Career paths blocked as partners retire later

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  • Mike fosberry

Lawyers could find their career paths blocked as partners retire later because of changes to tax relief on pension contributions, an accountancy firm has warned.

Of 95 law firms surveyed by Smith & Williamson, 53% said they expected a rise in the retirement age would affect opportunities for partner development, and therefore succession planning.

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In recent years high-earners have faced cuts in the amount they can contribute to their pension, while laws against age discrimination have meant that few firms specify a retirement age in their partnership agreements.

At present anyone paying into a pension is entitled to tax relief on contributions of up to £40,000 a year. From April 2016 this will be gradually reduced to £10,000 for those earning over £150,000.

Mike Fosberry (pictured), director of financial services at Smith & Williamson, said: ‘We are increasingly seeing partners retiring later as they haven’t been in a position to be able to make adequate pension provision, which has been exacerbated by recent changes to pension contributions.

‘The danger firms have got is it is creating blockage at the top of the partnership, where they can’t promote the new partners as the older partners stay on.’

According to the accountancy firm, the delayed retirements are compromising the recruitment, promotion and development of other lawyers.

Fosberry said that in light of the changes it was important that firms support partners in making personal financial arrangements, as high-earners can no longer rely on pension contributions alone for a comfortable retirement.

He said that this education on other investment opportunities should be available for both young and older partners, adding: ‘It needs senior management to take control of this issue.’

Readers' comments (19)

  • What career?

    I spoke to a lecturer at one of the local ex polys now 100% pass - rate Uneeeees the other day. He had worked at a very large City Firm. One 'Partner' is left of all the people training with he....

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  • A bit early for festivities isn't it Sir?

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  • A lot of this is down to these firms' failure to take on trainees. If you don't plan for your succession you end up having to give your practice away. But it is no longer every firm which can do the necessary range of work to train trainees. So that fact, together with the compulsory PII run-off, or should that be run-away, rules, have rendered small firms valueless. But then how do their owners fund their retirement? They cannot go on and on and on, well they wouldn't want to...

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  • David- planning succession?! Don't be ridiculous!

    The problem isn't a lack of variation of work its the training structure as a whole- entirely. Its absurd in the modern era to have 'one stop shops' for all areas of work- also known as high street firms. As the saying goes 'Jack of all trades, masters of none'. It is hopelessly outdated. Solicitors should specialise in certain areas of work.

    Solicitors squeezed at the top re promotion and at the bottom at entry level. But the answer is simple. Move away from 'Partner' type titles. They're irrelevant and just lead to people wanting 'the title'. As a profession lets get over ourselves- trainees aren't pre programmed to care about 'Parnership'. We create that environment- one where 'Partnership' is a worthy life goal and ambition (I am a solicitor). The simple fact is that good people should be rewarded, including by way of bonus based on overall performance of a team or the business overall. You don't need to be a 'Partner' for that to happen and you can be a 'Partner' in name without actually being a 'Partner' registered at Companies House etc anyway. If your pay isn't impacted- why should anyone care? Having more experience around is highly likely to be commercially advantageous.

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  • Other than the woeful drafting and abysmal grammar (now play the ball and play nicely - - - "impacted", I suppose at least you didn't type staff need 'incentivisation') there is nothing inherently 'wrong' with high st firms just as there is nothing wrong with having 'jack of all trades' in medicine a.k.a General Practitioners.

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  • 03.29 you appear in denial and your comments prove the point.

    A GP can work in general practice because there is only one physiology and biology. They refer to specialists on discovery of anything requiring further investigation. That is an admission and acceptance that they don't know everything.

    A 'general practice' (high street) solicitor cannot be an expert in everything. Most don't try to be.

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  • I have seen several firms where the partners just would not share the profit so failed to take on partners and then when they got into their 60s, it was too late. The present generation of assistant solicitors are unwilling to borrow, often secured against their homes, to buy into what they view as a valueless (but risky) business, to reward and release the present partners.

    Let's face it - why should they want to? A present day firm of solicitors is just a heavy liability around a partner's neck. One which the PII insurers may close down each year by refusing to offer cover or that the SRA may decide is risky so intervene. Bang - business gone!

    Far better to stay on a salary, ideally with performance related bonuses but keep hold of your home and avoid judgments, SRA interventions, SDT proceedings, run-off cover, bankruptcy, imprisonment. Have I left anything out?

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  • This high street firm has trained at least half a dozen solicitors over the past 25 years. Those who had ability have used us as a stepping stone. It doesn't encourage us to take on trainees, and it isn't our fault...

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  • @Anonymous22 February 2016 03:29 pm:

    I think you will find it is High St. Firm, when you abbreviate a proper noun.

    And @Anonymous22 February 2016 04:55 pm;

    I think you are wrong most High Street Firms, always used Counsel.

    They got greedy. Now they are facing problems (see recent experiences of 3 and 11 Stone Buildings for example).

    We go one way either all down together (and there are perhaps three Insurance type large conglomerations (heaven forbid for public interest safety there)), that I do get the impression the Claims Handling Society at 113 Chancery Lane really would secretly desire (and it would be easier for them to milk the tits of the practising certificates at least temporarily), or someone decides it might be that there really is a danger of conflicts and anti democratic behaviour (if this isn't actually quite clearly illustrated already in Crime, PI and by looking at the way for example FOS complaints against Finance Firms are handled).

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  • Anon 1.41 a part of the trouble it seems to me is that in rural areas anyway there is not enough demand for a solicitor to be anything other than a "G.P.". So do we all have to amalgamate so that practitioners can specialise? Is that the Future? If so I can only say how pleased I am to be out of it all and to have found someone to buy my practice at a time when it still had some value and when, in 1997, run-off cover was free, for some reason I have never been able to ascertain, but have been equally unwilling to question.

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