three other important observations in his post, Passing It On:
1. The brand must be solid
2. Successors must be groomed
3. Power must be shared
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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