How I Survived the Death of my Business Partner
When people would ask my business partner and father, Dennis King, what his succession plan was, he’d jokingly reply with a one word answer: “Claudia”. Dad and I used to think we had the succession planning stuff pretty well sorted. If something happened to me then Dad could run our business. If something happened to Dad then I could run the firm. We had a signed shareholders’ agreement, we both knew how to run the business, and we were both qualified trust account supervisors.
Last year Dad died. It turns out we weren’t as prepared as we thought we were.
The art of getting shit done
Dad and I worked together for 8 years and were in business together for 6 of them. Dad and I were the two directors of Dennis King Law, a New Plymouth law firm with a team of 15 people. When I started working with Dad I’d had a couple of years’ experience working as a tax advisor for KPMG so Dad pretty much had to train me from scratch as a commercial lawyer. Dad taught me to be organised, meticulous, efficient and hardworking. Basically he taught me how to get shit done, which is a skill I’ve come to realise a lot of people struggle with.
Dad got sick in December 2015 and died 3 months later on 16 March 2016. Dad got sick really fast, one week he felt fine and the next week he couldn’t work at all and never came back to work again. Dad was actually diagnosed with terminal cancer in September 2014 and was given 12 months to live. He showed no signs of being sick for about 15 months.
The denial stage
As Dad was a very private person, when he was diagnosed he decided he didn’t want anyone to know about it. We respected this and didn’t tell anyone except a few close family members and friends. I think Dad went into denial about the fact that he’d die soon. So did I. In fact, it was like we almost forgot that Dad was terminally ill. Which sounds ridiculous but that’s what happened. Because Dad and I were in denial, we failed to plan for how our firm would survive without him.
There were times when I tried to talk to him about things, but he wasn’t keen and I didn’t push it. We didn’t talk about who would look after his demanding litigation practice, or how we’d replace all the fee revenue Dad earned for the firm. Looking back we should have used this time to bring in an experienced lawyer to replace him. In fact, we were so badly in denial that towards the end of 2015 we bought new premises that we planned to renovate and move into in mid 2016. Interesting decision you might say.
The financial stress
I knew before Dad died that our firm would get no financial relief from our insurer because we didn’t have keyman insurance in place for him. Dad had an earlier brush with cancer just after I started working with him in 2008. At this time Dad had an eye removed due to eye melanoma, and this meant we couldn’t get keyman insurance for him.
The stress I encountered when Dad got sick was intense. I was so flat out with client work and stressed about the firm’s finances that I forgot to tell most people I was pregnant until I was well over 20 weeks. I was in a constant state of overwhelm.
When Dad died I was 6 months pregnant. So I couldn’t even drink wine. Even though I was a crazy, tired pregnant woman, I had no choice but to suck it up and put in the hours to get my firm and my team through this dark time. It took enormous hours to get through the massive backlog of work. Looking back I can’t believe I put myself and my unborn baby at risk like that. But I was so stressed I didn’t think I had a choice.
I wasn’t prepared for some of the bad stuff that would happen after Dad died. You expect that everyone will wrap you up in cotton wool and be nice to you. While most people were kind, here’s some of the bad stuff that happened:
- I had a client who wanted some work completed on the day Dad died. I asked the client for an extension, to which he responded “I’m sorry your Dad died, but that’s not my problem”. Yep, seriously. I experienced a number of situations where clients and other lawyers were unfairly inflexible and unforgiving in the few weeks after Dad died.
- Some clients tried to take advantage of our situation and used Dad’s death as an excuse not to pay their bills. We’ve had to use a variety of dispute resolution methods to sort these out.
- Our staff were understandably upset and productivity dropped for some time. This was hard on cashflow. So I had to work harder to try and make up for this shortfall.
- Speaking of cashflow, another thing that’s hard on cashflow is your firm’s biggest fee earner not generating fees anymore. Cashflow became a big issue for a while there and our overdraft took a hammering. Again, I had no choice but to work like a cray-cray lady to bill enough fees to get us through. I was determined to keep the firm going without reducing staff numbers.
- Dad had a couple of Law Society cost complaints from years ago that had been tied up in the LCRO process for a couple of years. No sympathy is given to your situation when the person who has knowledge of the matter is dead, and I had to spend many hours reading old files to get up to speed in order to provide responses and information.
