Posted Oct 01, 2007 04:01 pm CDT
The time has come for law firms to put mandatory age-based retirement policies out to pasture, said the ABA House of Delegates in August.
In a voice vote, the House approved a recommendation that law firms, in addition to discontinuing those policies, should “evaluate senior partners individually, consistent with the firm’s employment criteria.”
The House, which sets policy for the ABA, considered the recommendation submitted by the New York State Bar Association when it convened during the 2007 ABA Annual Meeting in San Francisco.
Following the recommendation would allow law firms to catch up with the times, said Mark H. Alcott, the immediate-past president of the New York bar, who introduced the measure in the House.
Mandatory age-based retirement has largely disappeared from the commercial realm in the United States, said Alcott of New York City. “But it continues in the legal profession as an anomaly—you might say a loophole.”
The loophole Alcott referred to is the partnership structure common to law firms. While the Age Discrimination in Employment Act of 1967 essentially prohibits age discrimination in the workplace, its provisions apply to employees. Law firm partners generally have been considered exempt from the ADEA’s provisions because they were considered owners or employers rather than employees.
But that distinction is being challenged. The U.S. Equal Employment Opportunity Commission is doggedly pursuing an age-discrimination case against Chicago’s Sidley Austin on grounds that 32 former equity partners demoted to other status in the firm were protected as employees under the ADEA.
Rulings handed down in 2002 and 2006 by the Chicago-based 7th U.S. Circuit Court of Appeals have made it possible for the Equal Employment Opportunity Commission to continue building its case against the firm. The U.S. Supreme Court also has weighed in recently on the legal implications of partnership, although the case did not directly involve law firms.
In Clackamas Gastroenterology Associates v. Wells, 538 U.S. 440 (2003), the court ruled that doctors who practiced medicine together in a professional corporation where they also served as directors and shareholders may still be counted as employees to determine whether the corporation was subject to requirements of the Americans with Disabilities Act.
The key, the court held, is the extent to which a particular partner participates in the control of the firm.
That holding is particularly relevant at larger law firms in the United States, where mandatory retirement policies are most prevalent.
The report that the New York bar submitted in support of its recommendation cites a survey for the American Bar Foundation, whose findings were reported in 2005. The survey revealed that 57 percent of the responding firms with at least 100 lawyers had mandatory retirement policies, while only 13 percent of firms with fewer than 10 lawyers had them.
“We do not suggest that partnership is, or should be, a guarantee of life tenure,” states the New York bar’s report, “and we are well aware of the economics of law firm practice and the need for senior partners to pass on client responsibilities to younger partners.”
Nevertheless, consistent with this pressure, a senior partner can and should be evaluated individually in accordance with his or her unique attributes and interests and the firm’s generally applicable performance criteria, including the full range of strategic and tactical legal abilities and lawyering skills.”
The policy was opposed by some delegates who viewed it as an inappropriate intrusion on the operations of individual law firms. Opponents also argued that retirement is a private contract matter between a firm and its partners.
Not so, said former ABA President Michael S. Greco of Boston.
“This is a matter of principle, and principle trumps contracts,” he said. “We advise our clients not to discriminate, and yet here we are. The day after a lawyer turns 65, his bags are packed, his files are in boxes and he’s out the door. All we’re asking—not ordering—is for firms to rethink whether we’re treating colleagues fairly and humanely.”
“Next!” ABA Journal, January 2007
“Who Is a Partner?” ABA Journal, June 2005