March 8, 2018
NEWS & VIEWS
By Matt Byrne 6 March 2018, The Lawyer magazine
The idea of offering partner retirement assistance is heartily supported by top law firms. However, the results of our survey reveal that what they actually provide lacks the structure and innovative thinking found at the big accountacy firms.
“To what extent do you think that both firms and partners nearing retirement benefit if the former provides specific retirement-related assistance to the latter?”
While UK law firms continue to face criticism in many quarters for their approach to retirement-related issues, the results of our survey suggest that an overwhelming majority have at least recognised the potential value of providing assistance.
Some 71 per cent of total respondents said they agreed entirely that both firms and partners nearing retirement could benefit if the former provided retirement-related assistance to the latter. Another 18 per cent agreed to an extent, while the remaining 11 per cent were neutral. No respondents said they disagreed with the statement.
What the market says:
Jane Harris, partner, Milestones: More firms are taking retirement-related assistance more seriously than ever before, though they are somewhat behind the accountancy firms when it comes to structured programmes and alumni networks.
Traditionally, law firms have only thought about supporting their partners when there is a problem with performance or behaviour. However, there is now a realisation that it makes sense to be more proactive about this and treat retiring partners well so that they can leave healthy, happy and as ambassadors for the firm.
There is clearly a need for practical support, yet firms are also starting to recognise the value of placing emphasis on emotional wellbeing and providing support that helps to strengthen personal resilience when it comes to retirement.
Tony Williams, principal, Jomati: It is encouraging, at last, to see that firms now recognise they have an issue and that a constructive and proactive approach to retirement is necessary, even if they are hazy as to how to achieve this.”
Anna Ponton, head of legal and professional services, Odgers Berndtson: Ending the relationship between partner and law firm on a sour note or with a sense of lingering disappointment is not good for either party, particularly the law firm. Happy alumni can be useful alumni in terms of promoting the firm’s brand in a general way.
Loyal alumni who move on and get involved in other things will always think of their former firm first if they are asked to give recommendations.
“To what extent do you believe there is a business/marketing opportunity for firms to differentiate themselves by offering specific retirement-related assistance to their partners?”
This question sought to identify specifically whether or not UK firms believe that the provision of retirement-related advice could offer them some sort of commercial advantage. It was designed to assess the extent to which there is the potential for firms to differentiate themselves by offering retirement-related advice.
While the results were less clear-cut than those to Question 1, the overall picture is clear: the majority of respondents say they believe there is an opportunity.
In all, 29 per cent of firms agreed entirely with the statement while another 43 per cent agreed to an extent. Another 18 per cent were neutral, while 11 per cent disagreed to an extent.
What the market says:
Elizabeth Holden, director, BCKR: The benefits of helping retiring partners extends deep into the firm and beyond. Trainees sitting with those retiring, aspiring partners and longstanding clients all watch how the firm treats its partners.
Williams: Leaders apparently recognise that doing the right thing in terms of retirement is also good business whether in terms of better retention, improved engagement, living the firm’s culture or creating ambassadors for the firm rather than detractors.
Ponton: Providing help reflects on the culture of the firm and its standing as a ‘good place to work’. It can be a positive move on the age-related diversity and inclusion front too. But fundamentally this is about treating people with dignity and respect – people who have, let’s remember, devoted much of their life (usually) to one firm.
George Wilkinson, partner, Milestones: The larger accountancy firms and business consultancies have been quick to see the commercial value of putting in place a supportive framework for their partners when it comes to retirement.
What we have seen in the legal sector mirrors these findings in that partners are likely to continue to be active, many will bring new client work back into the firm, others are involved in charities or start-ups, creating potential new income streams. Yet many law firms continue to be slow to react, failing to place sufficient emphasis and focus on this. It takes a senior sponsor to make this work and it should be higher up the HR agenda. Only then can the benefits be realised.
“If you agree, what would you say are the primary opportunities/benefits to the firm of doing this?”
The survey now turns to specifics, asking those firms that agreed with Question 2 to state why they did so and also to detail what they would consider to be the primary opportunities or benefits to a firm of providing retirement-related assistance.
