There is a trend in many firms for partners wanting to work longer than in the past. This is at least partly fuelled by the financial imperative that has arisen from people living longer, the absence of pension provisions in most firms and the challenge over the past 10 years of building personal pension pots.
At the same time, changes in age discrimination regulations have resulted in many firms raising their compulsory retirement age from 60 to somewhere between 65 and 70, or abandoning it altogether.
Many firms are therefore seeing a growth in the number of partners who want to continue working as partners into their 60’s.
The issue from the firm’s perspective
In some cases, partners moving into their 60’s retain the same drive and ability to generate levels of fees commensurate with a senior equity share; often, however, that drive and/or ability wanes.
Where such partners are still taking substantial profit shares out of the business, three issues can arise:
- Profitability can be directly impacted if an increasing proposition of partners are taking out more than they put in.
- Resentment can build amongst younger partners who feel they are ‘carrying’ their more senior colleagues.
- Even where the older partners are successfully maintaining sufficient client relationships to justify their level of profit share, both younger and aspiring partners may start to feel that the route to the top of the firm is being blocked. In due course, they may look to other firms, where they feel that there are better opportunities for advancement.
There is a risk therefore that this shift in the firm’s demographics destabilises the partnership, making it more difficult to retain the best talent amongst the younger and aspiring partners. This becomes a strategic risk to the long-term health of the firm.
The issue from the partner’s perspective
Most partners are sufficiently self-aware to recognise when their appetite for hitting annual targets is waning. They will also recognise the common challenge of building and retaining a flow of instructions from clients where those responsible for retaining lawyers seem to be getting younger and to be more inclined to connect with their contemporaries, who are the younger partners in the firm. Perhaps contrary to the perception of their younger colleagues, these partners usually feel under increasing pressure; knowing that their performance stats are falling below what is required can be very stressful.
The dilemma faced by partners in this situation is that, from a financial perspective, they often need to keep earning. What’s more, they do not necessarily know what else they could do. They will have worked within the security of the firm for many years, often all their working lives. They have been respected, both within the firm and amongst their business and social networks, for being a partner in a law firm. A significant part of their status comes from being seen as an expert in their field. It can be a scary prospect to give up the income and the status of a law firm partner.
The reality is that moving out of a law firm into another role is not straight-forward. Unless one moves into another legal role, one’s expertise as a lawyer has limited relevance in most jobs. Indeed, it can actually be a handicap to moving into roles such as non-executive directorships because many businesses perceive that lawyers have too conservative an approach to business risk.
If law firm partners want a second career outside the law, they need to be able to build a CV that does not make significant use of the word ‘lawyer’. That requires thought and planning. Optimally, that planning process needs to start a number of years before a partner actually steps out of the firm.
The main challenge in many law firms is that the issue of career transition out of the firm is a taboo subject – it is not discussed openly. As a consequence, there is uncertainty about how to raise the subject openly. Senior management may be reluctant to raise the issue generally, for fear of been seen to have an agenda to remove a raft of partners; individual partners may be nervous about raising the issue themselves for fear of appearing weak or lacking commitment.
Options to address these issues vary from firm to firm – dependent not least upon the culture of the firm. Our observations are:
- The issues outlined above are important business issues for the firm: the question of how and when partners leave the partnership is one that affects each and every partner at some point and is of strategic importance to the future health of the firm. It therefore makes business sense to find a way to discuss the issues openly.
- For firms, there is a real benefit to managing partner exits effectively. This is about transitioning practices and client relationships to the next generation, achieving an optimal balance between contributions and profit shares and not allowing expensive partners to stay in the firm “on autopilot”.
- It is preferable if the issues are raised in a manner that supports the partners concerned, rather than makes them feel that they are being ‘tapped on the shoulder’. The communication needs to be expressed as an invitation to attend, not an invitation to leave. The participants need to be volunteers, not conscripts.
- One of the principal issues is timing: the partner needs to be prepared for the question, and to have thought through or been allowed to think through the answer, in order for the conversation to be effective. One way to achieve this is to have a one-off discussion (at least to raise the issue in their minds) with every partner over a certain age (say, 50).
- The most effective help to both firms and individuals tends to be a combination of one-to-one coaching and access to financial and specialist outplacement support. It is vital that partners feel that the firm has a process/programme that is available to them, but that they can make their own choices about important aspects of it and not feel that it is something that is being done to them. Our experience is that there is a wide range of motivations, financial needs, family situations, health and fitness etc. among partners in their 50s, and that it is important for individual support to be tailored to these.
- Inherent in these programmes is an ongoing dialogue with individual partners in the latter stages of their careers about their plans. Planning for transition of clients and leadership roles forms part of that discussion.
- In our view, because of the very personal nature of the issues involved, most of the discussion needs to be with partners on a one-to one basis.
How Tyler Wilson can assist
In this context, we can:
- Assist senior management to prepare a career transition programme. We can provide specialist support that takes responsibility for aspects of the programme that would otherwise fall to Senior/Managing Partners and/or HR Directors, or sometimes not happen at all.
- Provide individual tailored packages of one-to-one support for partners considering their futures and the transition into life outside the firm. We typically find that this needs to last for between six and eighteen months, depending on the timing relative to the individual partner’s situation and their readiness and resourcefulness. The ambit of this support can cover both the practicalities of the transition (process, money, skills, CVs, networking, routes to new opportunities) and the effect on the partner on the transition (the emotional impact of leaving, managing expectations, hopes and fears, rejection and loss).
- Access specialist financial advice and outplacement support from experienced professionals, tailored to individual partner needs.
We can also:
- Present to meetings of partners about the issues surrounding end-of-career transition. It can be helpful to have the issues raised initially by an outside speaker who can talk about them generically – followed, perhaps, by a proposal from senior management for a programme that is openly offered to all partners once they reach a particular age.
- Speak at or facilitate group sessions as part of a career transition programme.
- Advise Senior and Managing Partners on reward and partnership structural issues in relation to partners in their 50s and above.
If you would like an exploratory discussion about any aspects of Partner Career Transition, please contact us on firstname.lastname@example.org or email@example.com.