Why age has never been a bigger issue for law firms
Earlier this year, the Employment Tribunal finally put an end to a long-running battle between lawyer Leslie Seldon and his former firm Clarkson Wright & Jakes (CWJ). He had sued the firm for age discrimination when he was forced to resign the partnership in 2006 on turning 65. He argued that the firm’s compulsory retirement age constituted age discrimination.
His claim was rejected by the Court of Appeal in 2011 and the Supreme Court in 2012. In also rejecting Seldon’s claim, the Employment Tribunal has brought to a conclusion one of the big test cases of recent years, which fueled many a debate as to age discrimination in the context of partner retirement.
Now firms can sleep easy knowing that they can oust older partners to make way for fresh blood.
If only life – or law – were so simple.
Solution solves nothing
The truth is that the Seldon case actually resolves very little. Success for the firm pivoted on its ability to justify its mandatory retirement age at 65. This it did by arguing that it would give associates the chance to rise up the ladder to partnership; that it would facilitate workforce and partnership planning; and that it would limit the need to expel partners by way of performance management, thus ensuring the maintenance of a supportive culture.
It was only able to do this though because of the specific nature of this small firm. It had no partner performance model in place, nor anything in the partnership agreement to allow the firm to remove or penalise an underperforming partner. This is a wholly different set-up to a large number of firms today.
Most firms now boast some kind of partner performance model as well as provisions for managing underperforming partners in their partnership deeds. This means that there should be very clear steps to removing a partner on a performance, not age basis. If such a system suggests that the partner is still performing well at 65, it would be very hard for the firm to compel him to retire on hitting that age.
This is only reinforced by the phasing out of the default retirement age in 2011. Although this legislation applies to employees, rather than partners, it still has ramifications for partnerships – making it harder for firms to push out a partner purely on the basis of age.
Retirement age retired
Recognising this, a rising number of firms have ditched their partner retirement ages altogether, including Allen & Overy, Hogan Lovells, Linklaters and Ashurst. Regardless of Seldon, it is likely that more, not less, will follow this example.
But what might be resolved at one end of the chain invariably causes problems at the other. We all know how much harder it is becoming for associates to get partnerships. With older partners staying on for longer within tightening equity structures, the risk only rises that younger associates will be further blocked from rising to the top.
We all know too that the window for partnership is a fairly narrow one. Go much beyond 8-10 years’ PQE without a partnership offer and you’ll probably never get one. It could even be argued that this in itself is a form of age discrimination – favouring the older partners at the expense of generally younger lawyers coming up the ranks.
While firms have yet to organise any kind of really credible alternative structure for those talented lawyers who don’t make partnership, there is the very real question of how firms can really support a younger generation of lawyers. Or whether the system is invariably biased against them.
In one way the Seldon case is important, even if the findings won’t apply to many law firms in future. It heralds an era in which age really will be a challenge in law firms, whichever end of the spectrum you’re on. CP