Partner Retirements – How to gain £1m in 2025

Could 2025 be the year your firm resolves the challenge of partner retirements? Some firms are now actively addressing the issues and securing £m’s of revenue.  Here’s how you could too.

The cost of poor partner retirements?

The average Top 200 equity partner manages a practice of £1-2.5m. An unwittingly poor exit puts all this revenue at risk. And that’s before you think of the lost goodwill amongst their clients, close partners and team members. All potentially due to a firm inadvertently mistreating their well respected, longest serving partners.

The UK’s aging population is compounding this challenge. The number of people aged 65 and over in England in 2023, increased by 52% on 1981 to above 10 million. With the number aged 50 and over, increasing by 47% since 1981 to over 21 million [Centre for Aging Better: The State of Ageing 2023-24]. The challenge is only going to increase.

What’s causing poor retirement exits?

For most partners, life after partnership is unimaginable and scary. They typically have no idea of what they want to do next. They’re full-on, highly respected experts and leaders, at the peak of their powers and influence. They have little desire to put their feet up and retire. Indeed, the term ‘retirement’ is an anathema to them. They often avoid the notion of thinking about life after partnership, let alone discussing it within the firm. They fear losing their standing, being pushed down an uncertain path or becoming ‘yesterday’s person’. They’ll keep working all the hours god sends, avoiding a retirement discussion until they no longer have a choice.

Firms too don’t know how, and when, to talk with partners about their retirement. The partner’s leader is ‘first amongst equals’ and serving their leadership term and, indeed, turn. Who are they to instigate angst and conflict with their long-term friend, peer and one of their Practice Groups highest fee-earners? They respect the partners privacy and desire to continue to work, despite the tension with the business need to bring people into and through the partnership. Leaders can’t help but emphasise with their fellow partner’s plight.

What’s the solution?

Supporting retirement decisions

The solution is not forcing partners to retire. Rather it is about supporting decisions to be made and ensuring that such decisions work well for the individual and the business. Some key factors include:

a. Reviewing fixed retirement ages

Currently partners can be forced to retire sooner than they wish due to mandatory retirement ages. Around 46% of firms have a fixed retirement age. Most are at age 65 while 15% had an age over 65 [Evelyn & Partners]. There is, however, currently a trend of eliminating partner retirement ages or at least pushing out the age when it kicks in. This is not to put-off the issue, but to enable retirement discussions to be voluntary, open and positive. With the removal of retirement ages comes a need for a conversation about the partner’s contribution, reward and position on the partnership remuneration ladder. However, this should be the norm for all partners, not just those nearing retirement.

b. Supporting partners in planning their retirement

Partners also need support clarifying what would make a fulfilling life after partnership, which is typically unique to them, and with determining when they desire, and can afford, to leave. This is normally done by talking to lots of people about their retirement experiences and through retirement workshops and one-to-one retirement coaching by specialists like Next-Up.

c. Managing fee-earning targets during transition

Consideration also needs to be given to the appropriateness of partners fee-earning targets remaining unchanged during their transition to exit, when the partner’s priority should be ensuring their key clients, leadership roles and revenue are retained and handed on smoothly to the firm’s chosen successors.

d. The importance of a transition plan

Having an open dialogue and transition plan outlining the expectations on both parties pulls all this together. Just like a lateral hire business case, but at the end of their partnership term. In the same way, this plan contracts and rewards the value to be placed on the partner’s service and contribution, and on successfully transitioning their clients and practice.

So, the solution is a sophisticated combination of helping partners understand what they want to do, enabling them to put their heads above the parapet and addressing the firm’s process and cultural aspects, often years before retirement, to enable successful retirement transitions and retention of clients and revenue.

What are firms currently doing and why? 

We’ve recently met several firms who’ve each newly reassigned a leading partner and/or HR professional to review their firm’s approach to partner retirements. This begs the question ‘Why?’, ‘What’s the rush?’, ‘Should you be?’ and ‘What does it entail?

