Planning for R-Day

It was February 1987 and he was 65. Not the date of his retirement but the date of his death. Ray Allmark, my grandad. Never sick a day in his life. 

A career as a senior engineer in Australia, Iran and Abu Dhabi. Then he ‘retired’. That’s when he got ill. And very quickly he was gone. 

One of the many things this taught me was that I wanted to control my retirement and what it meant for me. I can’t speak to other industries as I haven’t worked in them – I’ve been in professional services all my life. 

My grandad might have called me a paper pusher! But what I do know is that we need to have a big debate about retiring from legal services, and law firms in particular. 

What is retirement?

Wikipedia says: “Retirement is the withdrawal from one’s position or occupation or from one’s active working life. 

A person may also semi-retire by reducing work hours. An increasing number of individuals are choosing to put off this point of total retirement, by selecting to exist in the emerging state of pre-tirement.” 

The Office for National Statistics (ONS) data published for September 2018 confirmed that average life expectancy in the UK for all genders is just over 80. 

That’s an increase in life expectancy since 1980 of more than 10 years. Children born in the UK now have more than a 30 per cent chance of living beyond the age of 90. 

So we are all going to live longer. We are all able to be active for longer because of improvements in diet and healthcare – and when I say ‘all’, I mean it. 

Though there has been limited research on the lifespan of lawyers, a 2003 study in Virginia, USA, found that lawyers live on average a little longer than the general population. So what?

Well, if you can expect to live until at least 80 years old how will you fill your life? What does this mean for firms and their plans for retirement and succession? What are the implications of semi-retirement and pretirement? How can the profession create a pathway that is fulfilling for individuals and sustainably profitable for them; and what responsibility, if any, do law firms have for their people in retirement? 

You may be thinking: surely retirement is a personal thing; and it’s an individual’s responsibility to plan for their retirement? 

Yes it is, but consider the impact a demotivated ‘retirer’ can have on your firm. So in the ‘war for talent’, it would be odd not to do anything you reasonably can to make your firm a great place to work for that individual – with a plan for the inevitable end of that relationship. 

Lies, damned lies and statistics

There are more than 144,000 practising solicitors in England and Wales in around 11,000 law firms. Breaking these down by age band, 58 per cent of lawyers are between the ages of 25 and 44, while 14 per cent are between the ages of 55 and 64. 

In this latter group, the figures reveal that seven per cent in this band are in larger firms and 21 per cent in the smallest firms. 

It’s simple: succession and retirement are major issues for solicitors. It’s a vital issue now and one that will continue as the bow wave of younger lawyers do the inevitable and get older. 

R-Day: An event not a process

What happens when a sole practitioner wants to retire? What happens when a partner in a top 100 law firm hits retirement age? 

Arguably, the two questions are, in effect, focused on two completely different business models where the only unifying factor is the giving of legal advice. 

So it makes sense to view the issues that arise through the lens of their different challenges. Typically, a sole practitioner is faced with a choice on retiring: find a successor (whether that’s a member of the firm or another firm) or close the firm and buy run off professional indemnity cover. 

The examination of these options is the same as any other business person seeking an exit. There are questions of identifying successors, the valuation of the practice, the terms of a deal.

A failure to find a successor leaves the default option of run off cover and the closure of a practice. 

One word springs to mind when I consider this: ‘Plan’ – both as a verb in the sense of making a plan, and as a noun in the sense of having a plan. 

An orderly ‘Lexit’ (sorry, couldn’t resist!) – exit from the legal profession – demands a plan. It’s the only sure-fire way to have control. As to the question of the retirement of partners from large firms, let’s consider the differences. 

First, there’s no worry about successor practice issues or run off cover to consider. That’s a big plus. 

However, the trade-off for this is the shared agreement with the other partners about when ‘retirement from the equity’ will happen. Making that agreement in your 30s or 40s may seem of little consequence. 

The due date (your contractual termination date if you like) is off into the distance, but all too soon ‘R-Day’ approaches; and as R-Day rears its head, questions about role, responsibilities, status and reward come into sharp focus for both the individual and the firm. 

It’s an unavoidable consequence of aging and of the business models of most larger firms, which simply need the equity to galvanise the next generation and bind them and their performance into the firm. 

Departure lounge 

There is nothing worse than getting to the airport and finding an empty departure board. No flights, no destinations – just a blank board. 

When a partner or sole practitioner comes to that moment, the moment of departure from their firm, it can feel like a cliff edge. An ending. 

As your retirement approaches it can create a sense of being in a departure lounge, but without a ‘next’ and you are an ‘other’. You were a partner, you were the practice principal. Now who are you? 

Another way?

Borrowing heavily from the world of financial services, which is very familiar to me, I’ve been thinking about the human lifecycle. 

There is a natural and inescapable pathway for us all. We grow and develop, we gain experience and have experiences, we age and retire. 

In personal financial planning we are encouraged to prepare for and plan for retirement. In a binary way, that can represent the move from a salary to a pension. 

However, flexibility has been created in how pensions and retirement solutions work to reflect the changing nature of our society and life expectancy. Let’s take it as a given that partners must retire from firms. 

Then we can start to work on how that happens and what happens after their R-Day. They leave a firm – that’s all that actually transpires. 

The new pathway I have in mind means that we begin the preparation for R-Day well ahead of the event. It can start with a simple conversation or a question. Something like: “What are your plans for after R-Day?” 

That chat could happen up to five years before R-Day. It could form part of a coaching conversation that helps the partner to consider what they actually want – to have a sense of control and choice. 

A ‘life cycle’ coach could help the partner envisage their life after this firm and what it might entail. Does the partner want to carry on practising as a lawyer? 

How and where could this happen with the support and blessing of this firm? Does the partner want to consider non-executive or advisory roles in industry? Where, why and for how much of their time? 

How will they find such a role and what skills can they offer or might need to acquire to enable this choice? Might the partner be passionate about third sector roles and want to become involved with charities? How much ‘me, family and friends’ time does the partner want to have? Do they want to travel or to indulge a passion that has taken a back seat when working flat out?

Answering questions like these in a supportive environment, accepting that change will happen and R-Day will come, could lead to really positive results for the individual; the firm they are leaving; for families and friends; and the new relationships that will flow. 

Contrast this to the bitterness of feeling as though there’s no choice and R-Day is being ‘done’ to the partner. What happens to relationships with clients and colleagues as a demotivated (and possibly unwittingly resentful) ‘retirer’ heads to their end date? 

I haven’t touched on the psychological and social implications on the individual of a badly handled R-Day. In a simplistic sense, I would ask: do any of us feel the current status quo works for retirement? 

Would it hurt to embrace the inevitable and to plan in a positive way for it to happen? What harm can it do? 

How about a programme of activity for practitioners of all shapes and sizes that takes them comfortably towards not an ending of everything, but just of one chapter and to a new beginning. That must be a good thing – wouldn’t you agree?

Michael Burne is chief executive of Carbon Law Partners carbonlawpartners.com