Ed Poll
Daily Record Newswire
The age of 65 was selected as the targeted retirement age because, at the time, only a small percentage of that age lived beyond it, and thus the cost of insurance was manageable.
Today, many people live 20 years and more beyond 65 (hence the title of the book, “Life After Law: What Will You Do With the Next 6,000 Days?”)
As lawyers near retirement age, there are conflicting emotions. Those who love practicing law will want to continue doing it, perhaps until they “die with their boots on.” Those who are ready to move on will be more willing to leave their practices, most likely by selling them.
However, except for those in large firms that enforce a mandatory retirement age, or mandatary departure in the event their revenue production falls below a stated amount, most lawyers are unwilling or financially unable to leave their practice.
How many lawyers in sole or small-firm practices (who typically are not known for financial foresight) have adequately made provisions for life after the law?
Some states now require lawyers to have estate plans for their practices, providing for succession in the event of a lawyer’s death or disability. But the issues to be considered for retirement go well beyond that. Here are three that are paramount:
1) A financial plan
It should go without saying that life insurance and a disability policy are musts for any sole practitioner. Other steps to take include drafting a will and an estate plan that states your direction for the wealth you have earned. The plan can create trusts to conserve assets, provide financially for all the expenses necessary to close a practice, and properly value the practice for insurance or sale.
2) A succession plan
If you intend to stay in practice, you should designate a conservator or other representative to handle matters if you suddenly die or are disabled. If the practice is not sold, the best succession alternative is grooming a successor, initially brought on board as an associate or a lateral partner. Ideally, this succession plan can be structured to transition over a period of up to five years, as client responsibilities gradually transition to the new lawyer.
During this period, there can be ongoing conversations with key clients about the upcoming transition, an opportunity to forge new ties between the successor and both current and new contacts, and sufficient planning to ensure that the new lawyer is completely up to speed on what the client needs and expects.
Preparing makes all the difference between a smooth and a rocky transition when the time comes to turn the practice over to a successor.
3) A retirement plan
This can be the toughest of all because while successful people are typically focused and passionate about what they do, when the focus shifts to personal satisfaction, self-worth and well-being, the questions get trickier: Would it truly make you happy to quit working completely and perform community service, or would starting a new career lead to fulfillment?
Leaving your current practice by retiring is an emotional process, and a successful transition will require all the traits that defined your success as a lawyer: motivation, acceptance of risk, resiliency and commitment. Each person’s approach will be unique and can change over time, so don’t feel you’ve burned bridges to your past life.
What is common to all lawyers is that these realities and needs must be faced. Lawyers who fail do so in effect are throwing away the value of their practices, and in the process, relinquishing their life’s work without getting anything in return.
A lawyer cannot ignore perhaps the largest asset in his estate: the practice. The value is there. After investing years of hard work and financial resources in growing the practice, effective planning allows any lawyer to reap the benefits of that value and the extensive investment of time and effort that created it.
And no matter what your age, the time to start planning is now.
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Edward Poll is the principal of LawBiz Management. He coaches lawyers and is the creator of “Life After Law,” a program that helps attorneys plan for profitable exits. He can be contacted at edpoll@lawbiz.com.
