Retirement a Looming Issue for Law Firms
Posted Dec 10, 2007 7:04 AM CDT
By Debra Cassens Weiss
Aging Baby Boomer lawyers are creating concerns for law firm managing partners who want a smooth succession plan that keeps clients happy.
In an American Lawyer survey (sub. req.) of the largest 200 law firms, 38 percent of managing partners considered their older lawyers a significant management issue. While 64 percent of the firms had mandatory retirement, 28 percent of leaders at those firms were considering dropping the requirement, American Lawyer reports.
A different survey of law firm leaders by Altman Weil found that 46 percent at firms with mandatory retirement policies disagree with the approach, the magazine says.
Based on interviews with managing partners, American Lawyer reached three conclusions about the conventional wisdom: “Keep those you want for as long as you can. Help those you don't want find other work. And keep the pipeline full of ambitious successors.”
Firms without mandatory retirement emphasize a flexible approach, which sometimes means allowing older partners to give up their equity status in exchange for pay with bonuses. At Dechert, for example, partners who work past 65 will see their equity stake gradually drop until they become full-time special counsel at age 70, with no equity stake in the firm.
Hildebrandt consultant Larry Richard told the magazine that at some firms the flexible approach means older partners are rewarded for passing along clients and planning ahead for succession.
Sonnenschein Nath & Rosenthal, which has no set retirement age, has begun paying more to its older partners for passing clients to younger lawyers. Some firms pay royalties to partners after they retire based on the fees from clients they have passed down to others.
Law firms that have dropped mandatory retirement say they are reaping the benefits. Pillsbury Winthrop Shaw Pittman, for example, is attracting older lawyers who jump from other law firms. For example, 61-year-old Barry Gassman, a project finance expert in the energy sector, left Mayer Brown to join the firm, in part to avoid mandatory retirement in four years.
"As a partner hits [his] 60s," Gassman told the magazine, "mandatory retirement dampens [his] entrepreneurial spirit. Without that constraint, you are reinvigorated."