Only a few large law firms are providing structured retirement advice for their partners, a report has found – unlike the big accountancy firms.
A study of 28 top 100 law firms said that only three had formal internal programmes to help their partners plan for retirement. A further six were considering setting up a scheme, while another had a “discrete external programme”.
Although law firms were “starting to address the issue”, the joint report by Jomati Consultants and BoulterBowen WealthCare said, “only a minority” were providing or considering “ways in which they might provide more structured and timely support”.
The report went on: “For partners, the culture within most law firms remains one of high challenge and low support and for the majority, their retirement planning remains haphazard.
“The uncertainties of life after law and the apparent lack of opportunities, combined with the demands of practice, mean that all too often partners reach retirement from equity without having given the next stage any real thought, and without an effective strategy, both to remove the concerns they have over the financial aspects of retirement and to help them transition into life after law.
“Each firm will need to make its own choices about how best to offer support, but there is a pressing need for firms to demystify the process, to address the fears and uncertainties of partners, and to make sure that the conversations they hold are honest and effective.”
The report, entitled The Paradox of Partnership, was written by George Wilkinson, a former partner at Ashfords, and based on interviews with 50 partners, mainly managing or senior partners or chief executives, at 28 law firms.
The firms were all in the top 100, and most were at the top end in terms of size, including Allen & Overy, Clifford Chance, Hogan Lovells, Linklaters, DLA Piper and Slaughter and May.
The report found that partners often failed to address retirement “out of a potent mixture of fear – of loss of status, of change, of loss of community” and uncertainty about what came next.
“Partners know that ‘sooner or later everyone has to leave their law firm’, even if they are able to push retirement out longer than they had perhaps once anticipated. There is also the fear that if they don’t choose to go, they are likely to be undone by performance, and will find themselves managed out.”
Underlying the fears, the report referred to “the ‘stigma of retirement’ – that starting any discussion about retirement will be seen as a sign of weakness” and that the partner would lose control.
“The result is that lawyers often focus solely on the job in hand. This makes it very difficult for them to contemplate retirement or even start developing the contacts they will need for a career outside the law.”
The report found that firms were keen to highlight the support they provided to partners through coaching, access to financial advice, subscription to networking groups, or encouragement to take up external opportunities.
“But this is often ad hoc, a response to perceived needs identified at partner appraisals or at the request of a particular partner. Unlike the largest accountancy practices, there are few law firms that offer any structured preparation for retirement.”
The report concluded: “There is a real need for law firms to meet the challenge of this transition and neither law firms, nor their partners, should underestimate the impact of poorly handled partner retirements on effective succession and client relationship handover.”