Law Firm Retirement Age: When Is a Law Firm Partner Too Old?July 1, 2013
Law firms face a vexing problem in trying to respect and retain the contributions of older partners while simultaneously clearing a path for a promising younger generation to take over. But experts say firms that avoid the issue are creating a perilous situation.
On the one hand, allowing a recalcitrant older partner to dominate a client relationship or insufficiently hand it over to other members of the firm risks the loss of the client entirely when the partner finally steps away. On the other, pushing too hard or trying to force a phase-down process risks alienating a highly respected and well-connected attorney.
“There’s an elusive balance between looking after the firm’s interest in transitioning client relationships and retaining senior partners who bring a lot of value to the table in the form of long-term client relationships,” said Kent Zimmermann, a consultant at Zeughauser Group.
The issue is especially troubling because it isn’t going anywhere anytime soon: According to a recent survey by legal consulting firm Altman Weil, as many as 40 percent of active practicing attorneys are approaching the ends of their careers. And many of those aging baby boomers aren’t ready to step away quite yet.
“For so many of these folks, the firm is their life,” said John Olmstead of legal consultancy Olmstead & Associates. “It’s not just about compensation — it’s status, it’s ego. It’s their life.”
Experts say one of the biggest pitfalls posed by this kind of “graying” of the ranks at a BigLaw firm is uncertainty and anxiety among clients over who will be handling their work in the future. A general counsel might love the relationship he or she has with the firm, but if it flows entirely through one or two partners in their 70s, they can start to get concerned about what’s coming next.
“Clients are basically saying, ‘You aren’t going to be around forever. I don’t want to work with anybody else, but I want to know what the plan is,'” Olmstead said. “They don’t want to start a project and then have to find another law firm later to finish it.”
Even more dangerous is the fact that sometimes general counsel will raise these concerns about the future and ask the firm to work it out, but sometimes they won’t.
“GCs often don’t pick up the phone and say they’ve fired you,” Zimmermann said. “Much more frequently, they just start quietly sending their work elsewhere.”
“Often the firm doesn’t figure it out until it’s too late,” he said.
According to Philip Brown, a senior director of law firm strategy and management at Huron Consulting Group and a former managing partner of a large London firm, another risk is simpler: that the connection with the client will just cease to exist when their point of contact at the firm finally does retire.
“If you have partners in their late 60s who are failing in their duties to involve new and younger people so that the relationship continues beyond them, … the danger is that you both lose your partner and … lose your client relationship,” Brown said.
And, with the lingering effects of the 2008 financial crisis still being felt in the world of BigLaw, the pressure to retain big clients has never been stronger, meaning firms aren’t exactly willing to sit on their hands while relationships evaporate. That can mean mandatory retirement ages, though rules like that at Sidley Austin LLP and Kelley Drye & Warren LLP brought age discrimination suits from the U.S. Equal Employment Opportunity Commission. It can also mean written policies on winding down and transitioning into lighter roles.
Whatever form it takes, many of the best firms are trying formalize the process of transition, according to Zimmermann.
“Some high-performing firms are putting in place expectations, and even processes, to transition client relationships much earlier than in the past,” Zimmermann said.
The problem with those policies, though, is that they can drive away major rainmakers, who are often the toughest to encourage to start handing off work.
“It always seems like the partners that control the biggest books, bring in the most money, tend to be biggest mavericks,” Olmstead said.
There is, it seems, no perfect answer. But experts say the best firms tackle the problem head-on by finding a delicate balance: a continued relationship with attorneys that have devoted years to the firm, but also a sustainable trajectory for the next generation long after the partner has moved on.
One way to do that is for firm management to work with older attorneys to shift their roles, changing from hands-on practitioners to other positions that can help the firm: business development, maintenance of relationships with important clients, and managing and coordinating younger partners.
“In a sense, you want to get those partners, as they get older, to see that success for them is not just measured by how they do the work, but how they’re managing the next generation,” Brown said.
The best firms make that kind of company-first mentality a part of their culture, instilling it in new partners from an early stage and enforcing it as they move forward. But the logistics of fostering that kind of mindset are elusive, experts say.
“It’s tough,” Brown said. “Anybody that has absolute, clear answers, frankly, hasn’t thought it all the way through.”