Demographics explain why law firms need to plan – and help partners plan – for retirement

Have you noticed that retirement has become a popular topic of books, articles, webinars, and other media? The attention is warranted – and urgent- because more people are reaching what we think of as “retirement age” than ever before in history: more than 4.1 million Americans each year, or more than 11,200 people every day, are turning 65. (This period is actually trademarked “Peak 65.”) And since people are also living longer, healthier, more active lives than ever before, they may spend 30 or more years in retirement. So as a society – and as a profession – we are beginning to talk very openly about redefining what retirement means, including what will have to change to accommodate new approaches to work and retirement.

The demographics of the legal profession make the need to reconsider retirement even more imperative.  Nearly 14% of lawyers, or about 1 in 7, are over 65. That’s double the percentage of all US workers over 65 (7%). The median age of lawyers is 46.3, which mean that more than half of all lawyers are over that age; in fact, 67% of lawyers are 40 or older.

This makes it likely that most law firms have a substantial number of lawyers in their 60s, 70s or older. In fact, one demographic analysis found that in 2022, 36% of partners at Top 200 law firms were past or nearing 65 and 6% of partners were 71-88 years of age. These partners are often the most powerful and influential in the firm, with lucrative client relationships and extensive connections in the profession and the community.

Firms need to be prepared for this demographic shift and how they will treat older lawyers who either want to retire or to keep practicing. Some firms mandate retirement at a designated age, but this has nothing to do with a lawyer’s competence or productivity. These mandates are intended to move out older partners to make room for younger ones, who are seen as the firm’s future leaders. After all, age alone is not an indicator of capability; some lawyers remain sharp and productive well beyond their 70s, while others lose steam, clients and acuity long before reaching “retirement age.” Why should vibrant, productive lawyers who want to keep practicing be forced to leave solely because they reach an arbitrary age? Firms can surely find other ways to retain and promote younger partners without sacrificing older ones.

Whatever their age, when older partners do retire, what will happen to their clients and community connections when they go? If there are no clear retirement and succession planning processes, or if partners feel the firm is pushing them out or treating them unfairly, they may neglect (or refuse) to groom successors, and without successors ready to step in seamlessly, client relationships and community connections may be imperiled or lost altogether. In addition, many younger partners may feel disappointed (or betrayed) when the client relationships they expect to inherit do not materialize.

Ideally, senior partners understand why client succession planning is needed, and support it because they want the firm to continue to thrive when they leave. But even when they are supportive, they don’t necessarily do it. Moreover, if several partners retire around the same time without successors in place, the consequences may destabilize the firm, financially and culturally.

There are many things your firm can do to facilitate partner retirement, promote client continuity, and prevent this dire scenario. If you would like to explore what your firm can do to create or improve retirement and client succession processes and guidelines, please get in touch with me.