Years ago, it was not uncommon for attorneys to spend their entire lives as active (or at least registered) members of a law firm. In those days, firms often did not have to focus on the realities of transitioning an attorney’s practice until that attorney’s death. Now, in modern law practices, it is much more common to see attorneys transitioning to enjoy a retirement away from the law firm.
The retirement of active lawyers raises a number of issues with regard to planning and succession. There is no “one-size-fits-all” approach for attorney transition. Every practice must decide for itself the criteria for determining when it is time for an attorney to transition, based on the demands and realities of the particular practice.
For instance, some firms have adopted mandatory retirement ages in an attempt to simplify the transition process. However, the ABA has expressed concern with mandatory age-based retirement policies based on issues of public policy and the unique interests of certain firms and clients. Other firms look primarily to attorney productivity and effectiveness in evaluating whether transition is appropriate.
Of course, the ultimate goal is to strike a balance best for the attorney, the law firm, and the clients. This article discusses three keys to attorneys successfully transitioning from the practice of law toward the end of their careers.
Effective Retirement Planning
For many, finances are a factor in determining when it is time to retire. Attorneys who feel that they have not properly planned or saved for retirement may be more inclined to stay in the practice of law, even if there are other factors that weigh in favor of retirement.
Firms with dedicated financial planning services (whether in-house or outsourced) for attorneys may be able to support the transition of attorneys from full-time status and to help them prepare for that moment. As attorneys become more comfortable with their financial status, they may also become more flexible in deciding how much time to work and what kind of work to do.
Notably, not every law firm wants senior attorneys to simply walk away from their practice at retirement age. After all, senior attorneys carry valuable reputations, institutional knowledge, and mentoring capabilities that have been accumulated through time and experience. Consequently, transition rather than termination is often the best course of action for both law firms and attorneys, particularly when facilitated by increased economic stability.
Effective Succession Planning
No attorney wants to spend a career building a law practice to see it dissipate upon their departure, and no law practice wants to see a lucrative practice vanish because one key rainmaker decides to retire. Succession planning can be an effective alternative that benefits the transitioning attorney and the attorney’s firm.
Not surprisingly, many attorneys are a little leery of succession planning because they fear it sends the signal that they are dispensable. That is not the case. Like financial planning, effective succession planning is the product of careful planning over time.
Effective succession planning is not simply having an emergency plan for if an attorney suddenly leaves or becomes unable to practice. Instead, effective succession planning involves the identification, cultivation and support of more junior attorneys to take on the transitioning attorney’s practice. Such planning helps train and mentor more junior attorneys and may even cultivate their loyalty to the firm and the practice.
The failure to develop succession planning can damage both law firms and attorneys. Without succession planning, law firms risk being left with significant voids from departing attorneys , and attorneys risk being deprived of leaving a legacy that will extend well beyond their own careers.
Beyond just individual succession plans, many firms also focus on succession planning for firm management. By encouraging transition in positions of leadership, firms can create opportunities for up-and-coming partners and can help ensure that management is tapping from the firm’s best and brightest.
Defined Transition Planning
No attorney wants to be the first in the firm to attempt to transition to part-time or semi-retired status. However, if others in the firm have navigated the transition from full-time to part-time or retired status, their experience can help create a template for others. If there is a defined path, then the transition will likely be less intimidating.
Planning these steps involves a range of issues, from compensation to legal malpractice insurance to the attorney’s title. Deciding these things well in advance reduces risk for both the firm and the attorney and helps the transition process along.
Unfortunately, not every transition proceeds neatly along a predetermined career path. Without planning, an attorney may be oblivious to the need for transition or may be unable or unwilling to retire. The hardship increases when other members of the practice know that the time for transition has come, based on a lack of productivity or, worse yet, mistakes and corresponding exposures. Rather than wait for that moment, firm management can avoid certain risks in advance by setting a defined transition plan and adopting protocols (codified in the partnership agreement) so that everyone knows the rules and procedures upfront.
The end of an attorney’s career does not mean the end of a legacy or even the end of their practice. With effective planning over time, both attorneys and firms can be more prepared for the transition.
Shari L. Klevens is a partner at Dentons US in Atlanta and Washington and serves on the firm’s U.S. board of directors. She represents and advises lawyers and insurers on complex claims and is co-chair of Dentons’ global insurance sector team.
Alanna Clair is a senior managing associate at Dentons US in Washington and focuses on professional liability defense. Shari and Alanna are co-authors of “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance.”
This article was prepared with assistance from Keshia Lipscomb, an associate in the Atlanta office of Dentons US.