Law firms must plan carefully to provide sufficient retirement benefits to key partners. As senior partners look to retire and give up their equity, younger partners must ensure the firm has a viable plan in place to fund partner retirement benefits. A lack of retirement planning can severely limit a firm’s succession plan. Unfunded plans require an inefficient and expensive “pay as you go” approach and are not protected from the firm’s creditors. If left unaddressed, this often creates a silent tension among partners in both small and large firms. Retiring partners seek to maximize their benefits and benefit security while younger partners realize that they will bear the long-term burden of providing those benefits. A thoughtful approach to retirement benefit funding is essential to a firm’s succession planning strategy. There are two core strategies for law firms should consider when funding partnership retirement obligations: Using Life Insurance as an Investment Vehicle Institution...