Each of the firm’s partner retirement initiatives (such as they are) and their drivers both vary and overlap. They include:

1. Several partners nearing retirement without knowing if, when or how they want to leave. Client relationships remain personal, so firms are worried about losing large clients/revenue
2. High-performing junior partners being at risk of their opportunities and equity being unfairly blocked by over-rewarding long serving partners irrespective of their contribution.
3. ‘Partner lifecycle’ initiatives are popping up everywhere to enable partners to build their practices quicker, to help transition career milestones and to speed partners up the equity.
4. Addressing partner concerns about retirement. With partners struggling with the notion of ‘retirement’ firms are seeking to bolster partner motivation during their latter years.
5. A legacy. One Senior Partner told us “Partners avoid pondering retirement and I procrastinate over helping them. Ironically for the same reasons…  too busy, and don’t know what to do”.
6. The partnership model. Reviewing everything – partner contributions, targets, metrics, evaluation, reward, profit-share, structure, …  partner retirement is just one aspect.

Should partner retirement be a priority for your firm?

Some of the drivers above may be a priority for you too. It’s hard, however, to know how your partners are truly feeling, the impact of your processes and culture, and therefore your priority for addressing retirement. 

There are other considerations that may prompt action sooner rather than later, such as:

• Governance – Caroline Black’s recent blog highlights the hidden risks law firms Boards must address to safeguard the business from bad partner retirements.
• Mandatory retirement age – As outlined above do you have a fixed retirement age, and does it push partners that still want to work to take their clients to a competitor?
• Future proof – Do your retirement processes embrace age discrimination and different generations seeking to retire early for work:life balance or later to reflect a 100 year life.
• It’s important – It feels right and fair for partners to have a great exit and retirement after years of dedication. Yet the financial impact and urgency needs to be high for firms to act.
• The issue’s always there – MPs commonly say, “We regularly pick it up and put it down”, “I forget to follow it up” and “It’s always at the back of my mind”. Is it time to sort it?

Should you assign someone internally?

This type of intervention is best led from within the firm. If you’ve read this far, then you’re obviously interested and may want to initially consider assigning someone to investigate matters. However, the issues are sensitive, senior, bespoke and complex and you’ll probably want someone familiar with partnership issues and with the gravitas, confidence and respect to influence the partnership.

The firms mentioned above allocated Practice Heads (sometimes who’d just ended their term) or their Senior Partner, and/or their CPO, Heads of HR or L&D Director. Typically, this was on a project/part-time basis, but some were as a full-time assignment.

None were originally experts in partner retirements and, indeed, our HR Forum shows that few Professional Service Firms set themselves out to be ‘best practice’ in this arena. Not yet. So external expertise is also normally sought.

What does addressing partner retirement entail?

We have worked at a senior level in PSFs for the last 20 years, with practical hands-on experience implementing partner retirement strategies.  We provide an expert sounding board, market awareness, practical tools and external objectivity and credibility.  Our typical interventions include:

• Retirement Strategy MOT – A bespoke mix of canvasing partner views in confidence and helping analyse partner, client, revenue and succession data, as well as understanding partner expectations, cultural norms and existing processes. This focuses in on the nature and timing of partner retirement risks and helps clarify quick-wins and long-term solutions. Successes include creating a firm’s first partner succession plan, establishing regular career reviews (prompting retirement discussions) and initiating individual retirement contracts to manage the transition to retirement.   
• Helping cohorts of partners retire – Facilitating a group of senior partners, unclear and fearful of ‘retirement’, to embrace the issue and establish support for themselves and future generations. Successes included running workshops that enthuse and clarify non-retirement options and providing a 1:1 retirement coach. This resulted in a lot less tension, no bad exits and more clients handed over effectively and revenue retained.
• High risk retirements – Working with pivotal partners, who hold a high proportion of firm revenue and key client relationships, to come to terms with when and how they leave the partnership for the best interests of the firm, and themselves. Helping someone discover and achieve a fulfilling new life, is one of the great fillips of what we do.

When should you start?

There is no time like the present. By the end of January, 88% of New Years resolutions have already be broken [Baylor College of Medicine ]. So, there’s nothing to lose by making a resolution now!

Make 2025 the year that your firm addresses partner retirement, once and for all.  

If you’d like support exploring appropriate partner retirement strategies, then please get in touch.

About the authors

Jonathan Blair is formerly a Managing Partner and Barry Gipson a partner change specialist. Both have decades of experience in leading international law firms and have recently become associates of Next-Up, leading the newly launched partner retirement consultancy service.