Published on 6/9/08
Karen Mathis, immediate past chair of the American Bar Association, focused her term on developing a new awareness in the legal profession on the implications of the aging population. She said recently that 400,000 lawyers will retire in the next 10 years. That's equivalent to the entire current membership of the ABA!
What will these lawyers do? Will they close their doors and start new careers? Will they sell their practices? Will they become sole or small-firm practitioners because their current firms have a mandatory retirement age, some as young as 62? Will they be "warehoused" and merely wait to die?
Transitioning out of a legal practice is above all an issue of planning. If the practice is not sold or closed, the best alternative is grooming a successor brought on board as an associate or a lateral partner.
Ideally, the succession plan can be structured to transition over a period of up to five years, as client responsibilities gradually transition to the new lawyer. These five years can be seen as the "red zone" of your career — the area right before you reach the goal line of retirement.
During this period you can identify a successor, have ongoing conversations with key clients about the upcoming transition, forge new ties between your successor and both current and new contacts at the client, and ensure that the new lawyer is completely up to speed on what the client needs and expects.
Preparing for this kind of smooth transition can ease problems over the issue of goodwill when the time comes to turn over the practice to your successor. If the new lawyer seeks to buy the firm outright and change the name, and thus deleting yours, one might question whether the value of the firm's goodwill is decreased or even destroyed.
Often, when a firm is bought by outside interests, the buyers assert that clients will not remain with the firm once its proprietor leaves, and thus offer a lower purchase price. The selling lawyer then is left to assert that goodwill infers that the reputation of the firm continues beyond the removal of any one individual. With that reputation comes the client list, the phone number and the on-going nature of the practice (with staff and systems in place). Grooming and transitioning a successor from inside the firm can eliminate discord over this issue.
After investing years of hard work and financial resources in growing the practice, a planned transition allows you to reap the benefits of that years' long investment. Making sure you get everything done right requires creation of a timeline that includes descriptions of, and completion dates for, everything you need to do, in the order you need to do them.
If you're in the career "red zone" today, what are you doing to prepare yourself so that you can score a touchdown and spend the final years of your life enjoying the fruits of your labor as you choose?
