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Most firms have a partner population that tracks the national demographic, meaning there’s a huge bulge in the seniority list owing to the boomer phenomenon. These partners are often key to attracting the best clients and piloting teams. As their retirement age looms, it raises big concerns for firm management.
I used to worry greatly about the consequences of boomer partners retiring in droves, especially because many would talk about retiring early. However, the economy has put many of those plans on hold, having depleted the partners’ retirement assets. Even if that were not an issue, as partners reach the time of their planned retirement, often they back off because they fear the isolation it could cause. The loss of both intellectually engaging work and a collegial surrounding filled with friends at the firm can be terrifying.
That does not mean that your problem is solved, though. You merely have new issues to address.
It’s transition time. Many of these partners are slowing down as a natural part of the aging process, and for some heath issues can become a factor. Also, corporate officers who were their key connections at client organizations are retiring and being replaced by younger folks who prefer working with lawyers of their own generation. Beyond that, the partners of the next generation can get restless at remaining in second place with key clients and engagements.
The solution? Find a way to allow senior partners to slow down while maintaining their dignity. A great first step is a flex-time policy designed especially for them, one that allows them to stay engaged at a level of 80 to 50 percent of normal work expectations. It’s important to keep this separate from flex-time policies for other lawyers, including women partners on reduced hours to raise children, because older partners can balk at being grouped with those they see as on the “mommy track.” Thus, this policy would only be available to those over a certain age, such as 60. The main principles are the same: reducing the individuals’ billables expectation to some percentage and reducing their share of the profits by a like percentage. Their share of overhead stays the same, and their management and business generation roles must be taken into account. But take care that you can justify significant differentials between their deal and those made with other flex-time partners. The policy should also require participation in succession planning.
For those who want to go below 50 percent of normal expectations, you need a different approach. Unless they are substantial business generators, it will be very hard for them to cover their share of partnership profits when their share of overhead costs stays the same. That factor and the continued right to vote can breed resentment among other partners. Retirement from the partnership is a better option for them, as long as they can be assured of a continued right to work, with a smaller office and reduced secretarial coverage to reduce their share of overhead. If they are willing to commit to a set work level, a salary is appropriate. If not, compensation based on a percentage of the revenues received as a result of their work is effective. If business generation will be one of their contributions, a percentage of those revenues can also be part of the arrangement.
The key is to create arrangements that make retirement a transition rather than a leap off a cliff. There will always be partners who will choose to walk out and never see a law book (or you) again. But many more will want to stay engaged, and they can continue to be valuable contributors to your firm for years to come.
The mandatory retirement question. All of this argues for eliminating the mandatory retirement age still contained in many partnership agreements. But there is one downside to that—partners whose critical faculties are failing owing to age and who really need to be gently shown the door. A mandatory age policy that gives the management committee the power to make exceptions may help here. At the same time, a mandatory age can drive valuable partners to other firms if they feel dependent on management’s goodwill for retention. Resolving this problem will depend on the size and culture of each firm.
Edward H. Flitton is former Managing Partner and now Of Counsel to Holland & Hart LLP. He is a member of the ABA Law Practice Management Section Council.