State bar associations now laud centenarian members and the American Bar Association estimates that there are over 400,000 baby boomers practicing law in the United States. Accordingly, it is imperative that law firm leaders think differently about the role of senior lawyers who are approaching, have reached, or are well past the traditional retirement age.
Law firms should be on the lookout for internal signs that they may need to ramp up succession efforts. Signs that a law firm is facing eminent senior lawyer transition challenges include (1) senior lawyers underperforming relative to other lawyers, (2) senior lawyers underperforming relative to their past performance, (3) senior lawyers contributing a disproportionate amount of revenue, (4) senior lawyers hoarding work, and (5) junior lawyers expressing frustration about a lack of client interaction. One indisputable factor is age. When a firm’s existing leadership is in their 50s and 60s, succession planning needs to be on the agenda. Alan Becker, founding shareholder of the Florida-based firm Becker & Poliakoff, notes planning should begin, “At least seven or eight years before it is anticipated.” This might seem too early to start, but succession planning is not just about client transitions. It is also about leadership roles within the firm.
Senior lawyers are not just going to go away. In fact, many may hang on and practice much longer than their predecessors. Prior to designing an effective succession planning strategy it is essential to understand what’s going through the mind of a senior lawyer. What will motivate them to transition their practices and allow them to move away from the practice of law?
For many lawyers, the end of practice can be akin to the end of a marriage. Lawyers frequently identify themselves by their profession. Relationships outside the firm frequently skew towards professional colleagues and clients. These relationships are essential to maintaining a sense of self-importance, purpose, and power.
Many senior lawyers enjoy great personal prestige and professional status within the community and law firm. Lawyers frequently fear that any reduction of their practice, or even transitioning to an “of counsel” role, will cause them to lose their prominence. Law firm consultant Roy Ginsburg, who frequently advises firms on succession planning, says senior partners “fear their clients will walk away if they bring in other younger lawyers to begin building new relationships.” Founding partners view their firm as the only lasting legacy of their professional life, so turning the reigns over to others is often hard to imagine or accept.
Lawyers value autonomy. Information is the chief source of some lawyers’ power and can make them suspicious about junior lawyers eager to share in client relationships. Some senior lawyers may be reluctant to share knowledge because it may feel as though they are diluting their value to the firm as well as weakening their source of personal identity. Ginsburg comments that when an aging partner takes the initiative to transition, it can actually enhance the client’s loyalty and therefore add more value to the firm.
For many senior lawyers, years of practicing law have created the unintended consequence of social isolation. Some may fear retirement because they feel they do not know how to do anything else. This fear is personified when the career they have devoted so much time and effort too may have also held them back from making the deep connections required in flourishing outside of their law firms. Some may lack nurturing social networks, whereas others may have neglected their own personal growth and development.
Economic and future healthcare uncertainties have reshaped many senior lawyers’ perspectives on retirement. Retirement funds, which many assumed would be adequate to cover retirement, may no longer be sufficient. “People save less than they used to in our consumption economy,” Becker explains. But he believes, “for the most part it is a matter of staying engaged.” Additionally, some senior lawyers are unexpectedly involved in the financial support of younger generation family members. Burns & Levinson LLP Chief Operating Officer Paul Morton notes, “Some want to continue working longer because they want to stay on the firm’s health insurance program, believing it to be better than their alternatives through Medicare and supplemental insurance.” Whether it’s the fallout from the past financial crisis or the changes in the healthcare system, these issues may impact senior lawyers’ musings on retirement.
At some point, most law firm leaders have grappled with the question of whether mandatory retirement makes sense for their firm. At a minimum, concerns about lagging competencies and professional capabilities often call into question the need for a uniform protocol. Roughly half of Am Law 200 firms have some mandatory retirement policy. Not all stipulate retirement at 65, but most range roughly from 63 to 68.
