A Lawsuit Waiting to Happen: Age Discrimination in Big Law Firms
In the legal profession, as in many others, advanced wisdom often goes hand in hand with advanced age. However, many law firms are putting their aging talent out to pasture by way of mandatory retirement ages, a practice that in itself seems outdated in most other fields of business.
We all know the typical debate when such issues arise: older employees are more expensive and less innovative than younger employees, but older employees are more experienced and have stronger networks than younger employees. Many of these law firms specialize in employment law matters, often waging expansive lawsuits against established companies that let go employees over 40 based on their age. This leads to a very obvious question: if law firms and their employees are at the very center of litigation, how are law firms allowed to continue discriminating based on age?
The Age Discrimination in Employment Act (ADEA) was enacted over 40 years ago to prevent employers from terminating employees based on their age; but who is covered by this act and the extent of its protections is still evolving. The Supreme Court ruled on a related case just this past year, raising the bar on what a plaintiff must show to have a successful age discrimination lawsuit – that age was the “deciding factor” in their termination. A seemingly odd decision considering their youngest member is already 55 and their oldest is retiring this year at age 90. That’s a pretty high standard, especially since an employer may have mixed motives for the termination, and be smart enough not to leave a paper trail (or at least a paper trail that doesn’t show age discrimination).
Lawyers know all about exceptions to the rule, and the ADEA sure has a big exception: involuntary retirement is allowed in two situations: 1) occupational requirements (such as airline pilots) and 2) retirement plans. Retirement plans are signed contracts between the employer and the employee in which the employee is compensated for retiring early. These retirement plans are often written into the lawyers Partnership agreements.
However, since many older lawyers are often “partners” in their firms, there is the troubling question of whether they are an employee of the firm or in fact an employer. Law firms are generally set up as a hierarchy. Associates are basically paid employees working to someday be promoted to Partner. Partners are traditionally joint owners and business directors, however, a large number of big firms have transitioned to a two-tiered partnership system which separates Partners into equity and non-equity. Equity Partners have shared ownership of the firm and therefore share in the profits and losses of the firm. Non-equity Partners are given limited voting rights within the firm and are paid significantly higher amounts but essentially have the same rights within the firm as Associates.
Therefore, a partner must not only prove that discrimination occurred, but must also prove that the ADEA even applies to them. This is no easy task: the Equal Employment Opportunity Commission (EEOC) has a six factor test they use to evaluate situations like this which seems to focus on the amount of control the partner has on their own employment.
In 1999 the EEOC brought an age discrimination suit against big firm Sidley Austin on behalf of 32 former partners; however it ended with a $27.5 million settlement and no new legal determinations. In January 2010, the EEOC tried again by suing law firm Kelley Drye & Warren alleging that their policy of demoting partners upon their 70th birthdays violated the ADEA.
Considering the rapidly aging workforce and the state of the economy, the issues surrounding mandatory retirement age policies won’t disappear anytime soon. In addition, if these policies continue in major law firms, there is a high probability of an increase in litigation by lawyers against their law firms, in the near future. Firms should definitely take advantage of the resources older lawyers give them, mandatory retirement may help cut costs but it doesn’t help the firm retain older clients. If their production has not flagged, it seems that ageism is the only motivation behind the policy. An older lawyer one firm sees as over the hill, may just join the competition taking their experience and their clientele with them. However, “demotions” are a reasonable alternative to lay-offs. Older lawyers should understand the importance of transitioning from leader to mentor and know how to accept the change gracefully.
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