Is there a right time to hang up your hat?
By
Noelle Donnelly considers the options available for solicitors who are contemplating retirement but still want to remain part of the legal world
Reflecting upon my own experience at a former firm, I fondly recall the two founding partners, who were retired but still actively involved in consulting for the firm.
The more reserved co-founder would occasionally stroll into the office and sit among fee earners, browsing a broadsheet newspaper while sipping his morning coffee. His hot desk became a legal clinic for the day, offering technical and practical advice to junior protégés without the pressures of targets and fee earning.
The other (more vocal) co-founder would stride around the office greeting all in his path. One day he was doing the rounds with a photo of his new grandson; another day, he announced to all that he had caught a pheasant at the weekend and it was in the boot of his car if anyone was interested. I for one was glad that these elders had not hung up their hats.
But why do lawyers continue working into their golden years? Here come the stats:
Research conducted by Investec Private Banking in 2014/15 has shown that as many as 43 per cent of lawyers intend to work part time during retirement to supplement their income;
Fifty-five per cent expect to retire after the age of 65, with London-based lawyers preparing to retire even later;
One-quarter admitted to not saving enough for retirement, and failure to start saving early enough was one of their biggest financial regrets; and
A 2014 survey by Wesleyan showed that on average lawyers thought they would need £35,680 a year to live comfortably in retirement, but 70 per cent of them feared they would not reach that target.
Numerous surveys conclude that lack of financial preparation is a – if not the – key factor causing more lawyers to spend more time behind their desks.
Is retirement compulsory?
Some firms set a retirement age in their membership or partnership deeds, although partners are now protected under the Equality Act 2010. This sets the test that retirement has to be justifiable as a ‘proportionate means of achieving a legitimate aim’, such as succession planning.
The landmark Supreme Court ruling in Seldon v Clarkson Wright and Jakes (A Partnership) [2012] UKSC 16 suggests that employers can force retirement. The claimant, a former partner, brought an employment tribunal claim against his former firm that its mandatory retirement age of 65 was discriminatory. The firm’s decision was made prior to the abolition of the default retirement age in 2012.
The tribunal found that the firm’s mandatory retirement age was a proportionate means of achieving its legitimate aims, which included ensuring younger lawyers had the opportunity of becoming a partner after a reasonable period and facilitating workforce planning by having a realistic long-term expectation as to when vacancies would arise.Although many partnership agreements still have a compulsory retirement age, others have removed this clause following the abolition of the default retirement age. Arguments about succession planning and intergenerational fairness may be advanced to justify the retirement age.
What next?
In the legal sector, straightforward retirement is far from the norm. Many senior lawyers wish to remain involved in the legal field and will opt out of full retirement. Some may feel institutionalised having worked at a firm for many years.
Consultancy is an option which provides for a gradual, phased exit from the legal world. Many former partners choose to become consultants to continue legal practice, maintain client relationships, and have a more flexible working arrangement to allow them to pursue other interests, such as pro bono and committee or board memberships.
Many consultants are highly valued for their experience, clients, and contacts and can play an important ambassadorial role for the firm. Consultants may keep a client-facing role or they may add something to the running of the firm in an internal capacity, such as managing the CSR policy or supporting a firm’s expansion plans.
Consultants may act on a variety of models. Some are employed, others are external contractors and invoice the firm through a limited liability company. As firms change both their structures and ownership models, consultancy arrangements may become more common. It is also possible for consultants to be shareholders in the practice without the day-to-day management and fee-earning responsibilities of a partner.
So is there a right time to hang up one’s hat? It is a personal decision that depends on financial preparation, succession planning of clients, and the desire to stay involved with the firm. There is more flexibility nowadays allowing lawyers to retreat gradually from the legal world… should they so wish.
Noelle Donnelly is a solicitor at Kennedys