Demographics are presenting opportunities for young lawyers. It sounds unbelievable but senior lawyers especially with a boutique law firm are hungry for the injection of new young blood. Conversation on the topic has been popping up with long term clients looking for advice on the subject. Many times the downfall is communication or initiation between willing participants and oddly enough we spend much of the time with long term clients pondering the what ifs and pros and cons. Key person insurance plans are an excellent way to get things done but there needs to be, I find, a process to follow with an understanding of expectations and needs. Protecting the interests of the senior and the young lawyer are paramount.
Normally, once all are on the same page, I meet individually with both sides and sometimes there is inclusion of a spouse. It's important not to miss areas of concern, individually and from the perspective of the firm. Obviously the numbers regarding money are critical and being a touchy issue needs to be dealt with kid gloves. Intentions, good intentions are difficult to identify thus a structured process is the suggested format to follow. If there's a problem putting together the structure then there's a problem with the deal.
It's about satisfying the boss that the young lawyer will stay as not to waste time and money and for the new lawyer having that carrot dangling in reasonable reach is important. Again, structure is necessary thus any of the following or a combination thereof is appropriate to utilize:
- Split dollar agreement
- Wage loss plan
- Key person funding
- Plans that have cash available after a period of time
The above could entail an abundance of insurance / annuity products and consultation with the accountant and legal representation is preferred. A third party acting as a quarterback increases the success ratio greatly. Think about it. A senior lawyer working their whole life establishing a creditable, profitable law firm should dedicate some quality time, extend patience and answer hard questions if they are serious about formally bringing in a young lawyer on a junior partnership level. For the young person, wanting to be a part of a reputable law practice it's all about respect, some give and take and commitment. It's all about a willingness to follow a structured process.