I had a partner, on the executive committee of an AmLaw 200 law firm, pose the following question to me:
“Our managing partner has confirmed that he will be stepping down at the conclusion of his current term. He is now recommending to us on the executive committee that it would be expedient for him to select his successor. He informs us that that is a common and expected practice within the business community (e.g. Jack Welch at GE) and there are a number of large AmLaw firms (Jones Day, for example) where this is the accepted leadership succession practice. From your work with managing partners, what is your experience?”
Firm chairs and managing partners can play a very critical role in identifying and developing leadership talent within their firms — most specifically those lawyers ready to head up offices, practice groups and industry teams. But in my experience, there are a number of reasons why I would be cautious about having your current firm leader choose his or her successor. There is some evidence to show that allowing a firm leader, even and perhaps especially a very successful one, to choose their successor can result in a bias selection dynamic.
Selecting “Mini-Me” Candidates as Successors
When the incumbent has accomplished great things for a firm or been in the position for an extended period of time (more than a decade, for example) Executive Committees and Boards can often be tempted to anoint a clone. The incumbent will not admit that the firm needs someone with different ideas and competencies, and the Board can’t imagine insulting their highly accomplished partner by not accepting his or her choice.
In these instances, powerful incumbents may assume that they know best and may even exclude elected Board members from any succession discussions and decisions. I’ve witnessed this happen subtly, where over a period of a few years the incumbent nurtures one particular partner by continually giving that individual increasing responsibility until, eventually, everyone just assumes that this individual will take over. The incumbent may have good intentions and truly believe that they have an insider’s insight into who is the best candidate, but their judgment may also be clouded by a desire to preserve their legacy.
…Powerful incumbents may assume that they know best and may even exclude elected Board members from any succession discussions and decisions.
Often times these firm leaders (perhaps unconsciously) are most attracted to that replacement that is a mirror image of themselves. Typically, their choice of a successor is some partner who has a leadership style, business philosophy and even personality very similar to the mentor — “a mini-me”. Tell me then, please, where will the new ideas come from?
While in certain instances it may make sense to select a candidate who leads much as his or her predecessor did, many times it is a mistake. In our rapidly changing marketplace, law firms need new leaders who can evolve and build on their firm’s competitive strategies and cultures, not replicate them. Those firms need to identify the candidate with the specific skills, knowledge and “must-have” criteria that the firm may need going forward.
There have also been those occasions where the incumbent may have selected someone who they knew they could manipulate, or would appear to have anointed a “below-average” candidate. And there are also those occasions wherein the current incumbent argues that some partner has now earned or deserves the position and that rewarding them by making them the next firm leader would be the honorable thing to do.
Knowing What’s Best for the New Leader and the Firm
In one sense, the notion of earning it is an admirable tradition. If some partner works hard and selflessly contributes time to firm activities, rewarding her seems the proper thing to do. Unfortunately, it is not always in the best interests of your firm. It is often incorrect to assume that if someone can produce results in one position, she can produce equal or better results in another, regardless of whether the new responsibilities may require entirely different skills.
Finally, your next managing partner needs a clean break. If the successor feels in any way that they owe their position or are obligated in any way to their predecessor, the predecessor’s influence could constrain that new leader from making any needed changes. Many observers have been witness to the “meddling syndrome,” an affliction that occurs when the former leader stays too close to the circle of power and interferes with the incoming leader’s affairs, which consciously or subconsciously undermines all progress. I’ve known smart departing firm leaders (like Bob Dell at Latham & Watkins) who took a long holiday or sabbatical, in order to give their successor some maneuvering room.
If the successor feels in any way that they owe their position or are obligated in any way to their predecessor, the predecessor’s influence could constrain that new leader from making any needed changes.
In the corporate world, a recent study of companies where the CEO handpicked their successors found that almost 80% underperformed the stock market during their tenure. As Stanford University Prof. David Larcker warns in a November 2014 publication, CEOs may be overly concerned with their legacy, may pick someone just like them, and ultimately, are not the best equipped to make such a selection.
“A retiring CEO might want to ensure continuity of the strategy that he or she has put in place, when instead the company requires change,” Prof. Larcker writes.