Update on Lawyer Retirement Perspectives

Retirement concerns have been in the news lately as the profession grapples with the issues facing an aging population of law firm owners. In April 2007, the New York State Bar Association ('NYSBA') adopted a position urging its members to abandon mandatory retirement.

Then on the recommendation of the NYSBA, the American Bar Association at its August 2007 annual meeting recommended that law firms end mandatory retirement policies and urged that law firms evaluate their older partners on the basis of individual performgnce. 'The time has come for law firms to put mandatory age-based retirement policies out to pasture.'

On a related but separate matter in October 2007, the U.S. Equal Employment Opportunity Commission settled an age discrimination case against U.S. law firm Sidley Austin LLP on behalf of 32 former partners. The firm paid $27.5 million and entered into a consent decree.

As the U.S. legal profession ages, the relevance and importance of our beliefs and laws regarding age and work are taking on enhanced importance.

Surveying Mandatory Retirement Policies

In light of these recent events, Altman Weil, Inc. decided a fresh look at lawyer retirement perspectives was appropriate. In the newly released Altman Weil Flash Survey on Lawyer Retirement, only 38% of lawyers agreed with the enforcement of mandatory retirement provisions in law firms. However, 50% of respondents reported that their firms currently have mandatory retirement policies.

These findings may encourage more discussion and possibly policy changes in U.S. law firms. Certainly there is much to discuss. Even in making its recommendation to abandon mandatory retirement, the NYSBA report added: 'We do not suggest that partnership is, or should be, a guarantee of life tenure, and we are well aware of the economics of law firm practice and the need for senior partners to pass on client responsibilities to younger partners.'

As the Baby Boom generation nears retirement, many have already had a change in perspective. When younger, they knew that mandatory retirement was the right and proper way to manage the firm. Now that they are in their late fifties and early sixties, many have come to see this as possibly not the best approach for the good of the firm. This change in perspective is rational, as their vested interests have changed; however, it may also serve the firm's interests to retain the skills, wisdom, and market prominence of these senior lawyers.

As already noted, 50% of survey participants reported that their firms currently have mandatory retirement provisions. In firms with 50-99 lawyers, only 32% have such a policy.

In all firms where retirement is mandatory, 38% mandate retirement at age 65, 36% at age 70, 6% at age 67, and 5% at age 68. In smaller firms (in the 50-99 lawyer category) that have mandatory policies, the most common retirement age is 70, while in all other size categories, firms are most likely to mandate retirement at 65.

Support for Mandatory Retirement

When asked if they agree or disagree with the enforcement of mandatory retirement provisions in law firms, 38% agreed, 46% disagreed, and 16% were not sure. Of those who agreed, 41% thought 70 was the most appropriate age for mandatory retirement. An additional 31% saw 65 as the correct age; 6% chose 67; and, 5% named 68 as the appropriate age for mandatory retirement.

It's no surprise that the lowest support for mandatory retirement is found among older lawyers whose perspective on this issue is quite personal. However, these same lawyers, unlike previous generations, are far more likely to have the drive, energy, and good health to work well beyond what we traditionally think of as retirement age. Lawyers in smaller law firms and female lawyers were also less likely to support mandatory retirement.

Individual Expectations for Retirement

Twenty-seven percent of lawyers surveyed said they plan to retire early (i.e., before their Social Security retirement age). Twenty-nine percent plan to retire at retirement age; 29% plan to retire later; 4% plan never to retire; and 11% are unsure.

The majority of respondents (61%) plan to continue working in some capacity after retirement. Of those who will continue to work, 48% will practice law, and 35% will pursue another line of work. Seventy-five percent will work part-time.

The desire to continue in the practice of law is inversely proportionate to the size of firm in which a lawyer works, according to the survey. Sixty-seven percent of lawyers in firms with 50-99 lawyers plan to continue practicing either full- or part-time. The same is true of 44% of lawyers in firms with 100-249 lawyers, 38% of lawyers in 250-499 lawyer firms, and only 34% of lawyers in 500+ lawyer firms.

Male and female lawyers show clear differences in their retirement planning. Men are more likely to plan on a later retirement, while women are more likely to retire early or at retirement age. After retirement, men are more likely to continue working in the profession, while more women plan to work in other areas.

The primary reason given for continuing to work after retirement is a mixture of income and staying active (48%). The second most common reason is simply to stay active (40%). Eight percent listed other reasons, chief among them to 'give back' to the community. Only 3.5% indicate they would continue to work primarily for income.

The Full Survey

The Survey was conducted in September 2007 and polled managing partners and executive committee members in U.S. law firms with 50 or more lawyers. It reports responses from 521 individuals, or 12% of the 4,345 surveys sent. Participation included 28% from firms with 50-99 lawyers, 35% from firms with 100-249 lawyers, 17% from firms with 250-499 lawyers, and 20% from firms with 500 or more lawyers. The full report appears at www.altmanweil.com/LawyerRetirement.

James D. Cotterman is a principal of Altman Weil, Inc., a legal management consultancy headquartered in suburban Philadelphia, the editor of Compensation Plans for Law Firms, and a longtime Board member of A&FP. He may be contacted in his Florida office at 407-381-2426 or by e-mail at [email protected]. Copyright ' 2007, Altman Weil, Inc., Newtown Square, PA, USA.

