With the stock market down so far this year, is it a surprise that lawyers’ financial strategy is to keep working through 2016?
For many financial advisors who have lawyers as clients, it’s no surprise. But they warned that no one can work forever and offered some strategies to lessen the blow of a tough market on lawyers’ portfolios.
In a recent survey conducted for three days across the legal news websites of ALM, ThinkAdvisor’s parent company, 170 respondents out of more than 200 said they would work longer or stay the course to stave off investment pinches.
The approach dovetails with the culture at many law practices, where seniority means more power and business. Nearly every stock index has fallen this year since Jan. 1, with the exception of some Latin American markets, so law firm partners across the U.S. asserted that their plans to stay in the work force have not wavered.
“If I retired, I wouldn’t know what to do all day,” said David Bercuson, an entertainment lawyer based in Miami who has been practicing law for 45 years. He has his own firm.
“Some lawyers have an uncomplicated retirement plan. It’s a two-word description: Keep working,” said Frank Strickland, a partner in the Atlanta firm Strickland Brockington Lewis and the former chairman of the Legal Services Corp. Strickland, who is in his 70s, added that he relies on professional investment advisors’ help because, “I’m in the legal profession, not the investment profession.”
Indeed, many in Big Law may have less to worry about than high earners in other service professions.
Some law firms offer retirement planning guidance to their partners already, by investing through defined contribution plans in safer funds or setting up other funds that help partners save. Several major Am Law 100 firms still offer nonqualified pension plans which guarantee retired partners a set income out of firm profits until they die, according to Stanley Kolodziejczak, who leads the law firm services group at the accounting firm PricewaterhouseCoopers. Yet unfunded pensions plans are less widespread in the industry than they were several years ago, he added.
Concern and Perspective
Alan Weisberg, founding partner of Weisberg Kainen Mark in Miami and a tax attorney for more than 40 years, says he’s not losing sleep over the stock market situation. “It’s a bit disconcerting, but I’ve been through this before,” he said, adding that he still contributes to a 401(k). “Cross your fingers, hold your breath and hold on for the ride.”
He joked that he isn’t too worried because he’s recently gotten an email from Nigeria that he’s going to inherit $100 million.
International tax attorney Martin Press, a shareholder at the law firm Gunster in Fort Lauderdale, Florida, recommended that lawyers near retirement should calculate if they could live on 4% to 5% of their total assets each year.
“If he can’t do that, then maybe he should continue working,” Press said.
The recent stock market volatility is cause for concern for others.
With one daughter in college and another in law school, solo practitioner Eduardo Palmer in Florida said it was hard to keep contributing to retirement. He has cut his expenses to meet his pledges to pay for his daughters’ graduate schooling. He said he would start contributing to his retirement meaningfully again when they’re done in four years.
In a National Law Journal poll — an unscientific survey posted online — only five respondents out of more than 200 said they would rescind plans to pay for their children’s educations. “I’m a Cuban refugee and my father put me through law school. If my parents could do it with far less, so can I,” said Palmer, who said his goal is to continue working until he’s at least 67, in another dozen years. “It’s depressing when you look at your statement and see it’s gone down 30% in six months. You’ve just got to hang in there. I’m going to tough it out.”
Palmer said belt tightening starts by him not taking flowers home every week and could progress to cutting restaurant reservations and vacations.
“Growing up poor gives you perspective,” Palmer said.