The transition of senior partners to retirement can be a significant and stressful process for law firms of any size. The issue can be especially pressing, however, for smaller to midsize law firms facing the prospect of existing without their founding partners while transitioning to the next generation of leadership.

Each transition is unique and is dictated by a number of factors, including the attorney’s retirement plan, the nature of the practice, and the interests of the firm in maintaining client relationships. In an effort to simplify the process and to avoid the perception that partners are being treated differently, some law firms have adopted mandatory retirement ages or have otherwise attempted to create a uniform process for transitioning partners out of the firm beginning at a certain age.

However, mandatory age-based retirement policies may be subject to challenge on alleged public policy grounds, and the ABA has expressed concern about the blanket use of such policies. Some firms choose to eschew age-based policies in favor of other metrics, such as those measuring attorney productivity and effectiveness, in order to determine whether it is appropriate to begin transitioning an attorney.

An effective transition ensures that the interests of the law firm and its clients are protected while also recognizing the transitioning attorney’s contributions to the firm. Below are three tips for handling an attorney’s transition from the practice of law to retirement.

Be Proactive on Financial Issues

It goes without saying that people typically do not retire until they feel that they are financially secure enough to do so. It can be much more difficult to handle transitions for attorneys who may not have properly planned or saved for retirement, especially when the circumstances otherwise weigh in favor of retirement.

Firms with dedicated financial planning services (whether in-house or outsourced) for attorneys may be able to support the transition of attorneys from full-time status and to help them prepare for that moment. As attorneys become more comfortable with their financial status, they may also become more flexible in deciding how much time to work and what kind of work to do.

Indeed, the transition to retirement can occur as slowly or quickly as is appropriate. Not every law firm wants senior attorneys to simply walk away from their practice at retirement age. After all, senior attorneys carry valuable reputations, institutional knowledge, and mentoring capabilities that have been accumulated through time and experience. Consequently, a gradual reduction in both responsibilities and compensation can allow the firm to continue to realize the attorney’s contributions while giving the attorney a financial off-ramp to prepare for retirement.

Consider Succession Planning

Many attorneys, especially those who founded their own firm, take pride in building a successful law practice. While client relationships are of course vitally important in building a practice, with dedicated efforts by the firm and assistance from senior attorneys, those relationships can be transitioned to other attorneys to ensure the continued success of the firm.

However, some transitioning attorneys may be tempted to let their pride get in the way when it comes to transition planning.  After decades of serving clients, some attorney view their contributions as irreplaceable and are reluctant to even attempt to bring a new attorney into those longstanding relationships.

On this issue, firms with a strong culture of teamwork and collaboration are much more successful in transitioning client relationships.  Where attorneys have loyalty to the firm as opposed to simply their own practice, it is much more likely that they will put in the effort to identify, cultivate, and support junior attorneys to become the next generation of leaders.

The absence of such a culture harms law firms in both the short and long term.  If junior attorneys do not have the sense that the firm’s leadership is concerned about the firm’s future beyond the current partners, the junior attorneys are much less likely to exhibit loyalty to the firm.  A revolving door of junior attorneys is not a recipe for success for any firm.  Succession planning is instead the product of careful planning over time with a group of junior attorneys able to carry on the legacy of the more senior partners for generations to come.

Beyond just individual succession plans, many firms also focus on succession planning for firm management. By encouraging transition in positions of leadership, firms can create opportunities for up-and-coming partners and can help ensure that management is tapping from the firm’s best and brightest.

Consider Conflicts of Interest

The fact that parties are represented by separate counsel can create the perception that there are some issues on which the parties’ interests do not align. When potentially differing interests evolve into actual differences in approach, strategy or resolution, the very predicate of the joint defense can be jeopardized.

To address such circumstances, a joint defense agreement can address exactly what happens if one party decides to terminate it or abandon the agreement (for example, if one of the parties becomes adverse to another). This can include addressing any duties to nonclients who are parties to the joint defense agreement.  Many joint defense agreements will specify that the joint defense relationship shall not serve as a basis to try to disqualify another counsel in the future, nor does it support an attorney-client relationship between one party and another party’s lawyer.

Establish Precedent

A successful transition relies to a large degree on a mutual trust by the firm and the transitioning partner that each will respect the other’s interests. Where firm leadership has established that it will treat transitioning partners fairly, it can create a template for others and encourage them to "buy in" to the transition process.

Planning these steps involves a range of issues, from compensation to legal malpractice insurance to the attorney’s title. Deciding those issues well in advance can reduce risk for both the firm and the attorney and may help the transition process along.

Unfortunately, disputes relating to transitions are not uncommon, particularly when there is a disagreement regarding the need for a transition. The failure to proactively address the need for a transition can stir resentment among other partners who are aware of their colleague’s diminishing productivity or, worse yet, have concerns regarding the potential exposure to the firm from mistakes made by a partner prior to transition. Rather than wait for that moment, some firms will take the step of enacting a defined transition plan and adopting protocols (sometimes codified in the partnership agreement) so that everyone knows the rules and procedures upfront.

Transitioning attorneys into retirement can cause emotions to run high and can have high stakes for both the firm and the transitioning attorney. With thoughtful, long-term planning, firms can help avoid major disputes and ensure that their business continues to thrive for generations to come.