Understanding the Financial Aspects of Impending Retirement

10/01/2011
Accounting and Financial Planning for Law Firms, October 2011

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As an estimated 400,000 lawyers from the Baby Boom era will reach the traditional retirement age in the upcoming decade, it is increasingly emphasized that there are significant ethical consequences for failing to plan a practice’s future by transitioning client matters to a successor lawyer or firm. But a lesser publicized truth is equally certain: There are significant penalties in store for any lawyer who does not make a financial plan for succession into retirement. Certainly there are more caveats to this than there were just a few years ago as the lingering effects of the Great Recession make some lawyers fear that they cannot afford to retire. The truth remains, however, that no lawyer is immortal, and planning to practice until death or disability strikes is not planning at all.

The financial aspects of a potential retirement are different for lawyers working for big firms versus those in small or solo practices. The one constant is that the issues involved cannot and should not be ignored, as lawyers tend to do. Even transactional lawyers typically are not known for personal financial foresightedness, as they — like most of their peers — focus much more on practice matters at hand than on financial matters in the future. Lawyers who do this are cheating both themselves and their heirs. At minimum, whether in a large or small firm, lawyers nearing retirement age have some important financial issues that must be considered, the sooner the better.

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