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In the next few years, huge numbers of lawyers will begin reaching retirement age, a phenomenon that will leave many law firms without their founding partners or other longtime leaders. Adding to that exodus are the skyrocketing associate attrition rates and increased lateral defections that have created an ever-shifting workplace where the chance for new opportunities often trumps law firm loyalty. The upshot is that many of today’s law firms have a real problem with planning for tomorrow. “People generally don’t go to law school to run a business,” said Judith Lockhart, managing partner of Carter Ledyard & Milburn in New York. Identifying attorneys who possess the legal and business acumen to take the management helm is only part of the job. They also have to be willing to do it, Lockhart said. “You’ve got to find people who are interested in seeing the firm prosper,” she said. Lockhart and other firm leaders at the 115-attorney firm have worked in recent years to transition in next-generation department leaders, she said. Carter Ledyard is a 150-year-old firm based in New York’s financial district whose clients include the American Stock Exchange, Playtex Products Inc. and the Andy Warhol Foundation for the Visual Arts. The firm has created some “turnover” in department heads in recent years, Lockhart said, adding that it also has remained flexible with its retirement policy. “We recognize that not everyone wants to retire,” she said. Succession planning for law firms is becoming “much harder,” said Stanley Kolodziejczak, a national leader of the law firm services practice at PriceWaterhouseCoopers International Ltd. in New York. Baby-boomer retirement and job movement among associates and partners make it much more difficult for firms to determine who will be left to run the show. “They have to know who they have on the bench and who will be retiring,” he said. About 1 million lawyers are licensed in the United States, according to the American Bar Association (ABA). Extrapolate from the current total of attorneys, and a full 25% of attorneys � or 250,000 � will begin reaching retirement age by 2011. About half of law firms have some form of mandatory retirement policy, according to a recent survey by the ABA of 2,000 law firm leaders. Meanwhile, attrition rates are soaring. According to NALP, a Washington-based nonprofit group that tracks legal employment trends, by the time associates at large firms are in their fifth year of practice, 78% have left their firms. Long work hours, a lack of meaningful assignments and an unfriendly work environment are often cited as the reasons for the departures. Lateral hopscotching also remains high. Last year, lateral moves totaled 2,153, according to The American Lawyer, an affiliate of The National Law Journal. Who’ll be left? Who will remain running law firms of the future once the baby boomers are gone and the younger attorneys have scattered is the subject of some speculation. Stephanie Stefancic, a professor at the University of Pittsburgh School of Law, maintains that the profession is losing its best people. Co-author of the book, How Lawyers Lose Their Way: A Profession Fails Its Creative Minds (Duke University Press, 2005), she predicts that if large law firms continue to demand enormously high billable hours through work that provides little job satisfaction, the most talented and creatively diverse people will abandon the profession. “I don’t see much opportunity for change,” she said. Larry Richard, a psychologist whose work focuses on lawyers’ personalities, has a different vision. While personality types may determine what kinds of jobs people pursue, they generally do not indicate whether individuals will remain at their jobs. But he does expect the law firms of the future to include more contract or freelance attorneys, those who will spend part of their time at a law firm and part of their time pursuing other interests � whether it be family or guitar playing � outside of that environment. “I would not want to be a managing partner in the next 10 years,” said Richard, who also consults with Hildebrandt International. “It’s getting so complex and so unpredictable.” For now, all that coming and going of attorneys makes succession planning tough, but firms without a strategy may stand to lose even larger numbers of attorneys. Without a plan, top performers may sense the organization is adrift amid the pending retirement of its leaders. Plans for future lacking Even so, most law firms and legal departments do not have any succession plans, according to a survey last year conducted by Robert Half Legal. Of 300 experienced lawyers working in big law firms and corporate departments, 53% said that their organizations had no formal succession plan in place. Cozen O’Connor is in the minority. “It’s allowed us to move from a first-generation to second-generation firm,” said Lawrence Bowman, referring to the transition plan at the 501-attorney Philadelphia-based firm. Bowman heads Cozen O’Connor’s general litigation department from its Dallas office, a job he got as part of the firm’s transition strategy. Shareholders of the firm recently approved a leadership transition plan effective in June that will enable firm founders Stephen Cozen, 67, and Patrick O’Connor, 64, to hand over the reins to the next generation of leaders. In addition to appointing some new practice leaders, the plan reconstituted the number of shares per owner, reconfigured its pay structure and created a board of directors. Last June, the firm announced the initial phase of its transition plan, which included Bowman’s promotion. Cozen O’Connor’s openness with its plan has kept its attorneys feeling involved in the firm’s direction, he said. “People come together and discuss their differences face-to-face,” Bowman said. Second-generation shift Law firms undergoing a shift from a first to a second generation generally have a harder time fashioning a plan than do older firms since it is a new process for them, said Joel Henning, a consultant with Hildebrandt International. And those firms diving into the process for the first time are not just small firms, he said. Cozen O’Connor, for example, opened in Philadelphia in 1970 with three or four lawyers. It now has more than 500 attorneys in 23 offices. A succession plan often include specifics about retirement compensation (including the policy for return of capital), the age at which attorneys must retire if the firm adheres to a mandatory system, management structures, partner compensation, associate compensation and identification of clients.

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