Sprinting Toward a Brick Wall

Trends in law firm retirement policies can provide helpful background for planning. During more than three decades of surveying the legal profession, Altman Weil has regularly researched law firm retirement policies. The Altman Weil Retirement and Withdrawal Survey for Private Law Firms ' 2005 Edition (2004 data) chronicles the retirement and withdrawal policies of 202 primarily U.S. law firms, including:

• 58 local firms;
• 41 statewide;
• 62 regional;
• 28 national; and
• 13 international.

As indicated by Chart A below, an increasing proportion of law firms have documented retirement policies ' but surprisingly, 30% of respondents still do not.

The most frequently cited early retirement age for each firm size category appears in Chart B, below. Interestingly, the most frequently cited early retirement age for each firm size category hovers at 59 to 60 years of age, except for the 20-to-40 lawyer category, in which 65% of respondents cited 65 years.

The normal retirement age (Chart C) shows dramatic consistency for all size firms (and indicates, for the 20 to 40 lawyer firms, that 65% of respondents have a 'normal' retirement age of 65 ' equal to the early retirement age percentage). The survey also shows that man-datory retirement age decreases, on average, as firms increase in size.

Baby Boomers Need Options

Law firms need to focus on other options in addition to early, voluntary and mandatory retirement. Many lawyers want to continue to practice, have all the necessary ability and will continue to be productive ' and even highly productive. Firms need to retain, nurture and utilize these senior lawyers ' it can be a 'win-win-win' for the clients, the firm and the individual. In fact, Altman Weil consultants have been hearing more frequent anecdotes about senior lawyers who, facing mandatory retirement, take their practices, clients and skills 'across the street' to a firm that will let them continue to practice.

At the same time, while the basic policy architecture can be established, pre- and post-retirement op-tions must involve case-by-case flexibility, and the firm must have moving party status. Some lawyers will want to stay active when they should not ' when their skills or endur-ance have declined. Some will expect full compensation for less than full-time contributions.

A 'step-down program' involves a reduction in a partner's role, ownership interest and concurrent reduction in capital investment. It may end in retirement or senior counsel status. In this context, senior counsel refers to work-ing lawyers who have stepped out of ownership, but have not retired.

Post-retirement arrangements can also be established on a case-by-case basis, with retired lawyers continuing to practice. This should be undertaken on a selective basis ' not with everyone, and not to be viewed as an entitlement. The individual must want, and be able to continue, planned activities. Altman Weil generally recommends an established annual review, whereby the firm and individual can renew, revise or cease the arrangement.

Monitoring is critical in post-retirement arrangements. Altman Weil has encountered situations where 80-year old lawyers have concluded otherwise stellar careers on a mishandled matter, or even a malpractice allegation.

Retirement and post-retirement options are summarized in Chart D, below.

In the chart:

• Partner A works until mandatory re-tirement age, and retires.
• Partner B works until mandatory retirement age and retires, but with a post-retirement agreement to continue practice.
• Partner C takes early retirement (and that is that).
• Partner D takes early retirement, with a formal step-down arrangement or senior counsel arrangement until mandatory retirement.
• Partner E takes early retirement with a step-down or a senior counsel program, retires, but continues with a post-retirement contract.

Conclusion

Law firms need to consider multiple options for their aging and retiring Baby-Boomer lawyers. Because the individual lawyers' goals, abilities and expectations will differ, these options must contain both a basic structure and also case-by-case flexibility. For their part, individual law-yers need to consider their alternatives. In addition to working full time until full retirement, which in some cases resembles sprinting for a brick wall, senior lawyers must consider alternatives ' sprinting, running, jogging and walking ' and different distances ' from early retirement to post-retirement employment. While the subject is daunting and potentially leaves a bitter taste, having options can make the decision much more palatable.

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Alan R. Olson is a principal of Altman Weil, Inc., working out of the firm's Midwest office. He can be reached at 414-427-5400. Copyright ' 2006, Altman Weil, Inc., Newtown Square, PA.

It's strange to be discussing retirement as applied to one's peers and 'older siblings,' and stranger still to feel burgeoning empathy. Wasn't it last month that we were the youngsters of our firms, revering our senior partners' depth and longevity? Wasn't it last year when we graduated law school?

