By Xiumei Dong

Law360 (August 14, 2020, 5:05 PM EDT ) As law firms look for ways to reduce costs during the coronavirus pandemic, more are offering early retirement packages to employees. So far, firms have only confirmed the offer for staff, but experts believe the virus will likely accelerate the timing of retirement plans of many older lawyers.

While the Baby Boomers — the massive generation born between 1946 and 1964 — had already been transitioning to retirement, a wave of earlier-than-anticipated departures could soon surface, the experts suggest. In some cases, the moves will be voluntary; in others, retirement may be forced upon a senior attorney by job elimination or an unavoidable health risk.

"As we start returning to work, the challenge for our senior partners is most of anybody 60 or 65 and older is in the vulnerable category for getting COVID-19," said Susan Duncan, founder of legal management consulting firm Rainmaking Oasis LLC.

She added, "The question really is: Will senior partners who are 65 or 70, who in any way feel compromised or just even at risk ... actually choose to semi-retire or retire early?"

The in-house world recently saw a high-profile example when the top lawyer at chemicals and materials company Ingevity Corp. opted to step aside.

In June, Katherine Pryor Burgeson, 62, who had served as Ingevity's executive vice president and general counsel since 2015, decided to take early retirement as the company looked to cut costs and reduce staff to weather the financial impact of the coronavirus crisis.

Burgeson was replaced on an interim basis by former deputy general counsel Ryan Fisher, who also serves as a chief legal officer for Ingevity's performance chemicals segment.

"After almost 40 years of practicing law, this seemed like a good time to take advantage of the early retirement program offered as part of Ingevity's cost-saving initiative," Burgeson said in a statement to Law360.

According to an Ingevity spokesperson, Burgeson is still figuring out what's next, but has said she is looking forward to spending more time with her family.

"Law firms, unlike the corporate world, don't necessarily go through as much optimization trying to cut people in order to increase share price or something like that," said Robert Kamins, a former BigLaw chief operating officer who founded consultancy Vertex Advisors Group. "So this is an opportunity for an organization to relook at how they do things."

One of the biggest expenses for law firms is people, Kamins said. However, instead of making a layoff or furlough, early retirement can be more "socially acceptable" for the firm to offer because it is voluntary. He added that those who will more likely be targeted are employees on the support side whose workload can be transferred more easily to others.

Since the COVID-19 pandemic began to spread across the U.S. in the early spring, at least three firms have told Law360 they offered voluntary early retirement packages to their staff.

In a statement to Law360, Haynes and Boone LLP managing partner Tim Powers said 21 long-tenured employees had accepted offers from the firm as of July.

"The early retirement program was the byproduct of a long-term strategic plan to align our staffing levels with that of industry standards while continuing to efficiently support our attorneys," Powers said.

In an interview with Law360 on July 29, Cadwalader Wickersham & Taft LLP managing partner Patrick Quinn said his firm had offered voluntary retirement packages to legal secretaries. And in April, Husch Blackwell LLP confirmed it transitioned some employees to early retirement after announcing a series of cost-cutting measures.

Both Cadwalader and Husch Blackwell declined to provide further details.

"I am not surprised that this would be offered, given what has been learned about remote work across the entire law firm workforce," said Jim Cotterman, a principal with legal industry consultancy Altman Weil Inc. "This forced learning accelerated staffing changes already underway and initiated additional changes. The profession is adapting to the new normal and is now on a different operating trajectory."

Echoing Cotterman, Duncan of Rainmaking Oasis said the coronavirus pandemic has put more pressure on firms to be productive and highly leveraged, which means a high number of associate hours for each partner hour.

"Highly leveraged does not mean having a top-heavy senior partner law firm," Duncan added. "It's just not as profitable."

Citing the recently released Altman Weil annual Law Firms in Transition survey, Duncan pointed out that the legal profession has for years been overstaffed and underemployed, especially at the nonequity partner level.

According to the survey, which polled managing partners and chairs at nearly 800 U.S. law firms from March to April, half of all firms and 60% of large firms say their nonequity partners are not sufficiently busy. Overall, 84% of firms reported having underperforming lawyers.

"I think where the consultants believe some firms will go with that is to use this as an opportunity to say, 'You know what, this has changed what our needs have been. It's changed our cash flow ... and we need to take some measures here to protect the profitability, especially for our most productive partners,'" Duncan said.

According to Kamins of Vertex Advisors, the change impacted not only the professional staff. Senior lawyers who found themselves worrying over their job prospects may also take the opportunity to opt out sooner, he said.

"As COVID has gone on longer than people expected ... that's creating a longer economic pressure on firms," Kamins said. "Early retirement is a tool in firms' toolkits, and they're going to explore all their tools."

Typically, early retirement packages will include a month or a few weeks of severance pay for every year the employee worked at the firm, but firms that are not in a good financial position may cap the payouts, according to Kamins. The packages may also include accrued vacation and sick leave.

Because early retirement packages are often more generous than what may be available under other departure scenarios, the financial incentive may push older lawyers who were thinking about retiring in a year or two to do so sooner, Kamins explained.

"What it ultimately does is that it reduces their full-time equivalents of the headcount expenses without having to do the layoff, which has a much more negative connotation," he said.

Kamins warned of the risk of running afoul of employment laws if firms conduct layoffs targeting older workers. In the wake of the pandemic, three law firms have already been hit with age discrimination lawsuits by workers claiming the firms unlawfully terminated them.

Mark Kanyuk, 62, an information technology manager at Shearman & Sterling LLP until April 15, and Katherine Merhulik, who worked for Weltman Weinberg & Reis Co. LPA as a quality assurance specialist before being terminated in 2016, brought their suits in May.

Nancy Lynn Perkins, a former legal assistant for Kirkland & Ellis LLP who was let go by the firm last year, filed a suit Friday accusing the firm of age and disability discrimination.

Shearman moved in July to dismiss Kanyuk's suit, saying the firm had let him go amid COVID-19 belt-tightening and that he could not bring the case in Manhattan federal court.

While many firms in the past have been less inclined to push mandatory retirement in order to continue positive relationships with longtime partners, the ongoing crisis will likely force some to reevaluate, according to Duncan.

"It will be, for many of them, the 'justification' for slimming down either the equity partners to equitize people, or even to de-partner people into more of a senior counsel for a year, than to contract positions," Duncan said.

However, in a profession known for being inherently hierarchical, many senior partners are still primarily responsible for major client relationships and originating new business for the firms, she added.

"There is still going to be plenty of room for partners in the 65, 70, 75 range if they're still really productive and relevant to clients and have kept up with their practices," Duncan said.

--Editing by Philip Shea and Jill Coffey.

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