While the economic crisis is being felt by nearly every segment of the working population, one group of workers is faced with particularly tough decisions regarding their futures. Law firms need to be prepared to assist them in making a transition during challenging times. Six-in-ten workers (60 percent) over the age of 60 say they are putting off their retirement due to the impact of the U.S. financial crisis on their long-term savings, according to a survey by CareerBuilder.
The survey was conducted online within the U.S. by Harris Interactive on behalf of CareerBuilder, among more than 8,000 workers between November 12 and December 1, 2008.
Depleted savings accounts due to the economic downshift are causing older workers to stay in the workforce longer to make up for their losses. One-in-ten workers (11 percent) over the age of 60 who are putting off retirement say that the decrease to their savings may now cause them to never retire, while 73 percent think it will take them up to 6 years of extra work to recoup their lost savings. Nearly a quarter (24 percent) feel they can make their money back by working an additional year or two.
“Mature workers may be feeling the pinch of this difficult economy more than others because of their impending plans for retirement,” said Jason Ferrara, Senior Career Advisor at CareerBuilder. “Mature workers who are returning to the workforce to offset their retirement losses will likely encounter many of the same challenges that workers of any age are facing today. However, their level of knowledge and experience and network of professional contacts will work to their advantage in a competitive job market.”
CareerBuilder’s job site for mature workers, offers tips for navigating through a difficult economy. While some of the advice is applicable, especially for support staff, it is not of much assistance to law firm partners. Here are the problems your firm may face:
1. Partners who are unwilling to transition their clients.
Unless your firm has a mandatory retirement age you may find that senior partners are holding onto their clients in an effort to remain relevant at the firm and buoy earnings. This will be particularly true in firms which utilize a formula-based compensation system which promotes an “eat-what-you-kill” system.
When there is no strategy in place to transition clients to the next generation, the firm remains particularly vulnerable to loss caused by death, departure, or disability of the relationship partner.
2. Young turks who grow impatient waiting for their turn at managing and leading the firm.
Not only may your senior partners refuse to transition clients, but they may fear losing their relative position of power and becoming irrelevant to the future direction of the firm. No one wants to feel irrelevant. This concern becomes particularly troublesome for the aging partner.
The impact and resulting tension on the next generation is palpable, as those who have waited patiently grow increasingly dissatisfied and disillusioned about their own opportunities to lead based on their vision.
3. An inability to expand personal networks for the turks.
When the senior partner does not transition clients, they oft-times do not open their networks to cross-marketing by younger partners. Instead of the next generation being empowered to grow those relationships further, they are constrained. Everywhere they seem to turn, networking efforts hit the wall of some existing relationships, and resulting business seems to fall into someone else’s compensation bucket.
What should your firm be doing? How can it help?
1. Create a vital role your senior partners can fill so they do not feel irrelevant.
Smart firms make their senior partners ambassadors for the firm in the community-at-large and with existing clients. They are responsible to survey the firm’s key clients and provide valuable feedback regarding satisfaction with the firm’s services. They are also charged with helping younger partners identify targeted prospects, and using their own networks to help younger partners build bridges to reach their targets.
2. Create a compensation system which rewards the transition of clients, and of continued rainmaking, but discourages actually doing the work.
In order to eliminate hoarding, you have to enable your senior partners to continue to earn a reasonable living even though they are passing along the work to the next generation. There should be a defined point in time when actually doing the work, instead of passing it along, starts to negatively impact earnings.
3. Reevaluate your retirement plan(s) to ensure you are maximizing investment opportunities.
Of course, no one appears to be making money in today’s marketplace. And we get the feeling that further investments are like flushing cash down the toilet. But there are some bargains to be had, and strategies which will help ones portfolio bounce back quicker when the market turns around. And we know from past history that eventually it will turn around.
If your retirement plans only invest in conservative money market funds, you may want to reconsider that investment strategy now.
4. Eliminate forced early retirement.
This may seem counter-intuitive. Too many senior partners are being forced out of firms when they still have a lot to offer. One doesn’t become useless with the turn of a page on the calendar. Most are not ready to become irrelevant, or move on to a different phase of their lives. The result can be costly for the firm which casts them out, when the senior sets up shop and takes existing work with them.
Find other ways to keep your seniors engaged and vested in the future and continued success of the firm. With a little creative thought you can craft a new role, and reduce the operating expense required to support them in the process.
These are just a few thoughts which were prompted by the survey results. There’s no doubt that the extended downturn in the economy will impact most Americans. For those aged 60 and above, the impact is immediate, and needs careful thought and action on the part of law firms.
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