Retired solicitor and sole practitioner Sue Styants, AWS Legal Partner Chris Peddie from AWS Legal and Cruickshank Pryde Lawyers Partner Phil McDonald share their experiences with succession planning and approaches to retirement.
Sue Styants can tell you the precise moment she retired.
At 4.45pm on March 28, 2024, the former solicitor and sole practitioner closed the door for the final time at her Auckland office after 43 years in legal practice and drove home very satisfied with ‘Mission Retirement’ accomplished.
“I had completed everything required to close my practice and achieve an orderly exit after 18 months of planning and preparation,” she says.
For Mrs Styants and other lawyers LawTalk spoke to from across the country, the key to retiring – whether winding up a practice or handing over to a successor – is preparation in order to meet all exit requirements by the date you have set.
For Mrs Styants it was crucial to set a date well in advance and proactively manage and work towards this. In her case as a sole practitioner, she also had to decide on her exit strategy, i.e. whether to sell, merge or close.
“In my case I elected to wind up my practice and close the doors as I wanted a full-stop exit.”
“I remained resolute throughout the process to exit on the date I had set, and I never wavered from this. It was a particular challenge to balance and prioritise the demands of exit planning with the ongoing demands of practice.”
Law firms managing partner transitions say something similar – the process should start years before the fond farewells. It is also important to be aware of the impact of any health event, for example – a planned exit protects everyone.
At Cruickshank Pryde Lawyers in Southland, partner Phil McDonald says planning begins four to five years before anticipated retirements and expectations are clear.
“A good handover is essential and keeps clients and colleagues front of mind,” Mr McDonald says.
Chris Peddie, partner at Southland and Central Otago firm AWS Legal, says well before a partner steps aside, the firm begins assigning clients to a well-matched successor.
“About 12-18 months out from a partner’s retirement, we start regular, active reporting and we ask ourselves, have the client introductions happened, has the correspondence begun, is the relationship forming?”
“At the end of the day, it’s the client’s decision who they want to work with, and whether they stay at the firm, but because we’ve already thought carefully about who will gel with them, the answer is usually yes.”
Often the lawyer taking over has been working alongside the retiring partner for some time, so that relationship is already there, he says.
“That’s the best way to do succession if you want to retain clients,” Mr Peddie says.
Within a firm, 100 per cent client retention is unrealistic, Mr Peddie notes.
“Some clients see it as a chance to move. The aim is to retain the majority,” he says.
In Mrs Styants' case. the goal was to transition her clients where possible to new lawyers and manage transfer of their documents.
“My biggest priority was having conversations with my clients regarding my retirement plans. I contacted them directly, asked where they wanted their documents to go, and helped them find new lawyers. Most clients had been with me for years, so it was vital for me to take that personal approach.”
Cruickshank Pryde Lawyers has been navigating change after three long-standing partners stepped back in quick succession, following six decades of stability.
While significant, the change has not been too disruptive because of planning that began years ago.
“Four or five years ago we realised we were heading exactly to where we are now. We made a conscious effort to widen our recruitment and start building the next generation early. So we cast the net wide to build our succession pipeline,” Mr McDonald says.
As well as recruiting new talent, the firm was reshaped from a predominantly partner-based structure to one supported by more solicitors, legal executives, and a strengthened management team.
“The longer lead-in the better you can keep them coming from the ground up and retain them. Staff are your most valuable asset, so you’ve got to look after them,” he says.
“Succession is ongoing,” he adds. “Once someone is a good fit through the senior solicitor stage and then associate there needs to be a clear pathway into equity.”
Clear expectations help with process and planning. At AWS Legal, Mr Peddie says there is an agreed retirement age. Depending upon merits, there may be an opportunity for a post-retirement consultancy.
Partner Rachel Lindsay says the clarity is important for younger staff too.
“One of the important parts of succession planning isn’t just considering retiring partners but making sure we have an appropriate pathway in the firm for our staff. Our objective is to ensure all our people have documented career progression plans.”
At Cruickshank Pryde Lawyers, the pathway is clear.
“The rule of thumb is once you hit 65, you are in the hands of other equity partners as to what role you perform,” Mr McDonald says.
“Of course, this can be extended according to individual circumstances but equally when you’ve got people who need to move into partnership, you do need people to step aside.”
For Sue Styants, the transition has been seamless, without any regrets, and the new pace, very welcome.
Two years on, she is enjoying a life without the demands of legal practice and says the effort she put in years before her exit made all the difference.
“I achieved my final goal in the time frame I had set. I left my career on a high note, and I am now enjoying life after law.”
But there is frequently a loss of identity that comes for some retiring lawyers.
“Often the law is their life and that defines who they are,” Mr Peddie says. “When they lose that title, it can be impactful. So it is really important to factor that into the process.”
Mrs Styants agrees, noting that there can be a reluctance to retire due to a perception there will be a loss of identity.
Many don’t step away entirely. “Quite a few retired partners have taken on roles related to the profession, such as consultancy. For a lot it is not just a hard stop, but it is very much up to the individual,” adds Ms Lindsay.
To Mr McDonald, a hard stop is fine.
“I have got four more years doing this then the golf course beckons.”
Every year the Law Society Registry and Inspectorate teams are tasked with assisting practitioners who wish to close or merge their practices. All too often those lawyers leave matters well past the 11th hour and fail to allow sufficient time to attend to the necessary tasks involved in closure.
Broadly speaking there is a lead time of at least one month before a trust account can usually be closed. Key considerations include:
refunding or advising clients of any proposed transfer
securing trust account records for future access
providing the Law Society Inspectorate with a variety of records and assurances.
Regulations 16 and 18 of the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 establish the reporting and notice provisions.
A most useful feature to consider is the redesignation option whereby the bank account ceases to be a trust bank account but remains open. This means debtor and fee payments can continue to be received undisrupted.
The clearing of accumulated unneeded trust account balances is always worthwhile but is essential before the account is closed. This can take some time. Other considerations are the storage of and phased destruction of files (those that are hard copy).
The best outcomes that the Law Society Inspectorate see are where lawyers plan and phase their retirement transition at a measured pace to best accommodate client needs and avoid undue and unnecessary rushing.
There are a number of disciplinary decisions where inadequate planning has led to serious consequences and we would like to prevent that outcome.
A Standards Committee found that a retired sole practitioner Ms X engaged in high-end unsatisfactory conduct by failing to properly manage trust money when retiring from practice. In the period before her practising certificate expired, she transferred large sums though her trust account, including to her office account and her attorney’s account, without adequate written authority, records, or timely payout to those entitled. The Standards Committee found breaches of the Trust Account Regulations, the Lawyers and Conveyancers Act 2006, and the Client Care and Conduct Rules, noting serious delays and a lack of planning. Ms X was ordered to pay a $7,500 fine and $5000 in costs.