Just saying ‘no’ to retirement

Don’t ever tell Ned Levitt it’s time for him to retire. The 63-year-old partner at Aird & Berlis LLP intends to carry on practising law “until the hearse pulls up to the door.” He’s one of many healthy and highly motivated baby boomers who believe they will remain active and productive for many years to come. “My practice is still expanding so why put an arbitrary time frame on that,” he says. “I work out at a gym three mornings a week. I’m a shortboard windsurfer. So are you going to tell me to go lie on a couch?”
But this determination to break the old retirement age barrier can present huge problems for law firms — especially when it is accompanied with a reluctance on the part of the aging partner to make any moves to wind down his or her practice by passing on work and client contacts to younger colleagues. “Firms are struggling with this,” says law firm consultant Karen MacKay, president of Phoenix Legal Inc. She maintains that many firms do a poor job in managing retirement and succession planning. And it’s an issue that has become even more worrisome for law firm managers in light of a recent British Columbia Human Rights Commission ruling that Mitch McCormick, an equity partner with Fasken Martineau DuMoulin LLP, could proceed with an age-discrimination complaint regarding the firm’s attempt to force him to retire. The human rights code in B.C., as in some other provinces, including Ontario, has effectively banned mandatory retirement in employment relationships, having done away with earlier provisions that limited age-discrimination complaints to people aged 64 and under. Faskens argued unsuccessfully that McCormick, as an equity partner, was not an employee and is not therefore covered by this legislation.

In spite of this ruling, many law firms continue to rely upon mandatory retirement provisions in partnership agreements, taking some comfort from the fact that the B.C. Human Rights Commission conceded that the circumstances in McCormick’s case, where the firm controlled his work in various ways, may not apply to other situations where partners might not be considered employees. Nevertheless, in a society where mandatory retirement is no longer the norm, law firm managers would obviously far rather persuade partners to retire than try to enforce a questionable provision in their partnership agreements.
But how do you do this? How do you persuade someone like Levitt to slow down as his career continues to gain momentum? How can you convince people to direct their energies into hobbies or other interests after focusing for most of their lives on little else but their law practices? What will it take to get those whose earning power has never been greater to reduce their income soon after a global economic crisis that has wrought havoc upon many retirement savings plans?

For Levitt the simple answer is that you can’t and you don’t. In fact, he says, people at his previous firm tried and failed. He had been running his own firm, specializing in franchise and distribution law, but decided to move to Gowling Lafleur Henderson LLP at the age of 58, having chosen Gowlings partly because it does not insist upon retirement from equity partnership until the age of 70. While he does not fault Gowlings in any way, Levitt says he became uncomfortable when he realized he was expected to begin making a transition towards retirement in his early 60s. Not wanting to let go of his practice, he decided instead to move to Aird & Berlis, a firm he says will never force him to retire.

Scott Jolliffe, chairman and chief executive officer of Gowlings, says, “We have one of the best, if not the best, arrangements with our senior lawyers as they approach retirement years.” However, he adds, “We have a business to look after.” And that business, like that of any other law firm, requires that succession plans be put in place. Clients expect this, he says. They need to know who will take responsibility for their affairs when their primary contact leaves the firm. For that reason, the firm has a policy that, for five years leading up to retirement, partners should begin to “transition” their practices, expertise, and client relationships.

Jolliffe acknowledges it is natural for people not to want to give up control of their work and their relationships with clients. In fact, he says, “As you approach your retirement years, that may become a stronger personal feeling as you want to ensure that you remain relevant and important.” Dealing with this issue effectively requires a dialogue, he says, “where everybody understands the needs and goals of the other.”

It’s important to ensure the senior lawyer feels respected and has some measure of certainty that he or she will still have a meaningful role in the years leading up to retirement as well as a stable income. He says the key to this is changing the method for measuring a lawyer’s contribution to the firm so there are financial rewards for passing on relationships, developing work for the firm and passing it on to others, mentoring and supporting younger lawyers, and drawing upon his or her expertise to provide the firm with a second opinion or advice on various matters.

Jolliffe also says some lawyers continue with the firm as “income partners” long after resigning as equity partners. He cites the example of former Ontario chief justice and attorney general Roy McMurtry, still playing an active role as counsel to the firm at 77.

McCarthy Tétrault LLP has a similar approach to partner retirement. Paul Boniferro, a partner and the firm’s national leader of practices and people, says the standard retirement age is 65, but some people continue on as counsel beyond retirement if they have a skill set, particular expertise, or continue to be valuable to the firm because of their reputation or their ability to attract clients.

Boniferro also stresses the value of open and honest dialogue with partners, as early as possible prior to them reaching retirement age. These discussions can be tough, he says, particularly in situations where the partner wants to continue working after retirement, but there is not a good business case for doing so. In these cases, he may have to tell them: “The practice isn’t as strong as it used to be and it’s not very profitable. We want to make room for younger partners and associates to come up the ranks and we don’t see the value for the firm or for you to continue.”

Levitt maintains that this attitude to retirement is out of date. “The time-honoured tradition in larger firms is to say to young bright lawyers, ‘We’re going to work your brains out, but don’t worry about it because eventually you’ll inherit these clients.’ That’s the model: if you don’t get rid of your old farts, how are you going to reward the young people coming up?”

But for two key reasons this no longer applies, he says. One is that clients are not loyal to a single firm anymore so they may well move in any event, irrespective of whether the firm has a succession plan in place. The other is that younger lawyers are more mobile and more interested in work-life balance than working at an unhealthy pace with the hope of advancing within the firm.

But Boniferro says law firms can’t afford the risk that partners will reach retirement age without having done any succession planning, “or worse yet, decide, ‘There’s no room or space for me here. If I don’t feel respected and valued, I’ll go elsewhere.’”

Freelance journalist and business writer Kevin Marron can be reached at [email protected].

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