September 2010 | Practice Planning Tips for Success
Are You Prepared for Your 'Second Season'?
The time leading up to and beyond the closing of a practice can be called the lawyer's "second season." Preparing for your "second season" requires a clear personal retirement plan, that is separate and distinct from a practice estate plan.
In a recent article I wrote about the need to create an “estate plan” for the solo or small firm law practice. Such a plan has both public and personal significance. On the public (client) side, it addresses the practical and ethical importance of ensuring that client matters are effectively transitioned to a successor lawyer or firm when you are no longer able or willing to handle them. On the personal side, an estate plan for the practice is perhaps the most important element in your financial estate plan as a lawyer – ensuring a proper valuation for a practice sale so that you and your heirs get the benefit of years of service to thousands of clients.
State bar associations are taking the issue seriously. As our previous article noted, the State Bar of California is considering a requirement for lawyers to have an “estate plan for the law practice” providing for succession in the event of a lawyer’s death or disability. In 2007 the Indiana Supreme Court approved Rule 23, which encourages solo lawyers making their annual registration with the state bar to designate another lawyer to act as an “attorney surrogate” in the event of death or disability. The New York State Bar Association has developed a book, Planning Ahead: A Guide for Solo Practitioners, describing how an attorney can establish an exit plan, while the Missouri Bar regularly offers a workshop, “Stepping Up, Stepping Out,” with a similar focus. See [http://www.abanet.org/cpr/clientpro/res_gestae.pdf; and http://members.mobar.org/pdfs/precedent/aug09/senior-tsunami.pdf Also, see Selling Your Law Practice: The Profitable Exit Strategy.
There is, however, a second personal element of the practice estate plan that needs to be considered, one that is not easily analyzed or quantified. It centers on deciding what you want to do with the rest of your life. This is not an academic issue. Karen Mathis, when president of the American Bar Association several years ago, focused her leadership year on developing a new awareness for the legal profession regarding the implications of the aging population. She often emphasized that 400,000 lawyers will likely retire in the upcoming decade-plus. That’s equivalent to the entire current membership of the ABA, the largest volunteer organization in the world. What will these lawyers do? Will they close their doors and start new careers? Will they be able to comfortably retire and pursue their own unique interests? Only a clear personal retirement plan, as separate and distinct from a practice estate plan, will provide affirmative answers.
Questions for the “Red Zone”
The time leading up to and beyond the closing of a law practice can be called the lawyer’s “second season.” The focus is not on practice management or on material assets, instead it is on personal satisfaction, self-worth and well-being. Lawyers too often fail to consider these issues – after all, they are not addressed in law school or CLE training. Ideally, planning for these issues should be done over a period of up to five years before actual retirement, a time that can be seen as the “red zone” of your career – the area right before you reach the goal line of retirement.
All successful people tend to work long hours and are focused and passionate about what they do. If they want to pursue different interests, it is not that they wish to have a life of leisure – it reflects a greater desire to pursue their passion outside of law. When developing a plan for the second season, start with three questions that set the stage for all further deliberations. How do these questions resonate with you?
Leaving your current practice by retiring is an emotional process. You must want to do so, and a successful transition will require all the traits that defined your success as a lawyer: motivation, acceptance of risk, resiliency and commitment. Basically, you must answer the question, “What do I want to do when I grow up?” Each person’s answer is unique, and can change over time. Making a decision does not have to mean that you’ve burned bridges to your past life, or that you have erected a wall against more change in the future.
Circle of Life
Some have used the concept of a “circle of life” in viewing the transition that we all face. The poet T.S. Elliott put the idea this way: “We shall not cease from exploration. And the end of one's exploring will be to arrive where we started.” Although the thought of continuing exploration is what keeps many alive, vibrant and continuing contributors, the general circle of life idea is hardly an uplifting one. It holds that we enter the world as helpless infants, dependent upon others, pass through a cycle of decades where we first are nurtured by those around us and grow by taking from them, then pass on our own nurturing and growth momentum to others. At last we end life as elderly persons who have the same dependency on the kindness of family and friends and strangers with which we began.
To me, evidence refuting this circular idea of life is everywhere. When you enter the world, you have a certain DNA pattern that will enable you to grow, learn, develop and contribute to others. You progress through life contributing mightily to others in a variety of ways. The greatest contributors continue to do so until they die. UCLA basketball coach John Wooden, who contributed to and shaped lives for virtually a century, is a case in point. His teams had a degree of excellence that is mind-boggling today. “Success is peace of mind, which is a direct result of self-satisfaction in knowing you made the effort to become the best of which you are capable,” Wooden once said in explaining such performance. No circle of dependence here.
I doubt that Coach Wooden considered his profession to be a “job” against which he had to balance some other part of his life. Yet today many lawyers talk about assessing “work/life balance.” This is a long-term assessment that every lawyer must make. In the short term there is really no such day to day phenomenon as balance – at any given moment, the lawyer is doing just one thing, either working or engaging in personal pursuits. The broader perspective is how much cumulative time you devote to each, and what you value more. The same type of analytical process should apply to retirement planning also.
Change and Opportunity
Lawyers typically think they always know what needs to be done, and that they can do it if they just work hard enough and fast enough. That’s asking far too much of anyone, and trying to apply that to deciding your future all at once often produces self-defeating fear and paralysis. A thousand-mile journey is nothing more than a series of steps; take them one at a time. Assess the reality of your financial resources and your physical health. As they say in the airline business, put your oxygen mask on first, before trying to do anything else.
Assuming you’ve made all the appropriate plans and preparations, from lining up a successor to crafting an effective estate plan, only you can decide what you will do with your second season. The issue goes beyond “The Business of Law ®” -- we’re talking about the business of life. Will you seize the opportunity to begin anew, or be warehoused and wait to die? With life expectancies extended as they are today, and likely to increase, there will be a great deal of time left to occupy yourself with other activities. What will they be? The answers are certainly different for every individual; but you won’t begin to learn them until you ask yourself the right questions.
Remember that whenever there is change there is also opportunity. Pinch yourself, do meditation or find some other mechanism to stay free of stress to be able to see those opportunities. They do abound. We just need to “stay above the noise,” be patient and observant – the traits every lawyer learned in law school. Retirement is the time to apply that lesson to life. With the proper preparation, you can spend the final years of your life enjoying the fruits of your labor as you choose.
Edward Poll, J.D., M.B.A., CMC, is a strategic law firm planner who helps lawyers increase their revenue, improve their profitability and enhance their satisfaction with the practice of law. He blogs at www.lawbizblog.com.