Law firms are grappling with gradual increases in obligations to retired partners at a time when many can ill afford it. But as retirements have surged in the past few years, many firms have taken remedial actions to limit their exposure.
In general, firms carry three kinds of financial obligations to retired partners: the return of capital; topping-up of defined benefit plans, where a partner contributes a set amount during his or her career, but the firm guarantees a specified retirement payout; and, for a score or so of firms, funding traditional, unfunded pension payouts. In each, firms are finding multiple ways to mitigate potential damage.