- Taking leave was almost impossible. I couldn’t take time off to have my baby, and was signing solicitor’s certificates and undertakings from my hospital bed.
- Just after Dad’s death we had to move to our new premises. I should have been stoked about it but I wasn’t. I was overwhelmed by the grief I felt about moving out of our old offices where Dad and I had run our law firm together — it felt like I was leaving him behind. It seemed so unfair that he didn’t get to be part of it.
It could have been worse though — I’ve shared war stories with a firm whose deceased partner was the trust account supervisor so within a couple of weeks of his death another partner had to quickly do the 50 hours study required for the trust account supervisor course and attend the course so the firm’s trust account wasn’t suspended, and there were issues around which version of their partnership deed was the legitimate version, which resulted in the deceased partner’s family lawyering up and everything got very messy. But on the upside, this firm did have keyman insurance in place for their deceased partner so the financial stress wouldn’t have been as bad.
What does all this mean for you?
Over the last 18 months I’ve realised that the business succession planning stuff we hear and read about is actually bang on the mark. You need to do it properly.
Here are my recommendations for you:
- Whatever stage you’re at with your law firm or business, you need to start succession planning now, even if you and your business partners are younger. Go through each different scenario of each partner not being able to work anymore and consider the impact of that partner’s exit on your firm by running the numbers, and then put a plan in place to mitigate this.
- If one of your business partners has health issues and he/she doesn’t want to start making plans for their exit, they are probably in denial so you need to have an honest chat about why it’s important to do some planning asap.
- Get your partnership agreement or shareholders’ agreement sorted asap. So many firms and businesses don’t have one. Or they’ve got a draft one that they’ve been negotiating for 2 years and it’s never been signed.
- Have a meeting with your business partners, your spouse/partner and all the spouses/partners of your business partners, so everyone understands the process if one of your business partners dies.
- Your firm or business needs keyman insurance on all the partners/directors. Sole practitioners need it too. If you don’t have this organised then you need to do it asap.
- If you have a law firm with only one trust account supervising partner, then organise for another partner/director to do the trust account supervisor course asap. Those two partners should then take turns at being trust account supervisor on a 12–24 month rotation so they both keep up to date with current practices.
- Where possible, create passive revenue streams for your business to assist with the financial strain if something bad happens.
So how did I survive?
I’d love to have something really profound to share with you but I don’t. I basically just kept good lists of everything that needed doing, and I kept chipping away at them. I learnt to delegate more. As soon as Dad died I realised I urgently needed an assistant to help me sort out a bunch of stuff and to hold the fort when I took a couple of days off to give birth. I employed someone straight away and it was a massive help.
After a real rough patch last year, things did improve in my business. I’ll be honest though, I wasn’t at all myself last year and I wasn’t at all pleasant to be around. This year I’ve put much more focus on my health and wellbeing, and make time to exercise and have fun. I’m also taking time off now and then. I’m looking forward to being a digital nomad for a month during June/July and doing an Aussie roadie with my family.
Oh, and in case you’re wondering, I was blessed to have a healthy baby boy last year. Hopefully he won’t have picked up any workaholic tendencies from my crazy work hours while he was in the womb.
I’d like to make a brief tribute to Dennis who was such an amazing mentor to me, as well as many other lawyers over the years. Dad was a very strategic lawyer and I loved watching his tactical moves. One of his best tactics was pretending to be a hick lawyer from New Plymouth. His opponents often underestimated him and it was fun to watch him use this to his advantage. When it came to technology and the future of law Dad was way ahead of his time. What I didn’t mention above is that while I was busy trying to keep my firm afloat last year I was also getting Automio off the ground. Automio is making great strides with documentation automation due to a lot of hard work by our very talented team, but it wouldn’t exist without Dad’s vision. Dad, I’m so sad you’re not here to be part of bringing Automio to life, but I know you’ll be watching our every move with a big smile saying “go you good thing go”.
To getting shit done,
P.S.’m holding a webinar next week on 15 June called How to Turn Your Law Firm’s Website into a Money Maker. If you want to learn how to use your law firm’s website to get clients then this one is for you. Reserve your spot now.