Partner Retirement in Law Firms: Strategies for Partners, Law firms and Other Professional Services by Ronnie Fox is a necessary read for all of us. Retirement can be sudden, brutal and unexpected so we need a book like this to advise us. Lawyers are often excellent at supporting clients but not always as good at advising themselves. The book looks at retirement from the firm’s perspective, the individual concerned, accounting and tax consideration, financial aspects and what’s next after retirement.
— Law Society Gazette

It’s encouraging to see the subject of retirement being discussed more openly...What sets this book apart is its focus on an area rarely covered elsewhere: the tax and accounting process at the end of a partner’s career... This book highlights the issues and provides useful checklists to help reduce the risk. But it also reminds us that partners may have another 10, 20 or even 30 years of meaningful engagement with business and society. They can be ambassadors, mentors, and catalysts for change.
— Victoria Tomlinson

Sooner or later, in one way or another, it comes to us all. The realisation that you are no longer a “teen-age whizz kid” but have reached the end of your professional career can be painful in the extreme. Among other uses, this book helps to alleviate the pain & demonstrates that there is life after partnership. It is essential reading for those reaching the end of their professional careers & should be on the shelves of every law firm library as a guide to terminating partners’ tenure in the most civilised way possible. “BE nice,” the book urges but Ronnie Fox, its editor, can testify from his own long professional career how many relationships end nastily. The second edition of this invaluable book deals with changes in the law especially on the tax front since it first appeared. It can & should be read from end to end initially & also used as a valuable work of reference. In that connection, an index would be helpful. There is a considerable difference between the technical chapters which are packed with detailed information for the point of view of the firm on the one hand & the outgoing partner on the other, as against the more general ones dealing with psychology, investment & subsequent careers. This difference in pace makes the book far more interesting than the standard legal text book. Ronnie Fox is to be congratulated for seeing the gap in the market & filling it so effectively.
— Michael Simmons

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii By Ronnie Fox, Fox & Partners Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix About the editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv About the authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii Chapter 1: Partner retirement – a firm’s perspective . . . . . . . . . . . . . . . . . . 1 By Corinne Staves, CM Murray LLP The legal framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Voluntary retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Involuntary retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 The exit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Chapter 2: Legal issues from the individual partner’s point of view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 By Ivor Adair and Caroline Field, Fox & Partners Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Considerations for retiring partners negotiating their exit . . . . . . . . . 24 The default regime – the Partnership Act 1890 and Limited Liability Partnership Act 2000 . . . . . . . . . . . . . . . . . . . . . . . . 28 The exit routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Challenging expulsion / compulsory retirement and tactical considerations for partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Business protection by the firm – risks for the partner . . . . . . . . . . . . . 45 The deal and beyond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Chapter 3: Accounting and practical considerations . . . . . . . . . . . . . . . . . . 51 By Andrew Baker, RSM Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Retirement date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Impact of business structure and profit-sharing arrangements . . . . 53 Accounts at the date of retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Goodwill and anti-embarrassment arrangements . . . . . . . . . . . . . . . . . . 64 Non-partnership assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Financial settlement and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Post-retirement issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Chapter 4: Tax considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 By Nicky Owen, Crowe U.K. LLP Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Equity changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Profit share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Capital invested in the firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Salaried member/partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Retiring as a partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Retirement date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Tax reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Self-assessment tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Selling your share of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Selling your shares in a service company . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Post retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Chapter 5: The emotional impact of partner retirement . . . . . . . . . . . . . . 93 By Micheline Hogan, Psychodynamic psychotherapist Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Plan in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Alternative strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Defining your post-retirement role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Concluding thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Chapter 6: Build a strong retirement plan and safeguard your future – ten essential steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 By Veronica Mann, Talis Financial Advisers Make your plan – find your number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Investment risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 There’s no point planning if disaster strikes… . . . . . . . . . . . . . . . . . . . . . . . 114 Legacy planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Your ten-point retirement plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Chapter 7: Another career? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 By Roderick Chamberlain, former director of Career Guidance Services Limited Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 “When should I do it?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 “How should I think about it?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 “What should I do about it?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Concluding thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 About Globe Law and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131