I am one of three founding partners in a 12-attorney insurance defense firm in New Orleans. The three of us are in our early sixties and contemplating retirement in the next several years. The three of us have been discussing our succession plans and are wondering whether we would be better off merging with another firm or transitioning the firm to our associates. What are your thoughts on this matter?


A majority of firms prefer transitioning to the next generation of attorneys within the firm whenever possible. Many founding partners at this stage of their career are often not ready to move to another firm unless they have to.

Advantages of transitioning to associates in the firm include:

  • Continuation of the legacy of the firm
  • Continued employment for associates and staff
  • Potential to receive founder benefit
  • Flexible buy-out arrangement
  • Retention incentive for associates in the firm
  • Ability to continue working in your present office surroundings without having to learn new procedures, form new relationships, and integrate with another firm at this stage of your careers,

Disadvantages of transitioning to associates in the firm include:

  • Time it often takes to effectively transition associates in the areas of legal skills, client relationships and client development, and firm management.
  • Associates on deck are simply “too green” and do not have enough experience.
  • Associates simply want a job, don’t want to be owners of a law firm, and are unwilling to step up and make the required commitment and investment.

I believe that you should start by taking a critical look at the demographics of your associates and raise the following questions:

  1. What are the retirement timelines for each of you? Will you be retiring close to the same time?
  2. Do you have the bench strength – your present associates – to serve your existing clients if the three of you are no longer with the firm?
  3. If the three of you were no longer with the firm could your present associates retain your existing clients?
  4. Do any of your associates have the leadership and management skills to lead and manage the firm?
  5. Do any of your associates have the will to take over the firm and buy-out your interests?

Your answers to the above five questions will determine whether you should consider a merger strategy. It is often difficult to get a “founders benefit” (goodwill value) in mergers with other firms.

Click here for our blog on mergers

Click here for our blog on succession strategies

Click here for articles on other topics

John W. Olmstead, MBA, Ph.D, CMC

The post Merger vs Transitioning Our Firm to Our Associates appeared first on Olmstead and Associates.