“We agree that there may be a marketing opportunity for firms offering assistance for retirement as it can be a valuable tool for those in the position to take advantage of it,” pointed out one firm.
“However, aside from the marketing opportunity we believe that partners benefit greatly from assistance with preparing their retirement, both in a practical sense and in relation to the psychological side too. It can be a challenging time for people who have dedicated a great proportion of their life to their work. This is particularly true for many of our partners who have not infrequently spent a great deal of their working life, if not all of it, with the firm.
“Partners are more likely to feel comfortable about retirement if they have received assistance from the firm in preparing them for it, meaning they feel positively about it and are more likely to work with the firm to hand over relevant matters, information and contacts, and leave their successors better prepared to take over their clients.”
One firm flagged up the issue of retention as an increasingly important market issue at all levels of seniority due to the increased mobility of lawyers.
“Partners who can see that their eventual transition from partnership will be managed well are more likely to stay; and, when they do leave, to remain positive towards the firm,” said this firm. “It also has a positive impact on morale as senior partners are often highly respected and popular individuals who have played major roles in training the next generation of lawyers.”
Another summed up the benefits neatly: “1) It helps the firm proactively plan succession for key roles, client relationships and skills gaps. By encouraging the partners to prepare for retirement, they are more likely to open up their client relationships to others and develop others in the team. 2) If the firm understands the aspirations and needs of retiring partners they can tailor the support provided and, where appropriate, retain expertise within the business in a non-partner role, eg senior counsel. 3) Partners that retire and leave the business feeling well-supported will remain advocates of the firm and potentially create work referrals from within their network, e.g. from non-executive networks or offer mentoring support to remaining lawyers. 4) It can send a good message to staff if they see a positive exit from the business, and relationships maintained post-retirement.
All of the above, if delivered correctly, should certainly help differentiate a firm in a competitive marketplace. Another firm addresses this point, stating “whilst I do not see the primary aim of retirement-related assistance as creating a business or marketing opportunity, there are benefits in ensuring that partners leaving a firm ‘leave well’ and act as advocates for the firm. This may include creating connections and referrals, consultancy opportunities for the individual within the firm and building a network of individuals who feel a sense of pride in having worked for us during their careers. Any assistance/support provided to partners approaching retirement demonstrates that the firm treats retirement seriously”.
The latter point is echoed by another firm, which states: “It shows they care from the cradle to the grave not just for the new recruits – who will all become old one day.”
Another, even more pithily, sums up the benefits of a firm offering its partners better holistic care: “Everyone is an alumnus eventually.”
What the market says:
Harris: What is clear is that when individual partners feel they have something to move on to they are better at succession planning, clearer about client handover and more transparent with the firm. These behaviours help to reduce all the commercial risks associated with a senior person leaving.
Those who don’t feel supported or part of the wider alumni of the firm will tend to talk negatively about the firm and their experience, which damages the firm’s reputation and can often mean clients go elsewhere as they feel their relationship has also ended when the partner leaves.
Treating people with dignity while acknowledging their contribution makes for a successful, supportive retirement programme. The benefits are many but perhaps the most poignant is the strengthening of the relationship between partner and firm. Giving partners permission to think about their next steps impacts all aspects of their lives, and all the people around them. Ultimately, it is the right thing for the firm to do.
“Specify the most significant initiative/area of assistance your firm has introduced in recent years that was aimed at helping its partners prepare for retirement”
Staying with firm-specific information, we asked firms to tell us about the measures they have in place to help partners prepare for retirement. ‘Coaching’ looms large among the responses, with schemes including one-on-one sessions with an external provider to help partners start thinking about career planning, and coaching ‘for the life change’.
One firm said it offered “dedicated retirement planning”, with additional training on related areas. Several responses suggested that the sense that firms are behind the curve in terms of offering structured retirement assistance to partners is not too wide of the mark.
“Sadly, very little of note,” said one firm, while another said “None, other than making decent profits to enable them to retire.”
This respondent went on to say that their firm was “at the outset” of developing initiatives to support partner retirement.
“Our focus to date has been on having honest conversations with our partners about potential timescales for their retirement,” the firm added. “These conversations allow us to be more proactive around our plans and gives partners a greater sense of confidence that we will work with them to ensure their knowledge and experience is gradually transferred to future leaders.”
