About 16 percent of the partners in the nation’s top 200–grossing law firms are 60 years old or older. And more than half of them are at least 65. Collectively they are at or nearing retirement. For Big Law, they are the leading edge of the baby boom generation that has transformed or at least swollen virtually every institution they’ve encountered since arriving on the scene in the heady years that followed the end of World War II.
But even as the boomer lawyers ponder their departures—or seek waivers to stay on just a little bit longer—the center of gravity in the Am Law partnerships has already shifted. The younger partner groups are notably larger. Those in their fifties account for 28 percent of all Am Law 200 partners. Partners in their forties represent 36 percent of all Am Law 200 partners.
In practice this means that at least on the demographic charts, most firms are well positioned to outlive the departures of their senior partners. Already the transition in the leadership ranks has begun as a dozen or more longtime law firm leaders have stepped aside or announced their departures in the last few years. However, the Am Law 200 firms face a formidable challenge over the next five years as roughly another 7,000 partners turn 60.
This group is aging at a time when firms expect their partners to maintain high billable-hour work schedules, and financial pressures continue to press all firms but especially those that have stuck with their unfunded pension plans.
These findings come from an analysis of data prepared by RivalEdge, a Web-based research tool that is part of ALM’s Legal Intelligence group. RivalEdge identified about 48,000 partners in The Am Law 200 and found that 44,697, or roughly 92 percent, listed their law school graduation years on their firm website biographies. RivalEdge then sorted the results by years and by decades.
For purposes of this analysis we converted those graduation years into age groups, assuming that most law students turned 25 during the year that they graduated. Our sample included any lawyer with the title partner. As a control, we did one run of Rival Edge data that excluded firms that had a majority of nonequity partners. We thought the nonequity group might skew young. Then we reviewed just the one-tier partnerships. The results were similar, though the equity-only firms tended to be slightly younger.
The distribution of graduation years tracks the history of the modern large law firm. Beginning in 1980, the partnership ranks expanded slowly but steadily until they peaked with the three graduating classes of 1996, ’97, and ’98. Most of those lawyers would have become eligible for promotion to partner—both equity and nonequity—in the years 2004 through 2008. During those five years, demand for law firm services surged, and firms responded by growing rapidly.
Since then, partnership classes have fallen. As the writer Malcolm Gladwell pointed out in “Outliers,” one of his best-selling pop sociology books, the accident of one’s birth year can be as important as one’s talent or ambition. Some eras simply offer more opportunity. For instance, by last year the lawyers who graduated in the class of 2003 would have become eligible for promotion to partner in The Am Law 200. In its search, RivalEdge found only 1,152 lawyers from the class of ’03 listed as partners, the smallest partner cohort since the class of 1980.
I will assume for these purposes that your firm already has the basics in place: a graph that shows the age distribution of its partners and a client-team or relationship-partner regimen that includes succession planning. After that, this subject gets more difficult and much more personal. What’s your retirement policy, and when do you waive it? How much help do you offer exiting partners? When do you push mid-career partners to start planning for their retirements? How much longer can you maintain your pension plans?
How firms handle end-of-career matters makes a powerful statement about their organizations. Firms have tended to focus on the acquisition, sculpting and retention of talent. Developing and maintaining exit strategies will be just as important.
Press, ALM’s editor in chief, can be reached at firstname.lastname@example.org.