The Baby-Boomer generation entered the practice of law in unprecedented numbers, carrying lofty expectations and the collective willpower to engender unprecedented billable hours. Now this tsunami of active lawyers is moving toward senior status, phase-down and retirement. Despite the complex emotions engendered by retirement, the Baby-Boomer generation of lawyers ' and the law firms in which they have participated or help build ' must plan their future. The alternative ' 'I will work my 2000 billable hours until I retire to the beach' ' can be likened to sprinting toward a brick wall.Not a very realistic course, and one bound to hurt.

Retirement Policies And Ages

Trends in law firm retirement policies can provide helpful background for planning. During more than three decades of surveying the legal profession, Altman Weil has regularly researched law firm retirement policies. The Altman Weil Retirement and Withdrawal Survey for Private Law Firms ' 2005 Edition (2004 data) chronicles the retirement and withdrawal policies of 202 primarily U.S. law firms, including:

• 58 local firms;
• 41 statewide;
• 62 regional;
• 28 national; and
• 13 international.

As indicated by Chart A below, an increasing proportion of law firms have documented retirement policies ' but surprisingly, 30% of respondents still do not.

The most frequently cited early retirement age for each firm size category appears in Chart B, below. Interestingly, the most frequently cited early retirement age for each firm size category hovers at 59 to 60 years of age, except for the 20-to-40 lawyer category, in which 65% of respondents cited 65 years.

The normal retirement age (Chart C) shows dramatic consistency for all size firms (and indicates, for the 20 to 40 lawyer firms, that 65% of respondents have a 'normal' retirement age of 65 ' equal to the early retirement age percentage). The survey also shows that man-datory retirement age decreases, on average, as firms increase in size.

Baby Boomers Need Options

Law firms need to focus on other options in addition to early, voluntary and mandatory retirement. Many lawyers want to continue to practice, have all the necessary ability and will continue to be productive ' and even highly productive. Firms need to retain, nurture and utilize these senior lawyers ' it can be a 'win-win-win' for the clients, the firm and the individual. In fact, Altman Weil consultants have been hearing more frequent anecdotes about senior lawyers who, facing mandatory retirement, take their practices, clients and skills 'across the street' to a firm that will let them continue to practice.

At the same time, while the basic policy architecture can be established, pre- and post-retirement op-tions must involve case-by-case flexibility, and the firm must have moving party status. Some lawyers will want to stay active when they should not ' when their skills or endur-ance have declined. Some will expect full compensation for less than full-time contributions.

A 'step-down program' involves a reduction in a partner's role, ownership interest and concurrent reduction in capital investment. It may end in retirement or senior counsel status. In this context, senior counsel refers to work-ing lawyers who have stepped out of ownership, but have not retired.

Post-retirement arrangements can also be established on a case-by-case basis, with retired lawyers continuing to practice. This should be undertaken on a selective basis ' not with everyone, and not to be viewed as an entitlement. The individual must want, and be able to continue, planned activities. Altman Weil generally recommends an established annual review, whereby the firm and individual can renew, revise or cease the arrangement.

Monitoring is critical in post-retirement arrangements. Altman Weil has encountered situations where 80-year old lawyers have concluded otherwise stellar careers on a mishandled matter, or even a malpractice allegation.

Retirement and post-retirement options are summarized in Chart D, below.

In the chart:

• Partner A works until mandatory re-tirement age, and retires.
• Partner B works until mandatory retirement age and retires, but with a post-retirement agreement to continue practice.
• Partner C takes early retirement (and that is that).
• Partner D takes early retirement, with a formal step-down arrangement or senior counsel arrangement until mandatory retirement.
• Partner E takes early retirement with a step-down or a senior counsel program, retires, but continues with a post-retirement contract.

Conclusion

Law firms need to consider multiple options for their aging and retiring Baby-Boomer lawyers. Because the individual lawyers' goals, abilities and expectations will differ, these options must contain both a basic structure and also case-by-case flexibility. For their part, individual law-yers need to consider their alternatives. In addition to working full time until full retirement, which in some cases resembles sprinting for a brick wall, senior lawyers must consider alternatives ' sprinting, running, jogging and walking ' and different distances ' from early retirement to post-retirement employment. While the subject is daunting and potentially leaves a bitter taste, having options can make the decision much more palatable.

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Alan R. Olson is a principal of Altman Weil, Inc., working out of the firm's Midwest office. He can be reached at 414-427-5400. Copyright ' 2006, Altman Weil, Inc., Newtown Square, PA.