One firm argued that succession planning was a two-way process for the clients and lawyers.
“Clients should know of any plans well in advance and I have not come across any evidence of any push from clients for new relationship partners,” added the firm. “As long as a quality service is still being undertaken clients are happy. Firms should recognise this like US firms do, with no compulsory retirement age. Medicals should be provided FOC to protect both sides.”
One UK 200 top 30 firm highlighted its partners’ ability to reduce working days over an agreed period, while another said it held annual lunches with retired partners, who are also invited to all the firm’s partner retirement dinners.
“We provide them with our quarterly news magazine [while] partners are offered support with IT training and assistance,” added the firm. “Coaching as to specific needs is also freely available.”
Only one firm, a large international player, specifically highlighted financial planning advice:
“We use the firm’s private wealth offering and offer an in-house legal allowance to partners to use for financial planning, tax and probate services. Last year we launched an awareness campaign around this benefit to all partners to encourage them to draw down on [it] to establish the essentials they should have in place, whether or not they are nearing retirement. We offer this to all partners including newly promoted partners and lateral hires.”
Another firm seemed much more geared up to assisting partners on retirement-related issues than the norm, at least judging by its response to this question: “We created a collection of documents which are issued to all our partners considering retirement in the next two years.
The documents include a retirement handbook which covers a range of practical advice and support for personal and professional considerations when approaching retirement, and retirement form templates for the partner to complete. The latter detail: the matters on which partners are involved to help the partner conclude them in an organised and methodical way; suggestions of tasks that should be considered ahead of retirement, matter-related and non-matter related; at what stage before retirement the transfer of leadership roles should happen and the way this is undertaken; and the transfer of key relationships to others in the team, training and mentoring responsibilities. In implementing the use of the forms we invite the relevant departmental managing partner, HR and the individual to meet to agree the information that will formulate the pre-retirement plan.”
What the market says:
Ponton: This is a very personal and critical career transition point. Being given a handbook that details what you need to do to hand over clients is frankly rather impersonal and only really benefits the firm. One of the Big Four allows partners in their 50s to attend a group seminar about life after the firm.
Once they have given their year’s notice they get sent a form/handbook that outlines what they have to do to transfer their client relationships. That’s it.
What individuals need and want is somebody to spend a little time with them. There is a tendency to feel ‘scrap-heaped’ the minute you have declared your hand. Suddenly, these partners feel they are ‘yesterday’s people’.
One of the big issues here is timing. Partners leave it far too late to start thinking about life outside the firm, but can you blame them when they see what has happened to their colleagues? This needs to be addressed at an earlier stage and the stigma of talking about and positioning for the future removed.
One suggestion would be to encourage a discussion about life outside the firm for all partners and staff, so it is not always focused on life ‘after’. So, at the point of stepping off they have relevant experience to draw on and can offer referees and a network who have seen them in action beyond being ‘just’ a lawyer.
One-on-one coaching for, say, four sessions can make a huge difference and help partners understand what lies ahead. It helps them identify their strengths and weaknesses, and, quite frankly, just provides some ‘me’ time. A good coach can help them to establish what they want, identify their network and give them the confidence to strike out into the new world. Life in a law firm is extraordinarily cocooned.
In a room of 25 soon-to-retire partners at a recent event I spoke at not a single person was being given any one-to-one help, although all professed to wanting it. They were all at big commercial firms.
Wilkinson: Our experience is that law firms are particularly cautious when it comes to spending money on development, assistance and support for their partners. There is often a difference in opinion and perspective between partners and HR. This, in turn, leads to a difference between what is delivered and what is experienced.
Many firms struggle to get the messaging right, and the content aligned with what is of most value for partners. Having a fresh pair of eyes and an external perspective makes a big difference. This is often not something that can be managed internally by the firm, particularly in the early stages.
Holden: There is much that can be done in this area, often involving extending a partner’s valuable contribution to the firm or increasing the likelihood that their activities during retirement will also benefit the firm.
Our experience over recent years is that firms are definitely improving in this area. The key to a successful retirement is good early planning, made available to all as a matter of course.
