Law Practice

Sidley to Pay $27.5 M in EEOC Partner Case

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Updated: In a settlement that should send shock waves throughout many of the nation’s major law firms, Sidley Austin has agreed to pay $27.5 million to resolve a landmark federal case alleging that the law firm discriminated against 32 of its own partners.

The 1,700-lawyer Chicago-based firm also agreed in a settlement with the Equal Employment Opportunity Commission that it would not have a mandatory retirement policy for lawyers based on age, according to the Chicago Tribune and Crain’s Chicago Business.

Although the firm didn’t admit wrongdoing in a consent decree (PDF) approved yesterday by a federal judge, the case is important to law firms because of the precedent it sets concerning the definition of partnership. As discussed in an ABA Journal cover story in 2005, the EEOC contended that a number of Sidley partners were actually employees–and hence protected by laws against age discrimination—because the firm treated them as employees even though it called them partners.

In the consent decree, Sidley “made a significant concession,” reports the Los Angeles Times. It was: agreeing that “each person for whom the EEOC has sought relief in this matter was an employee” for the purposes of the Age Discrimination in Employment Act.

The case—which was brought by the EEOC itself rather than individual partners—resulted from an October 1999 demotion by the firm of 32 partners, allegedly based at least in part on their age. Financial details of the settlement are discussed in another post.

“Up to now, with no particularly good reason that I can discern, people in control of law firms said that if they called someone a partner … they didn’t need to worry about federal employment discrimination laws,” says John Hendrickson, the EEOC’s regional attorney in Chicago.

“What the Sidley case says is that you have evidence that people are called partners, but in reality are not active in the governance of the firm and don’t control their own destiny in the firm,” he tells the Times. “You can call them whatever you want, but for the purposes of the Age Discrimination Act they are employees.”

Sidley says in a statement the settlement “puts the cost, time and distraction of this litigation behind us. Moreover, continuing litigation with the EEOC would have placed us in an adversarial position with former partners. The firm is pleased that this litigation has been resolved, reiterates the commitment to our long-standing policies against discrimination of any kind and appreciates the understanding and support of our lawyers, staff and clients.”

The ABA House of Delegates decided in August to recommend that law firms eliminate mandatory retirement policies, as discussed in the current issue of the ABA Journal.

(Updated at 7:30 p.m., CDT.)

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