Depending upon your perspective, the baby boomer generation is responsible for all that is good with the world or all that is wrong.

Whether you are a 'boomer', a member of 'Generation X', or neither, the truth is that baby boomers were the first generation to never grow up. Like all teenagers, they rejected the values of their parents. Unlike previous generations, they then refused to become authority figures themselves. They took on the roles but not the conventional habits. This is why today's world leaders and, to be fair, most 'traditional' authority figures dress for their summer breaks like Harry Enfield's TV character, Kevin the Teenager.

Boom time

The term 'baby boomer' usually refers to those born during the period of increased birth rates when economic prosperity rose in many Western countries following World War II – during the relative peace and prosperity that followed the ravages of conflict and preceded the economic downturn of the 1970s.

Boomers are probably best known for opposing the Vietnam War, having more relaxed attitudes to sex and drugs, and for trying out less authoritarian methods of parenting. According to US newspaper columnist Lewis W Diuguid, however, they are also the "greediest generation".

"I am a baby boomer, born in 1955," he says. "My generation typifies today's excessive consumption. We live in oversized homes in the suburbs, drive an excessive number of miles to our jobs in the cities and we go on extravagant vacations. My generation wants it all, whatever the cost."

Diuguid also says his generation has a worrying "sense of entitlement".

But the boomers' parents' generation lived in the Depression; they ate simply and had little time for recreation. Boomers decided they wanted better for themselves and for their children and generally they worked hard to improve their lot. No preceding generation has built wealth in such a consistent way, produced as many entrepreneurs and built as many companies in spite of the prevailing economic climates.

Third age

Now, after all this hard work, our boomers are looking towards their 'third age' with a smile on their face, thinking about how they are going to spend the kids' inheritance.

Yet we live in a rapidly ageing society as the large post-war generation reaches retirement age – the first of the boomers turned 60 last year – and this is beginning to create some serious societal challenges, not least with regard to how we collectively pay for our senior citizens.

The public debate about this demographic revolution has focused mainly on the impact an increasingly old
population will have on the future of pension provisions and the potentially negative impact for welfare and care services. Consider this: at the inception of the UK welfare state in 1945 there were 40 workers for every pensioner; today that ratio is 4:1, and by 2050 it could be 1:1.

Battle of the bulge

But what do such trends mean for the legal profession? Since 1995, the average age profile of practising, certificate-holding solicitors has varied little except for the 51-55 and 56-60 bands, which have increased by 108.3% and 145% respectively. This is what is called a demographic bulge – something that causes demographers sleepless nights.

As of 2005, there were 9,597 partners older than 50 at UK law firms. There were also 3,385 sole practitioners over that age. And 85.9% of law firms, comprising 30.6% of all certificate-holding solicitors, had four or fewer partners.

The challenge presented here is readily apparent. In my experience, the majority of mid to large-sized firms have equity exchange and partner succession plans in place – the process by which the next generation takes on the baton, releasing the capital that enables the departing partner to enjoy his retirement.

Very soon there are going to be lots of partners at small firms looking to release the capital in the firm they have built over the years at a rate never before experienced. Sure, some may work into their sixties and even their seventies, but they will be the minority.

Is there going to be enough supply – and ability – to meet demand? Law Society figures suggest that there is a possible 44% of assistant/associate solicitors hoping to become equity partners. What is not outlined is what size firm they aspire to partnership with. How many look to the security of the big City firms rather than the smaller regional firms?

Money troubles

The other issue is affordability – without a significant inheritance, the average senior associate is not going to have several hundred thousand pounds of spare capital lying around. Nor is a bank going to readily lend that sum. And in such a buyers' market, a white knight in the form of a larger firm is an even less likely prospect.

Buying and selling a legal practice is not a routine activity. For 99% of solicitors, it is something they may do once in their career, and it will be the last major career decision they take.

Given the added pressure of the boomer bulge, having an exit plan is becoming crucially important. You almost need to have it in place 10 years before retirement day. This is because the most prudent approach is to have a succession plan in place; to have identified the rising stars from within who will buy into the firm.

As outlined earlier, no bank is likely to lend the full sum unsecured. However, there are specialist business finance companies that will release the capital in stages over a defined period – usually between five and 10 years – on a fixed-rate facility, matching practice income expectations. This allows the buyer to steadily increase their equity stake, gradually replacing that of the senior partner.

The equity earn can be linked into associate performance over the equity buy-in period and the transfer to the retiring partner linked in to client retention. This approach gives the finance company the security required because it ensures an orderly handover and continuation of trading. As a result, such a facility does not have to be personally secured.

Common problems

It is worth noting that this issue is not peculiar to the legal profession. The Institute of Chartered Accountants in England & Wales has carried out research into the baby boom challenge its own members are facing and is providing guidance about the best approach to take – either selling to another firm or the next generation.

Perhaps the Law Society will carry out similar research so that its generation of boomers can expect to retire at a sensible age with a comfortable income. They may be the generation that never grew up, but that does not mean they do not want to be well-funded as they grow old.

What else would you expect from a boomer?

Jonathan Smith is head of professions at Siemens Financial Services.