Business is full of twists, turns and surprises. As a seasoned associate, you know the importance of planning to mitigate this uncertainty for your clients. That’s why you draft thorough contracts covering countless eventualities or prepare robust legal strategies before entering a courtroom. Planning will never address every possibility, but it will allow you to minimize risk and maximize positive outcomes.
Given the importance of planning, it’s surprising that even the most diligent lawyers sometimes pay insufficient attention to two key areas: career planning and financial planning.
In this article, we highlight why taking a proactive approach toward your career and finances is crucial for creating the future you desire for yourself and your family.
Planning your career growth
A lawyer’s career is a long-term endeavour involving years of education, training and developing technical expertise. A career plan is crucial to ensure you make the most of your long-term investment.
As recruiters who specialize in the legal sector, The Counsel Network has noticed a cyclical progression experienced by lawyers as their knowledge, expertise and comfort zone within the profession develop. We have identified four phases of the cycle, each with a unique impact on the lawyer’s life, family and future. There is no set timeline for one to travel through the four phases – in fact, a lawyer might experience the cycle or portions of it several times throughout their career.
Like anything that’s new, you face a steep learning curve. The work is challenging and there is excitement in your new role. You may feel overwhelmed, but you are taking it all in.
You’ve got some time on the docket, so to speak. You’ve learned the ropes, feel confident and are motivated. You are achieving targets and making a valuable contribution.
You’ve established your place, so your foot eases off the gas. You’ve hit a plateau. You begin to experience boredom and declining motivation. Your mind wanders to thinking the grass might be greener on the other side.
You’re feeling frustrated and unhappy. You start seeing a lot of negatives in things that did not bother you before and may be heading for burnout.
An effective career plan must take these developmental phases into consideration. It is not just about developing a rigid, step-by-step blueprint for your path to partnership. Rather, it’s about proactively seeking out learning opportunities that combine your talents, values and aspirations as you navigate the four developmental phases. Critically, this means recognizing the tell-tale signs and laying the groundwork for new learning opportunities before you hit the cruising phase – or worse, slip into disengagement. A misstep here could trip up the long-term health of your career and your life outside of work.
Larger firms may provide a planning process and template for lawyers in the firm whereas other less formal firms will invite lawyers to simply write their own career plan. The first step is to take stock of where you are at in your career and identify your longer term career goals for where you would see yourself professionally in 3–5 years. Once you’ve formulated your vision for the future, map out a few simple steps that will help you get there.
There are endless avenues down which you can take your legal career, and setting out in one direction doesn’t prevent you from changing course later on. Indeed, you should review and update your plan on a regular basis. By taking charge of your career, you will have greater job satisfaction and opportunities for advancement while ensuring that you don’t enter the disengagement phase.
Building your financial future
While career planning can help you achieve your professional aspirations, financial planning can help you protect and provide for your loved ones – both now and in the future. A good financial plan is much more than simply a tool for maximizing wealth. Instead, it involves taking a holistic view of your life and goals and customizing strategies aligned with the future you envision for your family.
For senior associates, there are specific needs to consider within a financial plan. For instance, many lawyers in private practice may lack a pension or have one that is inadequate. If you are in this situation, proactive financial planning can prevent a shortfall. For example, permanent insurance can be an attractive tax-sheltered investment option for building wealth and saving for your desired retirement lifestyle.
Permanent insurance is a risk management tool that is like buying a house. Payments can be made monthly or annually as you lock in your premium and insurability, and the cost of insurance decreases as you pay over the years. Ultimately, you are building up the value of an asset that will grow over time. Starting later increases your payments and the overall cost. Meanwhile, reinvesting dividends from your permanent insurance into the policy’s cash value account allows you to build further equity as growth compounds tax free.
Of course, financial planning is not a one-time effort. Your financial needs, priorities and opportunities evolve over time, so adjustments are needed along the way to ensure the best outcomes for you and your family. Everyone’s situation is unique, but the following are examples of the key considerations for senior associates to address in your financial plan as you grow older and mature in your career:
- If you have a child, are you investing in their education with a registered education savings plan (RESP), within which your contributions can grow tax free?
- If you’re planning to buy your first home or perhaps upsize from a condo to a house, do you have a clear sense of how this will impact your finances?
- While you may be approaching your prime, have you undertaken any estate planning to ensure that your financial affairs are in order and that your loved ones will be looked after once you’re gone? Are you doubling down on your retirement planning to capitalize on recent promotions and higher income? Do you have a will?
- Should you aspire to become an equity partner, do you have clarity on your financial position? Do you have tangible assets to support the financial investment that will be required to enter the partnership?
- Have you explored the significant benefits of setting up a professional corporation to enhance your financial planning and tax optimization as you become more established in your career?
Ultimately, financial planning is about optimizing your financial resources to build the life that you desire while ensuring the flexibility needed to accommodate any personal, family and career changes that emerge along the way.
Optimizing your outcomes
Career planning and financial planning are distinct yet complementary processes. As a lawyer, you can use both to prepare for an unknown future and proactively create the life you want for yourself and your family.
An experienced mentor or advisor can help you with this. Career planning and financial planning are both highly personal, so there is great value in working with trusted individuals who can act as a sounding board and guide you toward choices fully aligned with your needs. And while it’s beneficial to start with both as early as possible, it’s never too late to begin tackling these important issues.
In your legal work and more broadly in life, there will always be a degree of uncertainty. But with sound planning and the same hard work that has gotten you this far, you can stay on track toward a bright future.