Retirement concerns have been in the news lately as the profession grapples with the issues facing an aging population of law firm owners. In April 2007, the New York State Bar Association ('NYSBA') adopted a position urging its members to abandon mandatory retirement.

Then on the recommendation of the NYSBA, the American Bar Association at its August 2007 annual meeting recommended that law firms end mandatory retirement policies and urged that law firms evaluate their older partners on the basis of individual performgnce. 'The time has come for law firms to put mandatory age-based retirement policies out to pasture.'

On a related but separate matter in October 2007, the U.S. Equal Employment Opportunity Commission settled an age discrimination case against U.S. law firm Sidley Austin LLP on behalf of 32 former partners. The firm paid $27.5 million and entered into a consent decree.

As the U.S. legal profession ages, the relevance and importance of our beliefs and laws regarding age and work are taking on enhanced importance.

Surveying Mandatory Retirement Policies

In light of these recent events, Altman Weil, Inc. decided a fresh look at lawyer retirement perspectives was appropriate. In the newly released Altman Weil Flash Survey on Lawyer Retirement, only 38% of lawyers agreed with the enforcement of mandatory retirement provisions in law firms. However, 50% of respondents reported that their firms currently have mandatory retirement policies.

These findings may encourage more discussion and possibly policy changes in U.S. law firms. Certainly there is much to discuss. Even in making its recommendation to abandon mandatory retirement, the NYSBA report added: 'We do not suggest that partnership is, or should be, a guarantee of life tenure, and we are well aware of the economics of law firm practice and the need for senior partners to pass on client responsibilities to younger partners.'

As the Baby Boom generation nears retirement, many have already had a change in perspective. When younger, they knew that mandatory retirement was the right and proper way to manage the firm. Now that they are in their late fifties and early sixties, many have come to see this as possibly not the best approach for the good of the firm. This change in perspective is rational, as their vested interests have changed; however, it may also serve the firm's interests to retain the skills, wisdom, and market prominence of these senior lawyers.

As already noted, 50% of survey participants reported that their firms currently have mandatory retirement provisions. In firms with 50-99 lawyers, only 32% have such a policy.

In all firms where retirement is mandatory, 38% mandate retirement at age 65, 36% at age 70, 6% at age 67, and 5% at age 68. In smaller firms (in the 50-99 lawyer category) that have mandatory policies, the most common retirement age is 70, while in all other size categories, firms are most likely to mandate retirement at 65.

Support for Mandatory Retirement

When asked if they agree or disagree with the enforcement of mandatory retirement provisions in law firms, 38% agreed, 46% disagreed, and 16% were not sure. Of those who agreed, 41% thought 70 was the most appropriate age for mandatory retirement. An additional 31% saw 65 as the correct age; 6% chose 67; and, 5% named 68 as the appropriate age for mandatory retirement.

It's no surprise that the lowest support for mandatory retirement is found among older lawyers whose perspective on this issue is quite personal. However, these same lawyers, unlike previous generations, are far more likely to have the drive, energy, and good health to work well beyond what we traditionally think of as retirement age. Lawyers in smaller law firms and female lawyers were also less likely to support mandatory retirement.

Individual Expectations for Retirement

Twenty-seven percent of lawyers surveyed said they plan to retire early (i.e., before their Social Security retirement age). Twenty-nine percent plan to retire at retirement age; 29% plan to retire later; 4% plan never to retire; and 11% are unsure.

The majority of respondents (61%) plan to continue working in some capacity after retirement. Of those who will continue to work, 48% will practice law, and 35% will pursue another line of work. Seventy-five percent will work part-time.

The desire to continue in the practice of law is inversely proportionate to the size of firm in which a lawyer works, according to the survey. Sixty-seven percent of lawyers in firms with 50-99 lawyers plan to continue practicing either full- or part-time. The same is true of 44% of lawyers in firms with 100-249 lawyers, 38% of lawyers in 250-499 lawyer firms, and only 34% of lawyers in 500+ lawyer firms.

Male and female lawyers show clear differences in their retirement planning. Men are more likely to plan on a later retirement, while women are more likely to retire early or at retirement age. After retirement, men are more likely to continue working in the profession, while more women plan to work in other areas.

The primary reason given for continuing to work after retirement is a mixture of income and staying active (48%). The second most common reason is simply to stay active (40%). Eight percent listed other reasons, chief among them to 'give back' to the community. Only 3.5% indicate they would continue to work primarily for income.

The Full Survey

The Survey was conducted in September 2007 and polled managing partners and executive committee members in U.S. law firms with 50 or more lawyers. It reports responses from 521 individuals, or 12% of the 4,345 surveys sent. Participation included 28% from firms with 50-99 lawyers, 35% from firms with 100-249 lawyers, 17% from firms with 250-499 lawyers, and 20% from firms with 500 or more lawyers. The full report appears at www.altmanweil.com/LawyerRetirement.

James D. Cotterman is a principal of Altman Weil, Inc., a legal management consultancy headquartered in suburban Philadelphia, the editor of Compensation Plans for Law Firms, and a longtime Board member of A&FP. He may be contacted in his Florida office at 407-381-2426 or by e-mail at [email protected]. Copyright ' 2007, Altman Weil, Inc., Newtown Square, PA, USA.