Are law firms pension plans underfunded? The truth of the matter is that we simply don’t know.
There haven’t been any reports of underfunded pension plans since 2012 (Wall Street Journal, Unfunded Pension Plans). But in this new time of uncertainty, do you really know what your retirement plan looks like? And more importantly, where are you with your retirement plans as we approach the new year?
Every law firm big and small is grappling with a whole host of succession issues. Managing partners trying to improve their financial standing my look to make the lateral move due to uncertainty surrounding their existing firm.
The financial fear is real, attorneys need to ensure that their succession plan is sound for their exit. Succession plans protect partners wealth in the event of un-expected life changing events.
A firm’s worth relies on growing the firm’s future earnings. Failure often results in a loss of legal talent and leadership within the firm as well as a loss of core clients. Defections can lead to firm’s turning out the lights and having to close the door with little to no compensation for those left out in the cold.
“Lawyers approaching retirement must have a succession plan in place to capitalize on their client relationships and market value to the firm. We advise clients on ways to cross pollinate these assets so that no money is left on the table” — Shari Davidson, President On Balance Search Consultants.
Many small and midsize law firms need to structure a succession plan to ensure that their firms:
- The leadership and management must be in place for the firm’s future success.
- The firm must retain existing client and referral relationships and sources of business and revenue for the firm.
Succession planning involves evaluating different aspects of the firm and identifying systems, processes and policies that need improvement in order to position your firm or practice succession regardless of your exit strategy. Options for succession typically include:
- Selling or merging the practice.
- Internal transitioning.
- Practice continuation with other firms.
- Turn out the lights and close the doors.
Small firms face real challenges to ensure a successful succession:
- Identifying another attorney in the firm to move into a partnership position.
- Locating colleagues to sell the practice.
- Locating merger candidates.
- Effecting the sale or merger of the practice.
- Proper wind-down of the practice if the practitioner decides to simply “close the doors” (employees, client files, etc.).
The key is to start early and not wait until the last minute. You need to put in place your succession / exit plan as soon as possible so that your family, employees and clients are not left in the dark if something should happen to you.
About On Balance Search
On Balance offers great insight and industry intelligence. Shari Davidson, president of On Balance Search Consultants, advises experienced attorneys at every stage of their ca-reer to take them to the next level. From making the lateral partner move to succession planning.
Shari takes a proactive approach to advising law firms on how to take a firm to the next level and helps rising talent make the transition to the right law firm. On Balance Search identifies opportunities that exist today, not down the road.
Contact us today. Call 516.731.3400 or visit our website at https://www.onbal-ancesearch.com
Please note that the content of this blog does not constitute legal advice and is only in-tended for the educational purpose of the reader. Please consult your legal counsel for specifics regarding your specific circumstances and the laws in your states pertaining to social media and any legal restrictions regarding the law.