Succession planning at law firms, or lack of such planning, is an ongoing challenge for law firms in New Jersey and beyond, but many are taking steps to address it, and in some cases seeing results from those efforts.

"The folks who [build a] firm assume that they won't get a visit from Father Time—Father Time is undefeated," said Vito Gagliardi Jr. of Porzio, Bromberg & Newman in Morristown, whose firm implemented a succession plan several years ago and now is taking stock of the results. "Just as folks have a hard time buying life insurance and filling out living wills, they have trouble giving up control because they can't accept the impact of Father Time."

More recent changes have taken place at Scarinci Hollenbeck based in Lyndhurst, where leaders "are being very proactive about succession planning," according to Donald Scarinci, a co-managing partner and founder of the firm.

"The market for legal services is becoming more and more challenging," and law firms "have an obligation to prepare young lawyers for that challenge," Scarinci told the Law Journal. "Our responsibility now goes beyond making them outstanding and ethical lawyers. Our responsibility now includes teaching them how to market their services and how to manage a legal practice to prepare them for the day that they are in charge."

There are many other examples. Succession was a stated reason for the appointment of new co-chairs to Brach Eichler's litigation practice in the fall. Before its renaming over the summer, Einhorn, Barbarito, Frost & Botwinick changed its management model and shifted leadership with an eye toward succession. Also last year, new leaders took over at Archer and McCarter & English. And going further back, succession-minded changes came at Mandelbaum Salsburg, in the form of a leadership change, and at Graham Curtin, which merged into McElroy, Deutsch, Mulvaney & Carpenter.

Vito Gagliardi of Porzio, Bromberg & Newman/courtesy photo

Change at Porzio Bromberg came in early 2017 in the form of a new management structure, going from a full-time managing partner with an administrative committee to a model where the managing partner continues to practice law and delegates specific day-to-day duties to members of a management committee. The committee not only changed its name and function, but younger lawyers were appointed to it.

Now three years later, the transition has "worked very well," according to Gagliardi, a litigator who became the first managing partner in the new structure in 2017, taking over for D. Jeffrey Campbell, who had occupied the post for two full decades, about half that time as a full-time managing partner. Only three partners who were at Porzio Bromberg when Campbell took over in 1997—in addition to Campbell himself—remained at the time the firm went through the 2017 transition, Gagliardi noted.

The change has allowed the firm to "develop the next generation of leadership," Gagliardi said. "There really has been no controversy at all among senior members of the firm."

The management committee has performed well, he said, noting as an example committee member Diane Averell, who oversees the firm's administrative functions and who over the past three years has implemented new technology, including programs governing service delivery and talent management, and handled the issues that go along with new office openings.

"All of that has taken place with my approval, but without my involvement," Gagliardi said, adding that the makeup of the management committee is unchanged after three years except for one member's lateral departure to another firm.

Gagliardi said that the process was smooth at Porzio Bromberg, but it's easy to see why challenges can crop up at firms going through similar transitions.

"No one would argue that lawyers are interesting creatures," Gagliardi said. "Managing them and getting cohesion on an idea … is often a challenge."

According to Scarinci of Scarinci Hollenbeck, the most challenging aspect of putting new people in roles of authority is allowing them to make decisions without intervening, even when the decisions appear misguided. "It's really hard to do that and sometimes it can be very disruptive, but it's the only way people learn," he said.

There have been a series of recent changes at the firm. They include promoting business and corporate law counsel Laura Miller to hiring partner; and appointing new co-chairs of the commercial real estate and corporate transactions and business law practices, as well as a new chair for the tax, trusts and estates practice.

"We have elevated junior partners and up-and-coming counsel to management and policy roles and we have even included associates on committees with decision-making responsibility and a budget to spend so they could begin to get a taste for law firm management," Scarinci said by email.

Law firms fall short in training for management ability "not because of senior partner egos" but "because teaching without lecturing is a very difficult, time consuming and sometimes disruptive thing to do that can actually cause unwanted turnover of staff," Scarinci said. "But the only way people learn is by having the power to make a decision and by seeing the consequences of that decision—good or bad. It's how we learned."

An education process also is playing out at Golden, Rothschild, Spagnola, Lundell, Boylan,

Jeffrey Bell of Golden, Rothschild, Spagnola, Lundell, Boylan, Garubo & Bell in Bridgewater, New Jersey

Garubo & Bell. In early 2019, the 25-lawyer insurance defense firm based in Bridgewater changed its management structure from a management committee to a single managing partner model, with committees handling specific issues—committees with which the managing partner collaborates.

The firm made adjustments in part to deal with retirements, including the retirements of three founding partners over the span of 15 years, according to Jeffrey Bell, who was installed as managing partner when the change was made.

"The firm wanted to ensure an orderly transition of leadership going forward," he said.

Bell said the process over the past year has been relatively smooth because of a good relationship among the firm's lawyers, a partnership agreement that hasn't substantively changed over the years, and the readiness to address future issues.

Still, the process is ongoing—"'transition' is actually a regular item at our shareholder meetings," Bell said—and the retirements that necessitated a succession plan are an issue on their own.

At Golden Rothschild, partners routinely are transitioned to of counsel roles en route to retirement, according to Bell, though he declined to discuss the firm's deequitization age or other particulars of the partnership agreement.

"You need to have difficult conversations on a regular basis," including conversations concerning a lawyer's specific future plans, he added. "No one wants to admit that they're slowing down, but you have to have a conversation with them if you think they are slowing down."

"You don't want to just have a shareholder or attorney walk in and say, 'I'm retiring next month,'" Bell said.

Those conversations are occurring at other firms, of course.

"Everyone struggles with this," said a managing lawyer of a midsize firm in New Jersey who asked not to be named in the interest of privacy for other lawyers at the firm. "The firms that have trouble confronting the older partners really find themselves in a jam. … It's not the most pleasant thing I've ever had to do, to have these conversations, but you have to do it to keep the firm viable."

Per the firm's partner agreement, partners beyond the age of 65 are no longer shareholders, and the buyback of shares begins that year and continues over a period of years, according to the lawyer. As for compensation, "we try to tailor their compensation scheme to something that makes sense," often with a base salary plus of percentage of business brought in, the lawyer said.

That process "doesn't mean you'll make less," and "we've had partners who are 65 or older who are as productive as they ever were," the lawyer said.

The lawyer added that such transitions have "gone pretty smoothly," partly because the deequitization age is set out in the partnership agreement and because the firm's compensation process as a whole is open. "It's a pretty transparent game that we play. The numbers are there. You can see origination, you see hours billed," the lawyer said.