It’s important to think about — and not just think about, but save for — your retirement. This is especially true now that Social Security is looking less than alluring. (When I see that money taken out of my paycheck, I just kiss it goodbye, forever.)
When it comes to providing for associates and other employees, most large law firms take a fairly straightforward approach: they offer 401(k) accounts, but no matching employer contributions. One of the few Biglaw firms that provided a match, K&L Gates, stopped that policy back in 2007.
With respect to retirement provisions for partners, there’s more variation from firm to firm. Some shops provide for retired partners in very generous fashion. For example, retired partners at Wachtell Lipton can receive annual seven-figure payouts for many years after leaving the firm (although sources at my former firm tell me some of this money represents a return of capital to the retired partners, and as such will vary from partner to partner).
A million-dollar retirement benefit is no doubt very pleasing. But at other firms, aging partners are less content with their arrangements….
Over the weekend, the New York Times covered the messy break-up of Sheresky Aronson Mayefsky & Sloan, a prominent divorce-law firm. The story was also picked up in today’s New York Law Journal, among other outlets.
Things have gotten ugly between the firm’s three top partners — Norman Sheresky, David Aronson, and Allan Mayefsky. Writes John Eligon, in the Times:
Now Mr. Sheresky, Mr. Aronson and Mr. Mayefsky may be facing their most challenging breakup yet: their own.
Mr. Sheresky, 82, left the firm in a huff last month, claiming that his former partners reneged on a longstanding commitment to take care of him financially in the twilight of his career. Mr. Aronson, 61, and Mr. Mayefsky, 57, denied that such a vow existed, and dissolved the partnership, forming a new one with Pamela M. Sloan, who joined the original firm in 2007.
Mr. Sheresky responded strongly Friday by filing a $26 million lawsuit in State Supreme Court in Manhattan, alleging breach of contract and fraud.
So they’ve gone from litigating alongside each other to litigating against each other. It’s a sad state of affairs.
And perhaps one that we’ll see repeated as older lawyers, especially the baby boomers, exit the professional stage. As the Times piece notes, “the dispute that led to Mr. Sheresky’s name being removed from the firm’s letterhead and new Web site raises a common question for the city’s prominent firms: how to handle a senior partner who is transitioning toward retirement?”
The events that culminated in Sheresky’s lawsuit seem quite conventional. Sheresky — who at 82 is quite a bit older than Aronson, 61, and Mayefsky, 57 — served as a mentor to the two younger attorneys. After they formed their own firm together, Sheresky was the biggest rainmaker. According to Sheresky, even though he brought in the majority of the clients in the early years, he agreed to an even, three-way profit split. In return, Aronson and Mayefsky supposedly agreed — orally, not in writing (ruh-roh!) — “to extend the same courtesy to [Sheresky] when he was aging and less productive.”
The other two partners have a different version of events. Mayefsky claims that Sheresky took a bigger share of firm profits until 2003 — and that Sheresky continued to share equally in profits even after the younger partners became the major rainmakers.
The atmosphere at the firm got increasingly tense, it seems, until things finally boiled over earlier this year:
At a contentious lunch at the Midtown restaurant Patroon in March, the three men argued over a deal they had made in 2007 that led to Mr. Sheresky’s receiving $100,000 a year from the firm on top of his regular share of its profits. Mr. Sheresky said the extra compensation was intended to pay the mortgage on his Manhattan apartment, a gesture the younger partners extended to repay him for building up the business in the early years.
But at the lunch, Mr. Sheresky said, they told him for the first time that the payments were to last only 10 years, as a means of buying him out of the firm, not to cover his mortgage; and that they also wanted to cut his share of the profits in accordance with his reduced work.
Mr. Aronson and Mr. Mayefsky contend that Mr. Sheresky agreed back in 2007 to the 10-year buyout plan, and say they never paid his mortgage bill.
(The NYLJ piece has a more detailed discussion of the various financial arrangements.)
This sounds like the dissolution of a gay marriage: a game of “he said, he said.” It appears that, surprisingly for a bunch of lawyers, the partners didn’t put these alleged agreements in writing.
Most law firms, especially big ones with hundreds of partners, are more meticulous when it comes to retirement provisions for aging partners. How does your current firm — or your former firm, if you’re more comfortable dishing about it — handle retirement benefits for partners?
Please let us know, by email (subject line: “[Firm Name] Retirement Benefits for Partners”). If we receive enough high-quality tips — the more concrete numbers, the better — we may do a follow-up post. Thanks.
For the Lords of Divorce, a Breakup [New York Times]
Aging Divorce Lawyer Sues Former Partners for $26 Million [New York Law Journal]