Senior partners possess a wealth of knowledge — from your firm’s oral history to specific client details — that your practice does not want to, and cannot afford to lose. From a cultural perspective, these lawyers are an integral part of your practice and its history. And although it is imperative that your firm develop new leadership as senior partners approach retirement age, an equally important concern is capturing retiring partners’ knowledge and extending the relationships they’ve formed with clients.
Every firm needs a formal retirement process to capitalize on senior partners’ assets and ease their retirement transition.
Retirement can seem like an unsettling prospect for long-time attorneys. Even if they are looking forward to greater leisure, senior partners may find it painful to cut daily ties to a firm that has become a second home, and to colleagues who have become like family. Yet, as much as some older attorneys wish to remain active in the business, they may be unable to keep up with a full-time workload. Your firm’s challenge is to design an arrangement that allows them to continue to contribute while reducing the pressures of everyday practice.
Keeping a senior attorney without a full-time workload translates to lost billable hours plus continued administrative and overhead expenses. However, the benefits of such arrangements often outweigh the costs. The retiring partner’s compensation typically is reduced according to the proposed workload reduction. And depending on the time and scope of retiring partners’ activities, your firm may negotiate paying them an hourly or flat rate as they transition to their taking the designation “of counsel,” and becoming “semi-retired.”
Planning Goes a Long Way
Good planning is the key to a firm’s successful financial and emotional retirement process. Start by developing a five-year rolling calendar with retiring partners’ leave dates. A few years before they are scheduled to retire, discuss their plans for work and leisure, even their financial situation. You may discover, for example, that a partner is economically unprepared for retirement.
When discussing retirement plans, get a sense of whether a partner want to stop working completely; and explore with them career options — inside and outside your practice. Once the partner and your firm have reached some decisions, draft a transition plan. This document should be in place at least 12 months before a partner’s retirement date, and include details about client transfer responsibilities and retirement announcements.
If a retiring partner wants to continue working for the firm in some capacity, it is generally easy to find productive places for them. For example:
Retirees can take a more active role in recruiting efforts, visiting law schools and conducting interviews, or participating in summer or first-year associate programs.
Retiring attorneys could focus on building and maintaining relationships, a broad directive that includes both mentoring younger attorneys and nurturing long-standing client relationships. Client development will become the transitioning attorney’s emphasis, not production.
Marketing and PR
Senior partners can act as spokespersons, getting your firm’s name out by becoming more active in their professional and charitable organizations and serving on committees and boards. They might also look for opportunities to speak and write articles.
A retiring partner can help your firm tackle those major projects that often get sidelined by billable hours — for example, researching a possible merger with another firm, developing a new practice niche or growing your pro bono program.
The “Of Counsel” Option
Some retiring partners may want only a minimal professional commitment after their separation date. The value to the firm is keeping their name associated with the practice. Negotiate establishing an “of counsel” relationship for them. Compensation for such an arrangement usually is based on a fixed monthly fee, over a fixed period of time.
For those partners transitioning to a part-time or flextime work arrangement involving production, compensation may be based on collections, typically 33% to 50% of cash receipts, or alternatively, on a straight hourly rate.
Grooming the Next Generation of Leaders
When discussing the status of retiring or “of counsel” partners, planning is crucial to a law firm’s success. Yet, it is surprising just how many firms postpone planning for their future. It goes without saying – associates and younger partners want assurances that your firm will train and develop them to take the helm when the time comes. Passing the torch can take several years, so identify early-on those attorneys who demonstrate the skill, ability and personality to become effective managers.
Depending on the interests and professional development goals of younger attorneys:
- Involve them in significant management decisions;
- Allow them to head committees or projects;
- Share detailed information about operating costs and expenses;
- Assign them to oversee support staff or paralegals; and
- Introduce them to important clients and include them in client meetings.
Ready or Not
While some firms have instituted mandatory retirement dates for partners, it is better to have a written plan in place for a slow retirement transition that incorporates your firm’s needs and a partner’s wishes. The goal is to retain valued senior attorneys who are not ready, emotionally or professionally, to quit working.
For suggestions on retaining senior partners or questions that you may have on retirement planning, contact us at [email protected] or 312.670.7444. Visit www.orba.com to learn more about our Law Firm and Lawyers Group.