Posted Jul 09, 2007 07:16 pm CDT
A hearing has begun in an age discrimination case brought against one of London’s most prominent law firms by a now-former partner, in a cutting-edge case could potentially threaten the British legal profession’s traditional “lockstep” compensation system. It could also be a sign of more litigation to come, as law firms, like other employers, learn by experience how a new age discrimination law that took effect Oct. 1, 2006—and provides for unlimited damages—will be applied.
There appears to be no dispute that Peter Bloxham, now 55, opted to retire last year in order to lock in a lifetime $350,000 annual pension payment from Freshfields Bruckhaus Deringer, where he headed the firm’s bankruptcy practice. Like many American employers, Freshfields was about to change what it termed an unsustainable pension plan, to reduce the amounts paid out. However, this forced Bloxham to retire six months early, rather than accept a pension benefits cut of up to 40 percent, his lawyer is expected to tell London’s Employment Tribunal, as an approximately nine-day hearing continues, according to Bloomberg.
Younger partners are likely claimants in such cases, the London Times reported earlier this year. That is because junior partners can be paid less than senior partners for doing the same—or more—work, essentially based on their age under the traditional British lockstep compensation system that ups the ante for partners for each year they remain at the firm. Similarly, it appears that Bloxham’s claim “relates to the fact that Freshfields’ pension cuts affected partners differently according to their age at the time the changes were implemented,” the Times reports.
Experts say law firms in the U.K. may be seeing more such claims soon:
“The Freshfields case is just the tip of the iceberg. Law firms across the board appear to have underestimated the impact of the new legislation,” Clive Howard of Russell Jones & Walker, a British law firm that represents plaintiffs in employment matters, told the Times in January. “The traditional ways in which some law firms organize partnership and other promotions, reward performance and take recruitment decisions based on the number of years experience that a lawyer has are all now potentially discriminatory on grounds of age.”
According to Bloomberg, equity partners at Freshfields earned an average of $2.1 million each for the year that ended April 30, 2007.