While there were undoubtedly numerous factors that contributed to the recent dissolution of Testa, Hurwitz & Thibeault (see accompanying story in this section), market pros say the law firm’s collapse serves as a valuable case study in the importance of succession planning.
When Testa lost founder Dick Testa, who passed away in 2002, the void he left was enormous. A pioneer of the venture capital world whose long-standing relationships with the community were the crux of THT’s success, Dick Testa’s name carried a great deal of weight in the venture capital community.
To be sure, no matter what the industry, companies are often built on the reputation of individuals. But as those companies evolve and time goes on, the expectation is that new leaders will emerge to assist, enhance and sometimes replace the original leadership.
In THT’s case, the founder’s leadership was virtually undisputed by other THT members, and this ultimately contributed to its dissolution, says Heather Stone, a former THT partner who recently joined the firm of Edwards & Angell as a partner. THT was run more like a corporation than a law firm, she says, and “Dick Testa was THE leader. Everyone else subordinated their egos and ways of practicing law to what he thought was the best way of practicing law.”
No one, including Stone, disputes that Dick Testa was an extremely effective leader and brought the firm up into the highest echelons of the legal business. But during his tenure, and during the years following his death, the firm failed to develop a credible, cohesive business culture within THT that adapted with the market, she says.
It Doesn’t Come Easy
To be sure, instituting a viable succession plan and companywide culture for a law firm is no easy task. Steve Meredith, who runs Edwards & Angell’s corporate practice and the firm’s Private Equity & Venture Capital Group, says a law firm is like a very delicate ecosystem, made up of many entities with their own opinions and practice methods. It is a tough ship to steer and can easily come apart, but it’s important to keep both the ecosystem and those who make it up intact in order to ensure the continued success of a firm, and to keep abreast of the changes in a rapidly evolving industry.
“Lawyers need to work together to institutionalize practices, even though we all do our own stuff,” Meredith says. “We each have our own characters and our way of doing things, but it is important to both collaborate and foster people’s individualism in order to work toward getting a business culture and establishing a firm-wide view for our clients.”
While many of Meredith’s clients would prefer to deal with him on a one-on-one basis, he makes a point to introduce them to other lawyers at Edwards & Angell. This is the only way, he says, that a firm can hope to retain clients for the long run and the sole manner of institutionalizing a more uniform kind of business practice.
“We strive to become counselors to our clients in order to extend their reach, act on their behalf and make business decisions that allow them to leverage themselves. I work very hard to bring in other lawyers to talk to my clients, so that they can demonstrate their own judgment skills to clients and give them their opinions,” he says.
This trend is affecting the way law firms market themselves, as well. In the 1990s, conference speaking opportunities and press calls were generally handled by the head of the private equity or venture capital practice. Today, an increasing number of firms are doling out these responsibilities to multiple lawyers, and media relations people are aggressively promoting specific attorneys for their sector expertise.
Of course, the idea of institutionalizing a business culture applies to all enterprises, not just law firms, says Charles Jacob, a partner at Nixon Peabody, and is a challenge to everyone. Many law firms are looking at ways to ensure that those who develop the business find ways to institutionalize it, and the successful ones find a way to make sure that an individual lawyer’s client also becomes a client of the entire firm.
“For many law firms, those who generate the business and bring it in are not necessarily those who service and support the work,” Jacobs says. “The challenge and the key to success are finding the right mix.”
This mix is particularly important for venture capital law firms today as their business continues to grow, Jacobs says. There is a deep pool of talented new lawyers to choose from, and many law firms are both in a position to and want to hire top brass from other firms, he says. Many lawyers are also looking to make lateral moves and find different venues to practice their profession, he says, so as firms both lose and gain staff, they will need to ensure the continuity of the workflow so as to avoid losing clients.
For a law firm to have a culture that works, lawyers need to focus on their clients, keep them connected to the enterprise, and engage in constant dialogues with their fellow lawyers, Stone says. This goes a long way toward both culture building within a firm and towards helping clients meet their need.
At the end of the day, though, it is impossible to plan for all occurrences, Jacob says. A succession plan is undoubtedly extremely important, but no company anywhere, in any business line, has it down pat.
“We have had a number of clients who have stayed with us even as the lawyers they worked with have moved on to pursue other opportunities or passed away,” he says. “But there are also clients who have chosen to take their business along with the people they trust, and this can happen anywhere, in any business.