Wisconsin Lawyer
Vol. 78, No. 6, June
2005
Legal News & Trends
Despite nearly universal retirement coverage
in law firms, unfunded obligations still pose threat
The 2005 Altman Weil Retirement and
Withdrawal
Survey for
Private Law Firms finds that 96 percent of responding law firms have an
active, IRS-approved retirement plan.
Funded retirement programs - in which the
availability of retirement assets is assured by setting aside current
income as it is earned and before payment of personal income taxes -
have become almost universal in law firms with 20 or more lawyers. Nine
out of 10 smaller firms also have such plans.
"This is a welcome trend," notes Altman Weil principal James D.
Cotterman. "Ensuring adequate funds for retirement is going to be a
critical issue as the first wave of baby-boom lawyers begin retiring in
just five short years."
Of 12 plan types identified in the survey, the
most popular are the:
- 47 percent providing combined 401(k) profit
sharing,
- 21 percent maintaining 401(k) income reduction,
- 17 percent having Safe Harbor 401(k), and
- 13 percent offering profit sharing.
Firms with 100 or more lawyers overwhelmingly favor 401(k) income
reduction plans and 401(k) profit sharing combinations. Smaller firms
offer a variety of plan options.
Just 24 percent of law firms also report maintaining non-qualified
plans limited to highly compensated and key management employees. These
plans do not qualify for preferential tax treatment, but neither are
they subject to the reporting and disclosure requirements of qualified
plans.
Only 35 percent of non-qualified plans are prefunded, relying instead
on the ability and willingness of future owners to
pay benefits as they come due.
Unfunded obligations like these represent a
fundamental risk to the legal profession in an era of partner mobility,
an aging population, and a very competitive labor market," says
Cotterman.
"Law firms are grappling with the issue of past
promises and their future economic consequences. But the bottom-line is
that unfunded plans represent a clear competitive disadvantage in the
marketplace. Firms seeking lateral hires or good merger partners will
have a tough time if their fiscal house is not in order."
Many unfunded plans are being modified with payment caps, reduced
benefit formulas, longer vesting requirements, and other strategies to
limit or reduce the future economic burden on law firms.
Sixty percent of firms with non-qualified retirement plans cap total
payments in a single year. Additionally, 85 percent of firms require a
minimum period of service for participation. More than two thirds of
firms report amending their deferred compensation plan since 1990, most
commonly by lowering a preexisting payment cap, lengthening the payout
term, or adding a cap for the first time.
Among firms with documented policies, 38 percent require manda-tory
retirement. As the size of the firm increases so does the likelihood of
mandatory retirement - 57 percent of firms with 100 or more lawyers have
such provisions, while only 13 percent of firms with 10 or fewer lawyers
do.
The findings are based on data collected from 202 law firms
nationwide in 2004. Twenty-six percent of firms responding had 100 or
more attorneys, 37 percent had 20-99 lawyers, and 38 percent had fewer
than 20 lawyers.
For additional information, visit www.altmanweil.com.
Mandatory court form
updates: criminal, general, and
guardianship
As of April 21, 2005, the Wisconsin Records Management Committee has
updated and introduced the following forms. Key: New (N)/Revised (R)
Criminal
CR-243 Annual Report of Crime Prevention
Organization (R)
CR-259 Notice to DA/DA Response on Petition
for Sentence Adjustment (R)
CR-270 Order for Examination under 971.16
(R)
General
GF-131 Order Appointing Guardian Ad Litem
or Counsel (R)
GF-132 Juror Qualification Questionnaire
(R)
Guardianship
GN-2001 Petition for Guardianship of
Incompetent/Protective Placement/Protective Services (R)
GN-2002 Order and Notice of Hearing for
Guardianship/Protective Placement/Protective Services (R)
GN-2004 Report of Guardian Ad Litem (R)
GN-2007 Determination and Order for
Appointing Guardianship Protective Placement/Protective Services (R)
GN-2015 Petition for Annual Review (R)
GN-2017 Annual Report of Guardian Ad Litem
(Annual Review) (R)
GN-2018 Order for Continued Protective
Placement (R)
GN-2043 Order for Temporary Protective
Placement (R)
GN-2090 Petition to Approve - Transfer to
Spouse, Marital Property Agreement or Other Transaction (N)
GN-2091 Order to Approve - Transfer to
Spouse, Marital Property Agreement or Other Transaction (N)
Forms and summaries are available in PDF or MS Word format at
www.wisbar.org/forms. For more information, contact Terri Borrud at
(608) 266-7143 or terri.borrud@wicourts.gov.
Updated form prevents identity theft
The Wisconsin Register of Deeds Association updated the HT 110
(termination of decedent's property interest) form several years ago,
but many Wisconsin attorneys are still using the old form. Due to the
concern of identity theft from information on various records available
on the Internet, the association removed the area for Social Security
numbers.
"We cannot reject old forms submitted with the Social Security number
already on them, nor can we `black' this area out," says Jodi Helgeson,
Adams County Register of Deeds. "We strongly urge the use of the updated
form, but when attorneys do use the old form they should leave the
Social Security number area blank."
For more information or to download the new form, visit www.wrdaonline.org or call
Helgeson at (608) 339-4206.
Wisconsin Lawyer
