Tens of thousands of law firms in the U.S. are owned and/or managed by lawyers from the baby boomer generation. These “baby boomer lawyers” have been retiring and will continue to retire throughout the next 10-15 years. However, as a result of today’s market, the prospect of retirement has both significantly changed and become increasingly complex. What was once a benefit, the ability to build one’s own practice, has now become a challenge upon retirement. Here, we take a problem-solution approach to this topic by first discussing the issues complicating the prospect of retirement and then presenting a practical, efficient solution that can help baby boomer lawyers seeking retirement transition out of the profession according to their needs.
Statistics today show that, overall, people are living and working longer. Because more savings is thus needed for retirement, many people now need to continue receiving income later into life. For baby boomer lawyers seeking retirement, if their respective law practices do not have viable succession plans (partner(s) or associate(s) who will take over and continue to run the practices for the benefit of the founders and retirees), then the law practices must somehow continue to operate if the founders, retirees, and soon-to-be retirees wish to derive personal cash flow from the businesses. However, not all law practices are equipped to operate without their soon-to-be retirees.
Additionally, lawyers have more restrictions regarding transferring their law firms’ assets compared to any other business, the most restrictive of which is the inability to share profits with non-lawyers. Because that restriction does not allow any part of a law practice to be sold to non-lawyers, there are very limited choices for lawyers seeking to exit their law practices with any leveraged payout.
Whether baby boomer lawyers seek either partial retirement, full succession, merger, or acquisition, there is a simple answer to many of the issues complicating the prospect of retirement: utilizing project-based lawyers as an alternative to traditional employment which comes with increased costs and other risks for law practices. Here’s why:
The ability to wind-down your practice. The choice of partial retirement means you still want or need to work, but on a reduced basis. By utilizing project-based lawyers, you would have the continual ability to expand and contract your workload at any given time based on your needs. Whenever you want more time off, project-based lawyers can assume your workload. And whenever you want to work more, you can determine how much project-based assistance you want, if any.
Continued revenue, but with less effort. Additional revenue can be generated from utilizing project-based lawyers, while simultaneously allowing the baby boomer lawyer to reduce his/her workload. Additionally, the practice can retain clients that it otherwise would not be able to without the assistance of project-based lawyers.
Short-term coverage planning. The small firm may just need help from project-based lawyers until permanent hires can be made (and those project-based lawyers may even prove to be the best candidates, after having already worked for the firm).
Long-term coverage planning. In the long-term, the small firm may not want to permanently hire anyone, but may still want to retain as much business as possible. Project-based lawyers can meet that need too by allowing the firm to retain the business, while saving the firm from the expenses of permanent hires.
Succession/Exit planning. The choice of succession, rather than closing down the firm, would seem to be preferred in most solo and small practices. The reasons for choosing a successor may include the need/desire to continue receiving income from the firm, as well as the desire to see the law practice you worked hard to build for years continue to succeed, among other reasons. However, finding a suitable successor can be very difficult, as such an undertaking raises important questions about successor candidates that can only be answered by getting to know candidates and seeing them work as professionals. Utilizing project-based lawyers can help you more easily find a suitable successor for a few important reasons. First, you would have the opportunity to get to meet and know the project-based lawyer(s). Second, hiring a project-based lawyer would allow you to evaluate that lawyer’s abilities over a period of time without having to make a long-term commitment or incur extra expenses. And third, you would be able to continue operating your firm as usual while you look for a successor (because no long-term commitments were made) or, if you want to spend extra time seeking a successor, additional project-based lawyers can manage some of your workload so that you can have that extra time without losing revenue.
The project-based lawyer solution to these retirement-related issues facing baby boomer lawyers can be immensely successful because of its inherent adaptability. Because the individual needs of baby boomer lawyers considering retirement greatly vary, having an adaptable solution that works effectively in a variety of circumstances is necessary. Thus, by utilizing project-based lawyers, lawyers can more easily and efficiently solve the challenges related to retirement.
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