Mandatory retirement policies can be imposed through varying degrees of enforcement. Some firms, including Bradley Arant, Knobbe Martens, and Cravath, take a stricter approach and have virtually no attorneys over age 65. Other firms such as Holland & Knight, Greenberg Traurig, Duane Morris, and K&L Gates are more lenient in their mandatory retirement requirements. Morton’s personal opinion is, “No one should be forced out the door just because of age; however, one should not be entitled to continue in a certain status level or compensation level if the individual is not contributing in a fashion that is expected of that status level.” Firms need to decide how to handle less productive senior partners in a compassionate, but fiscally responsible manner.
The good news is senior lawyers departing because of mandatory retirement policies are finding it relatively easy to find a new perch to land on. In a 2015 ALM survey of lawyers at Am Law 200 firms, half of the respondents to a indicated that their firm had hired a partner or of counsel in the past 12 to 24 months who had reached, or was about to reach, retirement age at their previous firm.
Several best practices can help navigate the middle ground between forcing a senior lawyer out the door and never having a difficult conversation. First, communicate early and often. Kathy Morris, a Legal Careers Advisor from Under Advisement Ltd., quipped, “It’s critical that you start planning for succession early. And by early, I mean now.” Lawyers are notorious for contemplating every possible way in which a client deal can go wrong, even if it would not happen for years. However when it comes to having discussions with lawyers about retirement plans, they are frequently an overlooked priority. Some firms institutionalize retirement conversations beginning at age 55 to review lawyers’ future plans and opportunities.
Focusing on the client side of succession planning is an excellent tool to get reluctant senior lawyers onboard with the process. Even the rare partners, who may not particularly care about their colleagues or the legacy of the firm, typically care deeply about their clients. When emphasis is placed on meeting client needs, rather than firm needs, law firm leaders can increase the likelihood of buy-in from resistant senior lawyers. Ginsberg cautions that many firms financially penalize attorneys near retirement when they bring in younger partners to perpetuate the client relationship. Firms that get it right will incentivize senior lawyers to transition the relationships.
Savvy law firms have found that including succession planning as part of an overall strategic planning process can help to overcome resistance from senior lawyers. It can help to begin with a firm census of lawyers by age, then asking the following questions:
- What percentage of the firm’s equity partnership is 62 years old or older?
- What percentage of originations do those partners control?
- Are any junior lawyers servicing those clients? If not, who can be introduced to the relationship?
- What types of training and mentoring do those junior lawyers need?
Successful law firms recognize the measurable economic value that lawyers can contribute to their firm beyond billable hours and fee earning. Partner emeritus programs, nonequity senior partnership roles, and of counsel positions only scratch the surface of options available for firms willing to be creative about harnessing the talents of their senior lawyers. Retired partners might want to participate as speakers for training sessions or act as mentors for associates. The role of “sponsor” for women and diverse attorneys has grown recently and offers another way to engage those who want to stay connected. Sometimes a senior lawyer will want to do something innovative subsequent to the practice of law, such as developing a mediation service, ancillary business, or consulting practice.
When appropriate, conversations with senior lawyers will transition to formalized succession plans. These plans include a timetable for transition, a detailed plan for transitioning each client relationship for which the lawyer is responsible, including which junior lawyers will assume key responsibilities, and a detailed compensation plan, including benchmarks and outcomes. A recently retired partner from a large firm commented that he wrote out his plan two years before he intended to retire and presented it to his firm because his firm did not have a formalized process. Individual plans, whether directed by a firm or self-developed, should be reviewed annually and include feedback from the executive committee, compensation committee, and managing partner as appropriate.
Well-crafted succession planning can result in senior lawyers applauding the efforts of firm management for creating respectful and flexible transition arrangements. Transitions are difficult, especially for change-resistant lawyers. Inviting retired lawyers to alumni functions, retreats, partner meetings, and social events can reduce the emotional pain and dislocation that the lawyer may feel in “cutting ties” to the firm. Communicating early and often about succession planning helps firms manage their long-term interests and foster life-long firm citizenship in senior lawyers.
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