Many practices 'don't have any real money aside', says Bud Schiff, managing director of benefits adviser Alvarez & Marsal. He adds that most of them 'don't want to advertise that they have problems' although even 'the largest and most successful firms' are aware that they have to act.

Cutting pensions for younger partners

Some are taking steps to deal with these issues. These include introducing new provisions to restrict the future payout levels to a certain percentage of firm income. Others are taking the dramatic move of cutting back gradually on this kind of plan for younger partners.

Fewer contributors

At certain firms, the issues have deepened as partner numbers have been cut back - so there are fewer people contributing to the pool from which pensions are paid. The amounts paid to partners in retirement can be substantial. Mr Schiff gives the example of firms that use 10 per cent of distributable income on pensions. This clearly means that for every $1 earned by a working partner, only 90c goes into a pot from which he or she can personally benefit. Source: Bloomberg Business of Law