Boomer lawyers are retiring in record numbers. Many are the same ones with the biggest book of business. Does your firm have a strategy to transition those clients to your firm’s younger generation? And remember: hope is not a strategy.
Who’s Retiring When?
First, the firm needs to know the senior lawyer’s retirement plans. Easier said than done. Many attorneys simply don’t want to think about it, let alone talk about it. There are lots of understandable reasons surrounding the reticence. Many can’t envision a life without being identified as a lawyer. Others cling to practicing law because they have no clue what to do when retired. Then, of course, there’s the thought of one’s mortality. Retired people may feel that they are one step closer to the grave than those still working.
Control What You Can Control
Law firm leaders can do little to influence these factors because they are largely out of their control. However, another critical factor impacting retirement timing is still in their control. It is how senior partners are paid. In most firms, any talk of retirement and the inevitable need to transition clients to a younger lawyer is usually accompanied by a reduction or elimination of the senior lawyer’s origination credit.
It’s now no wonder that some senior lawyers overstay their welcome. It’s bad enough for the senior lawyer to wonder if they have saved enough for retirement without a steady paycheck. It adds insult to injury to ask that same lawyer to take a hit in compensation and lose the origination component during the last years of practice.
The Solution – Shared Origination Credit
For any client-succession plan to work, the senior lawyer must be provided with some level of income protection that rewards the lawyer for furthering the plan's goals. Firm leaders, working with the senior and junior lawyer, must create a fair division of credit. Additional adjustments may be necessary to compensate for non-billable time (e.g., mentoring). The firm may even have to “find” extra money from profits to keep both the senior and junior lawyer content. That would be a prudent short-term investment to maintain the profits generated by the senior lawyer’s clients that will ultimately benefit all for years to come.
Depending on the client and the practice area, transition plans don’t have to be the same. Plans should always be sensitive to the client’s needs and the lawyers’ talents. One size does not fit all. The same should be true for the compensation strategy behind each client transition plan.
It sounds simple, but you’d be surprised how many firms expect the senior lawyer to “take one for the team.” Or worse, are shocked when the senior lawyer leaves for a firm that already has figured out how to transition clients and keep everyone happy—taking his clients with him.
Finally, don’t forget to get the client’s input. They may not see things the way a law firm does. Clients are not just files; they are participants in a relationship with the lawyer and firm. Never assume the client will meekly go along with the firm’s plan and keep forking over fees. Client buy-in to a transition plan increases the likelihood they will stay with the firm, because they were treated with respect and given a seat at the table.
Don’t fall into the trap of continuing a compensation practice for soon-to-be retirees because “that’s how we’ve always done it.” Times have changed. Firms should, too. Those who stubbornly cling to old practices do so at their own peril.