Industry Resources

Navigating Partner Transitions: The Impact of Mandatory Retirement in Law Firms

In the Am Law 200, approximately 16.7% of the nearly 59,000 partners are nearing or have surpassed the typical mandatory retirement age of 65, which poses challenges for these firms as they navigate the transition of experienced leaders to a new generation. With an average of about 34 chairs, executive members, and senior partners whose 35-plus years of experience, client relationships, and leadership must be transferred to the next generation of leadership and rising stars.


The process is hardly ever smooth and sometimes involuntary. While some partners criticize mandatory retirement as ageism or an overly cautious measure, others point to studies linking cognitive decline with age, particularly after 65, the typical retirement age at this time. However, advancements in medical care may render the notion of retiring at 65 outdated. According to the U.S. Bureau of Labor Statistics (BLS) data from 2020, about 10.8% of the workforce aged 65 and older were still employed. This percentage has been increasing over the years and demonstrates a potential change in retirement expectations.


Compared to the general workforce population, BigLaw tends to have a higher percentage of lawyers working beyond 65, signaling the increased number of lawyers who continue to practice beyond a typical retirement age in relation to other areas of the workforce.


Despite the prevalence of mandatory retirement policies in law firms, many firms offer exceptions and flexibility to retain partners beyond the traditional retirement age. For instance, Greenberg Traig represents one of the firms with the largest group of working partners who are older than the age of 65. This data is likely correlated to their retirement plans as they do not have a known mandatory retirement age.


Transitioning leadership roles smoothly to younger lawyers through promotions, incentives, and succession planning is crucial for law firms. However, the trend of lateral movement in the industry has made this process more challenging. Firms often resort to acquiring talent rather than cultivating it internally, leading to potential succession gaps and talent drain. When firms adopted mandatory retirement policies, in some cases several decades ago, the typical partner was a “lifer” who had been at the same firm their entire career. Fast forward to today, most firms have more lateral partners than lifers, and hence mandatory retirement policies will need to adapt to this situation.


Identifying succession challenges is straightforward, but developing and implementing effective succession plans is where many firms struggle. Despite having mandatory retirement policies, not all firms adhere to them strictly, which can deter ambitious lateral hires seeking clear paths to leadership roles. This practice is common among the Am Law 200 firms. When you throw in another curveball with legacy retirement benefits, some firms have to make tough decisions on whether to continue any retirement benefits which will in turn decrease the profits for their then-current partners and thereby make the firm less competitive in attracting new lateral talent.


As the legal profession ages, firms may need to reconsider the strict enforcement of mandatory retirement policies and focus more on individual capabilities rather than arbitrary age limits. Implementing transition periods and mentorship programs for aging lawyers can facilitate smoother leadership transitions, as seen in firms like Winston & Strawn.


Looking at the specific firm of Gibson, Dunn, and Crutcher, we can see the impact of a mandatory retirement age. 46 partners graduated 1984 or earlier, making them beyond the age of 65 out of 1976 partners. The executive committee can vote to allow partners who are approaching their retirement age to remain with the firm. Most likely all of these partners who are beyond the age of 65 were voted on in order to continue with their partnership at the firm.

Upon surveying these partners, around 36% percent of them are predominantly in the litigation practice and some have held a form of leadership within the firm including sitting on the executive committee. Considering that partners beyond 65 are voted on by this same committee, a pattern could potentially emerge based on previous standing in the firm. Additionally, the majority of the remaining partners are “lifers”, and very few are lateral partners. Over the next 10 years, over 120 partners at Gibson Dunn will approach retirement, making a plan for retirement a vital topic for the firm to discuss. As partners continue through their growth at a firm, retirement policies remain on the mind as people look to their future endeavors.


There are plenty of law firms who do not hesitate in hiring partners who are older than 65. These firms typically have less stringent policies including openness to remote work as well. For a law firm partner who mostly services his or her own work along with some service associates or partners and doesn’t require a larger infrastructure and would rather keep a higher percentage of billables, we have very strong options for this segment of the market.


We are available to assist both firms and candidates in addressing succession planning challenges and offer insights on industry best practices. Effective execution of a well-crafted plan is key to resolving leadership transition issues. If firms are interested in evaluating their current standing and learning about successful strategies in the industry, we are here to provide guidance and support in developing a comprehensive game plan.

Sources

The American Lawyer. (2024, May 7). The 2024 Am Law 200 by the numbers. Law.com. Retrieved from https://www.law.com