How Philly law firms manage the retirement of senior partners
Posted: April 25, 2017 - 5:00 AM
Chris Mondics, STAFF WRITER
After spending nine years at the Securities and Exchange Commission, Justin Klein transitioned to the role of a corporate lawyer at the Ballard Spahr law firm where he focused on securities law and corporate governance.
Then a few years ago, he and the firm decided Klein would transition again.
He began to move more responsibility for his clients to junior lawyers while focusing on advisory roles and business development. Klein, now nearing 70, also began putting in fewer hours although he plans to keep working. The idea was that the firm would maintain client relationships while compensating Klein for aiding the changeover.
Firms in Philadelphia and beyond are devising strategies to promote younger lawyers as baby boomers near retirement, often giving the elders financial incentives to ease the process. The goal is to preserve client relationships for the next generation.
“We encourage partners to start transitioning their practices when they turn 60,” said Klein. “The firm has been clear that if you [transition your practice to another partner] you are not going to be hurt financially.”
Big firms here have been highly profitable since the 2008-09 recession, but revenues have been flat and finding new business has been hard.
Firms have been struggling for years to craft opportunities for more junior lawyers. Managers say it is sometimes tough to get baby boom lawyers to let go of the idea that only they can foster clients they’ve known for years. Some lawyers still haven’t recovered financially from the market crash while others can’t imagine doing anything else.
At the same time, many senior lawyers give critical services to clients.
Ideally, a client’s needs will outlast any lawyer’s career. The question becomes how to make sure the client doesn’t leave once the relationship partner moves on. Some firms have a mandatory retirement age, but many do not. Regardless, leaders say that transition has to start long before the lead partner leaves.
“We are making sure that we have more than one lawyer attached to a client,” said Ballard Spahr chair Mark Stewart. “The more touches you have with the client, the better the relationship.”
For generations, firms didn't need to focus on hand-offs because clients rarely left. That changed as corporate clients deemphasized affiliations with particular firms and emphasized relationships with individual lawyers. Many companies also have decentralized their process for seeking outside help, spreading it over several departments, so a long relationship with a big company's general counsel isn’t the protection it once was.
Many lawyers, like Klein, work well into their 70s and are highly valued. So the timing of a transition can have more to do with a lawyer's skills and client list than with age.
“In some cases, it might be that the client wants the relationship partner to be the more mature lawyer,” noted John Soroko, C of Duane Morris.
At Cozen O’Connor, there is no formula for transitioning more senior lawyers into retirement, says CEO Michael Heller, because age isn’t a useful measure of a lawyer’s value.
“We have so many lawyers who are extremely productive and terrific lawyers and if they want to work well into their 70s, God bless 'em,” he said. “At the same time I am a fiduciary of the firm and I have to look at what is in the best interest of the firm over the next 10 to 25 years.”
At Cozen, that means promoting more junior lawyers while compensating senior partners for transferring responsibility, Heller says.
Alison Bernard, chief talent officer at Dechert, said it focuses on helping younger lawyers develop leadership and communication skills. Dechert also helps younger women and minorities become partners. That includes explaining what partners look for in a lawyer’s business plan and the questions a young lawyer might expect in a partnership interview.
“We are trying tell our associates how the process works, what is happening behind closed doors,” Bernard said.