For many attorneys, retirement feels like something to consider later, after the next case is settled or the next deal is closed. Yet a critical question looms larger than ever: What if the financial safety net you are counting on is not as secure as you think?
Across the legal industry, a quiet financial reckoning is unfolding. Partner exits, client churn, mergers, and rising costs are reshaping how firms fund retirement. The question every attorney should ask in 2025 is simple: Will my pension or buyout still be there when I need it?
The Hidden Truth About Underfunded Pensions
The data is scarce, and that is part of the problem. Most private partnerships still are not required to disclose the funding status of their pension plans. The last major wave of reporting came more than a decade ago, when outlets such as The Wall Street Journal and Bloomberg Law highlighted firms struggling to meet partner obligations.
Since then, many firms have frozen or restructured defined-benefit pensions and replaced them with profit-sharing, deferred-compensation, or self-funded models that shift long-term risk to individual partners. In today’s volatile economy, shaped by inflation, consolidation, and private-equity influence, that risk is only growing.
If you are a senior attorney, the real question is not how much you have saved, but how financially healthy your firm truly is.
Retirement Planning Has Become a Moving Target
Every law firm, whether large or small, is feeling the pressure of succession planning. Partners who once expected guaranteed buyouts or pension payouts are realizing those commitments may no longer be sustainable.
- Several trends are driving this shift:
- Law-firm mergers and acquisitions are at record highs.
- AI and automation are changing staffing and billing structures.
- Client loyalty has become increasingly unpredictable.
- Younger partners demand transparency and equity, not vague promises.
Your personal retirement is directly tied to your firm’s stability. Without precise planning and accountability, even successful partners can find their exit strategies uncertain.
The Financial Fear Is Real
Without a solid succession plan, attorneys risk losing the value they have spent decades building.
Attorneys approaching retirement should have a clear succession plan that captures the full value of their client relationships and the years of work they have invested. A well-structured transition ensures those assets are leveraged effectively and no revenue opportunities are lost during the handoff.
Succession planning protects personal wealth, ensures continuity for clients, and enables retiring partners to benefit from their contributions fully. It is both a business and a financial safeguard.
When Firms Fail to Plan
A firm’s worth depends on its ability to generate future earnings. When leadership avoids facing difficult realities, the results can be costly.
- Lack of preparation often leads to:
- Lost talent and client departures
- Disrupted leadership transitions
- Financial instability or even firm dissolution
The warning signs are clear: shrinking partner profits, high turnover, and a lack of discussion around succession. The firms that survive are those that plan before the cracks appear.
The Purpose of a Succession Plan
- A strong succession plan is not only about retirement; it is about ensuring the firm’s continued success. Every effective plan should:
- Secure leadership continuity by identifying and preparing successors.
- Retain clients by transitioning relationships gradually and intentionally.
- Protect financial stability through regular review of pension and deferred-comp obligations.
- Document institutional knowledge and systems.
- Clarify exit terms, capital accounts, and payout schedules.
When everyone understands the process, morale improves and the firm becomes more attractive to clients and recruits.
Common Succession Paths for Lawyers
- There is no single model for law-firm succession. The most common paths include:
- Merger or sale that monetizes goodwill and provides client continuity.
- Internal transition to existing partners or associates.
- Practice continuation through another firm that shares your culture and values.
- Orderly closure when winding down is the most responsible choice.
The right path depends on your goals, your firm’s size, and its long-term viability.
Unique Challenges for Small and Midsize Firms
Smaller firms often face additional challenges. Finding a successor, maintaining client confidence, and managing operations during transition can be complex.
- Common challenges include:
- Identifying a qualified successor or merger partner.
- Maintaining profitability during the transition period.
- Managing client files, staff, and communications.
- Handling the sale or wind-down responsibly.
The longer planning is delayed, the fewer options exist. Early preparation preserves flexibility and value.
How Recruiters Help During Transition
Recruiters with law firm strategy expertise bring essential market insights. They know which firms are growing, which are financially stable, and which are open to mergers or acquisitions.
- Working with a recruiter helps you:
- Evaluate the market value of your practice.
- Identify potential merger or acquisition partners.
- Assess the financial health of target firms.
- Negotiate favorable terms for transition or retirement.
Recruiters act as advisors, not merely intermediaries. Their goal is to help attorneys protect their wealth, clients, and legacy.
Start Planning Before Life Forces the Decision
Too many lawyers postpone creating a succession or retirement plan until circumstances dictate their actions. Illness, internal disputes, or market shifts can erase years of hard work and progress.
Early planning provides control. It allows time to choose successors, test transition structures, and reassure clients.
“Do not wait until life circumstances decide for you,” says Davidson. “Putting a plan in place early protects your firm, your clients, and your family.”
The Human Side of Retirement
Retirement is both a financial and an emotional transition. After decades of practice, stepping back can feel like losing part of one’s identity. A structured plan reframes this as a continuation rather than an end.
Senior partners can remain involved as mentors or consultants, leveraging their experience to create a lasting asset for the firm.
The Lesson
Underfunded pensions are a warning, but complacency is the greater danger. A lack of preparation leaves attorneys and firms vulnerable.
Whether your firm is thriving or facing uncertainty, it is essential to understand how retirement will be funded and how partners will transition. A proactive strategy strengthens the firm, reassures clients, and safeguards the individuals who have built its reputation.
Take Control of Your Future
If you are approaching retirement or want to understand your firm’s financial health, now is the time to act. We help attorneys and law firms evaluate their options, secure their financial well-being, and plan for the next chapter with confidence.
About On Balance Search
On Balance offers great insight and industry intelligence. Shari Davidson, president of On Balance Search Consultants, advises experienced attorneys at every stage of their ca-reer to take them to the next level. From making the lateral partner move to succession planning.
Shari takes a proactive approach to advising law firms on how to take a firm to the next level and helps rising talent make the transition to the right law firm. On Balance Search identifies opportunities that exist today, not down the road.
Contact us today. Call 516-731-3400 or visit our website at https://www.onbal-ancesearch.com
Please note that the content of this blog does not constitute legal advice and is only in-tended for the educational purpose of the reader. Please consult your legal counsel for specifics regarding your specific circumstances and the laws in your states pertaining to social media and any legal restrictions regarding the law.