“Do you believe there is a benefit to your firm of partners taking non-executive directorship (or other external appointment) roles post-retirement?”
Moving on to non-executive directorships (NEDs) and other external roles, the response to Question 5 which asked whether firms thought there was a benefit to the firm of partners taking these on post-retirement was again overwhelmingly in favour, with 89 per cent of respondents saying they believed there was a benefit to the firm. Just 11 per cent said no.
What the market says:
Holden: It is great to see this level of enthusiasm for post-firm NED roles but, as those embarking on this path know, there is much to be done to bring it about. Being a lawyer, even a very successful partner at a top City firm, does not guarantee you any roles.
Wilkinson: The reality is that for many partners getting the time to focus on NED roles outside the firm is simply not on the agenda. Firms could do more to promote and support this, as clearly there are tangible benefits for both parties. Some firms have an excellent system for sabbaticals and perhaps introducing something similar where time spent working in different sectors or for clients in-house could make all the difference.
“If yes, what is your firm doing to assist these partners to obtain such roles? If no, what do you see as being the biggest barriers/risks to them doing so?”
In the follow-up question, we asked both sides to provide their reasons. One respondent highlighted the issue of reputational risk with any appointment.
“Lawyers are likely to be more natural NEDs for public sector/quango roles and trustee roles,” argued this firm. “Unless partners are familiar with, and can present in, a listed company environment, in a non-legal role, they are likely to be perceived, often unfairly, as being too risk-averse, and too concerned with detail rather than strategy. This means they need to be able to present themselves as businessmen with a legal background rather than the reverse. My firm, recognising the above issues, advises lawyers on how to present themselves appropriately, inter alia by meeting with exemplars. Frequently, the missing element is not knowledge but confidence.”
Another firm admitted that “whilst we can see the benefit likely to be gained by firms from former partners securing NED-type roles, we do not undertake any specific activity to encourage or support former partners in doing so”.
More encouragingly (although in a comment that also seems to confirm the general lack of retirement-related infrastructure for partners across the UK’s largest firms), one firm insisted that it seeks to encourage partners, when appropriate, to leverage its network of clients and other contacts, adding “we are about to establish a more formal alumni network (and would be interested to learn from the experience of others)”.
Another firm, which admits to providing “very little” by way of practical help other than “introductions”, pinpoints and confirms the key issue facing lawyers hoping to secure a lucrative NED role post-retirement: “Often, boards are resistant to having lawyers as NEDs as they are perceived as being not commercial enough and too focused on speciality areas. Compare that to the ‘T-shaped accountant’, with a broad range of experience backed up by deep expertise.”
What the market says:
Williams: For a white, male, private practice lawyer in his mid-50s to expect to walk into FTSE100 NED role immediately on retirement is pretty close to cloud cuckoo land. There are plenty of roles of various sorts available after retirement, but a partner needs time and help to explore these, and to develop a relevant contact base.
Given the pressures of practice it can be hard to make time – or to admit that time should be made – for considering one’s future options, which is why specialist help from outside the firm may help to provide a level of objectivity and confidentiality.”
Harris: There is this strong perception that partners will go on to take up NED-type roles, yet many have no real desire to do this. It comes down to exploring a partner’s identity and how they see themselves.
There is genuine merit and value in exploring the full spectrum of possibilities and opportunities that present themselves. This can be achieved once some of the exploratory work has taken place.
Holden: Lawyers can do much to reposition themselves in this market, but it takes effort on the part of the individual and genuine encouragement on the part of the firm. Too often only lip service is paid to it by management.
“Do you believe there is a benefit to your firm of partners taking non-executive directorship (or other external appointment) roles while still practising?”
The answers to this question were entirely consistent with those to Question 5, with 89 per cent of respondents saying they also believed there was a benefit to the firm of partners having external appointments post-retirement and just 11 per cent saying they disagreed.
What the market says:
Holden: While the response here is encouraging, much more could be done to make it a reality. Many firms talk about the benefit without finding ways of supporting partners to achieve it. Simply permitting these roles is not enough. The firm should actively support partners in developing themselves, their networks and the firm’s brand by taking on such roles.
