Reap What You Sow

Hey law firms!  Have you given much thought to your partners approaching retirement, and calculated what their retirement may cost you? 

I reckon that there are at least five different types of attitudes that a retiring partner (“RP”) may have. Here they are:

  1. Strategic Break. The RP wants to leave the firm and recoup the greatest reward possible, so they leave a few years before they really want to retire and transition as many clients as possible to a new firm which is willing to pay them for the clients who they bring over.
  2. Mad as Hell Break. The RP encourages clients and referral sources to leave and would never refer anyone in a million years.
  3. Complete Break. The RP leaves the practice and has no interest in helping their former partners whatsoever but does nothing to influence clients and referral sources to stay or leave.
  4. Luke-Warm Break. The RP leaves and takes steps to introduce the key clients to other lawyers at the firm but does not make any special efforts beyond that.
  5. Sizzling Hot Break. The RP introduces clients and referral sources to successors, including in personal meetings; coaches and trains successors on how to handle the clients and referral sources; vouches for their successors to the clients and referral sources; refers clients following departure; talks up the firm to everyone; follows up with clients and referral sources post-departure to find out if they are happy with the succession and intervenes to address issues.

Each of these types of Breaks will have a different cost to the firm. Although the financial impact will be different in every firm, and for every partner within a firm, each firm should be able to come up with a methodology for measuring the impact.  Here would be my stab at something that might work for a partner with a substantial client base retiring from a medium-sized firm, comparing a Mad as Hell Break to a Sizzling Hot Break:


  • RP client origination credits = $2,000,000 annually.
  • The firm earns 40% of its gross fees after paying the lawyers who do the work and the lawyers who bring in the work.

On a Mad as Hell Break:

  • Client retention = $300,000.
  • Value of clients retained for one year = $300,000 x 40% = $120,000.
  • New clients referred = zero.
  • Other value provided by RP = zero.
  • Net Value to firm = $120,000 annually.

On a Sizzling Hot Break:

  • Client Retention = $1,500,000.
  • Value of clients retained for one year = $1,500,000 x 40% = $600,000.
  • New clients referred = $100,000 annually.
  • Payment to RP for new referrals = 15%.
  • Firm earnings on new referrals = $100,000 x 40% – 15% of fees billed = $25,000.
  • Other value provided by RP Break (ongoing contributions to firm morale, consulting, mentoring, etc.) = $20,000.
  • Net value to firm = $600,000 +25,000 + 20,000 = $645,000.

Maybe you should think about how you treat your partners on the way out, and what their attitude is likely to be.

This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.

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