Posted Jul 06, 2007 12:50 pm CDT
A New York appeals court is permitting a trial on whether a lawyer’s partnership agreement with Winston & Strawn entitled him to be paid the same amount after he reached retirement age.
The New York Appellate Division, First Department, ruled that the compensation agreement for rainmaking partner Anthony LoFrisco was ambiguous and he was entitled to a trial on his breach of contract claim. The ruling is LoFrisco v. Winston & Strawn LLP, No. 05828.
More rainmaking lawyers are challenging the way law firms cut compensation after they reach age 65, a process known as decompression, the New York Law Journal reports. At the same time, more law firms are waiving policies that require retirement or smaller paychecks.
LoFrisco’s initial 1994 agreement with the firm based part of his salary on fees collected from his clients, even if he had no involvement on the legal matters. LoFrisco had a relationship with GE Chairman Jack Welch, who retired in 2001, and LoFrisco was paid at least 13 percent of GE billings.
The 1994 agreement provided that rainmaking compensation would be lowered by 25 percent when he turned 67 in 2001, and by another 25 percent each of the next three years. But LoFrisco renegotiated the deal. In the new 2001 contract the firm canceled the 25 percent decompression and agreed to “consider” requests to do the same in subsequent years. The clause read:
“The [Executive] Committee [of the Firm] will consider your request for similarly structured bonus payments in fiscal years subsequent to Jan. 31, 2001, on a year-by-year basis. Specifically, that consideration will consist of the same analysis of your contributions to the Firm as conducted in this fiscal year, as well as prior fiscal years.”
The firm paid LoFrisco $2.3 million in 2002 and $350,000 in 2004.