The interests of individual lawyers and their firms have converged. It has become clear that, in order to survive a challenging professional life, an individual lawyer needs to create a hinterland in which they can happily exist even at times of extreme professional stress. That hinterland can exist in family life, creative art, sport, politics or in many other places. Increasingly, however, it is also coming to exist in the governance of businesses, charities, public agencies and similar organisations.
There are also likely benefits for the firm’s clients – new skills, new insights and unlimited networking opportunities. Put simply, a lawyer who understands clearly how a client thinks and reaches a decision through the experience of being one, sitting on a board, is rather better placed than one who lacks that experience. This advantage is not limited to commercial lawyers, it is applicable to all practitioners.
“How would you describe the firm’s approach to partners holding external appointments (such as non-executive director roles and trusteeships)?”
In this question we wanted to dig deeper into the culture of UK law firms and their philosophy towards NEDs and other external appointments for partners, asking how they would describe their approach to this issue.
It is notable that a large majority, 64 per cent, say they encourage it. And yet the answers to previous questions suggest that this ‘encouragement’ lacks something in terms of practical assistance.
Just 14 per cent admitted that they tolerate it, 7 per cent said they discourage it and 4 per cent prohibit it.
What the market says:
Holden: All too often we find that ‘encouragement’ falls well short of active support, amounting instead simply to a permissive approach with little training or guidance. However, the best firms are changing their programmes.
“Please state why this is your approach”
Asked why they were in favour, most firms reported benefits including gaining wider experience or additional skills and, of course, an extended network of contacts. One firm went further, stating “one of our firm’s values is ‘freedom’ and so we trust our partners to work in a way that complements their commitments outside of work. Wherever possible, we would look for ways to ensure a partner could hold an external appointment and accommodate this as part of their working week”.
On the opposite side, one firm admitted a potential “negative” was that they could be “a distraction from fee-earning”. Another said “the potential for conflicts of interest in our practice areas/localities is huge”. A third was blunt about the risks and equally blunt about the action the firm has taken to protect itself: “In previous years we lost partners to the bench and to employment tribunals. There was the additional factor of time lost to the firm and its clients. We decided that to be an equity partner you had to be fully committed to the firm. This has proved to be correct. We no longer lose equity partners. Anyone who wants to follow other careers has the opportunity to step down from equity to fixed-share partnership.”
What the market says:
Holden: It is clearly disappointing when partners leave a firm earlier than the firm would like, but it is surely more exciting when others stay longer as fee-earners because of a more progressive approach. Personal wellbeing is vital for the successful delivery of professional services. One ingredient of wellbeing is a hinterland that is not simply a retreat, but also a source of inspiration. If you want to be a good lawyer, get a life outside the law.
“Outline any opportunities your firm offers to partners who are looking to scale back their work levels/hours as they approach the end of their career”
For many firms this question touches on one of the most contentious issues relating to the retirement of their senior lawyers, namely when or how (or indeed if) partners can scale back their hours.
Some firms’ responses were precise and detailed in terms of the options they offer. Others’ were equally precise as to what they most definitely do not offer.
“None,” said one firm. “We expect all serving partners to devote the whole of their time to the business. If partners wish to undertake NED-type roles that will demand significant time away from the business, it is highly likely that profit-sharing arrangements will need to be adjusted.”
“Considered on a case-by-case basis they could step down to fixed-share partnership, but as a rule we want full-time, fully committed equity partners, not part-time, not fully committed partners,” said another.
At another firm partners “may reduce their hours by up to 40 per cent for a maximum of three years culminating in retirement”, while at another partners have the ability from the age of 62 to demand reduced hours “and if they choose they can scale back in one go or, for example, drop one working day a week per year”.
What the market says:
Williams: Many partners are reluctant to scale back as this is tantamount to admitting the partner is retiring in one or two years, ie ‘I’m in the departure lounge’.
Why quality talent who just wish to reduce their workload (and income) should feel this is the only option is an indication of a lack of imagination on both sides.
Ponton: A lot of firms allow their partners to be consultants for a year post-retirement. This is quite an expensive way of giving them a soft landing.
Addressing the issues earlier may mean that partners are ready to leave the firm and do something else on their retirement date rather than perhaps feeling like a bit of a spare part.
Read the full article from The Lawyer here.