Retirement Planning for Lawyers: 10 Vital Steps to Prepare

Whether around the corner or further down the road, retirement for lawyers requires extensive preparation. There are certain lawyer retirement rules and regulation requirements you’ll need to follow—and they vary from state to state. 

For example, Nevada lawyers will have a different retirement process than New York lawyers. According to Law.com, attorney retirement in New York is “remarkably complex” with “variations of ‘retire’… used in different contexts.” The article also states, “It is critically important to understand the labyrinth of potentially applicable ethics rules that intertwine with certain court rules on retirement.”

In this article, we’ll outline whether or not there is a mandatory age for a retiring lawyer, as well as the steps you need to take for a smooth and successful lawyer retirement.

When Do Lawyers Retire?

According to the U.S. Census Bureau, the average retirement age in the U.S. is 65 for men and 63 for women. However, that age tends to be a little older in the legal profession. The American Bar Association’s 2021 ABA Profile of the Legal Profession found that nearly 14% of lawyers are working past age 65. 

Ultimately, it is usually a lawyer’s decision on when to retire—dependent if the law firm has a mandatory retirement policy. However, it is never too soon to begin lawyer retirement plans. Determine when you want to retire and create a timeline accordingly. 

Is There a Mandatory Retirement Age for Lawyers?

In some cases, yes. Mandatory retirement is a controversial topic in the legal industry. Some law firms have policies that require lawyer retirement by a certain age—usually between 65 and 70.

A survey done by Altman Weil, a legal management consulting organization, found that about half of all major U.S. law firms have a mandatory retirement policy in place. Additionally, 29% of attorneys surveyed stated that they plan to continue working after their retirement. 

Retirement for Lawyers: 10 Step Process

1. Review Active Cases and Address Pending Court Dates

Prior to lawyer retirement plans, you’ll need to deal with open cases, pending court dates, and active client files. Do you intend to finish all open cases before retirement or will you give them to another attorney? 

Determine your plan for each open case and clearly communicate that procedure with clients. Obtain client permission to submit a withdrawal as attorney of record if needed. If the client is transferring to another lawyer, file a Substitution of Attorney. Refer to your state bar association guidelines or rules for terminating representation.  

2. Inform Clients of Your Retirement

ABA rule 1.4 states that “lawyers have an obligation to communicate relevant information to clients.” Your lawyer retirement plans should include how and when you will notify your clients of your retirement. Communicate with clients about what will happen to their information/files and be sure to document all correspondence. 

For reference, the South Carolina Bar Association provides an example of a letter to a client informing them of an attorney’s retirement. 

After informing clients of these changes, record an outgoing message announcing your retirement for your professional phone line. This message lets clients know who to contact for information or legal assistance after you’ve retired. 

3. Make a Plan for Storing Client Documents

Retirement planning for lawyers requires that you familiarize yourself with applicable regulations for storing client information and create a document storage plan for storing these documents. For example, an instate succession and wills statute for Oregon explains that an attorney who has custody of a will may dispose of the will only if at least 40 years have elapsed since its execution.

In addition , review your files to determine if there are any items that need to be returned to clients, such as original documents or other property belonging to the client. Should you return any files to clients, make copies or other documentation for your records before sending them back. Legal document management software can help ease this process/transition.

4. Finalize Business Affairs

After your retirement, what will happen to your practice? You can sell the practice, transfer it to a successor, or close it altogether. Whichever course of action you choose, you’ll need to consider these options as part of your lawyer retirement plans. 

• Selling your firm: Should you choose to sell your practice, select your buyer carefully. This route will likely make you the most money, but it comes at the cost of transferring your firm’s good name to new ownership. Refer to the American Bar Association Rule 1.17: Sale of Law Practice for more information on selling your law practice. 
• Transfering your firm: If you prefer succession planning, choose a trusted successor and create a strategy for transferring client files and business ownership. 
• Closing your firm: Determine how you will close your accounts and communicate that clearly with each client. Be sure they know where they can turn for legal assistance after your retirement.

5. Submit Your Notice

Part of submitting your notice for retirement includes updating your status in the Attorney Information System or AIS. You can change your status from “active” to “retired” or if you think you may practice again in the future, you can change your status to “inactive”. 

If you select a “retired” status, you will not be charged bar fees. Whereas the “inactive” status will usually require you to pay bar fees to maintain your license. Both the “retired” and “inactive” statuses can be changed back to “active” if you meet requirements set by your state bar, but “inactive” is typically easier to change. 

Rulings on this procedure will differ from state to state. For example, according to the California Bar Association, “annual license fees are waived for licenses on inactive status (for attorneys) who are 70 years of age.” They advise that “resignation should be considered a permanent step for attorneys who are certain they would not wish to practice law in California again.” 

In addition to changing your status, you’ll also need to inform your local bar association(s) and any insurance carriers about your retirement. 

6. Consider Lawyer Retirement Benefits

Familiarize yourself with the retirement benefits available to retired lawyers in your area—this should factor into your financial decisions. 

According to the New York Bar Association, standard partner retirement benefits include the following.

• Retirement income: This is usually paid to retired lawyers on a monthly basis, and can come from the law firm’s revenue or a previously-funded source.
• Return of capital: This is usually paid to the retired lawyer within one year of retirement.
• Accounts receivable/work in progress (AR/WIP) at the time of retirement: This is often tied to the firm’s current revenues and paid over several years. 
• Access to office space and an administrative assistant: Some firms will continue to provide office space, access to an assistant, and even participation in partnership meetings.

Retired lawyers may also qualify for other benefits such as medicare and social security. The Social Security Administration averages an individual’s earnings over their career (or when they are paying social security taxes) to determine what benefits they are entitled to. In this case, the earliest age you can access your social security benefits is 62, but the longer you wait to withdraw retirement benefits, the more you’ll receive. 

7. Gather Your Financial Information

To adequately prepare for your life after retirement, you’ll need an accurate picture of your personal financial situation. Take a look at your 401k, savings, and investments. Then, determine how your personal finances will factor into your retirement budget. 

8. Plan Your Retirement Budget

After gathering a clear picture of your financial situation, estimate your future living expenses to prepare a retirement budget. 

Your living expenses may look different as a retired lawyer. Determine the lifestyle you strive for and what realistic expectations according to your financial situation. Your budget should factor in essential expenses such as housing, insurance, taxes, transportation, food, and healthcare, as well as non-essential costs such as entertainment, travel, and hobbies.  

Of course, it can be difficult to create an accurate, detailed estimate of your retirement expenses ahead of time. Therefore, you may want to create a few alternative versions of your budget—such as a more financially conservative version and a more financially liberal one—to plan for the best- and worst-case scenarios.

9. Prepare an Exit Plan

Set up a retiring lawyer exit plan to ensure your clients, colleagues, law firm, and anyone else who is impacted by your retirement is set up for success. Refer to the New York Bar Association’s Planning Ahead Guide for an exemplary exit plan.

10. Complete Your Estate Planning

An estate plan ensures that your funds go where you want them to go. As part of your plan, you’ll need an up-to-date living will that properly addresses the allocation of property and assets, bank information, safe deposit boxes, and client files. You’ll also need to appoint an estate executor or a trusted individual to act on your behalf. 

Leave Your Firm in Good Hands

Retirement planning for lawyers can get complicated. Ensure that you’re leaving your practice and colleagues in good hands with the most robust legal practice management solution on the market. 

Try MyCase risk-free with a 10-day free trial to see how our software can help your firm run more efficiently and ensure a smooth hand off. There is no commitment required, you can cancel anytime.