Retirement: Is this the new four letter word?
According to a recent study by Altman Weil, Inc., the closer to retirement a lawyer gets, the more likely he/she is to oppose mandatory retirement ages. Interviews with a number of aging lawyers suggests that they don’t want to retire, but they do want to work only part-time and they no longer (if they ever did) want to be responsible for rainmaking.
In a recent case involving a firm subsequently merged into Thelen Reid, the law firm argued that the lawyer breached his employment agreement by failing to produce sufficient billable hours. The lawyer argued that he merely had to be available to do work, that he did not have rainmaking responsibilities. In this case, the issues revolved around an employment contract and its interpretation, and the arbitrator found that the lawyer did seek billable work and was available. There was no requirement in the contract that he reach the firm’s billables benchmark; that was outside the contract.
In another case, involving Sidley Austin, the Chicago-based law firm, the EEOC claimed that the firm fired a group of lawyers on the basis of age. The firm alleged that the “de-equitization” of partners was based on decreased productivity. The parties settled and the law firm reportedly paid more than $27 million dollars to the approximately 40 dismissed lawyers. The EEOC alleged that Sidley acted like an employer, that the lawyers in the firm were partners in name only, that they were treated and acted as employees without any real involvement in the management of the law firm, and that their “dismissal” was subjective. The inability to point to benchmarks required by all lawyers of the firm such as hours billed, origination billings, participation in the governance of the firm, etc., coupled with common characteristics of the dismissed group that are contrary to law (such as all the dismissed lawyers being over the age of 40), can give rise to claims of wrongful termination.
Despite the increasing frequency of such claims, and the increasing victories on the part of the lawyers making the claims, I find it absolutely fascinating that firms are not addressing this issue with greater urgency. In fact, the firms I’ve discussed this with are still adamant that their mandatory retirement age will not change. They are still of the mind to de-equitize partners on reaching a given age, usually between 62 and 70.
As law firms take on more characteristics of their corporate clients, they will have to adhere to the same business principles required of their clients and they will have to comply with all the laws applicable to their clients.
In a conversation today with a new managing partner, he suggested that one of his major challenges in his term of office will be the succession issue. When a successful lateral partner departs, he/she normally takes several associates and a big book of business. His challenge will be to find ways to encourage retiring partners to leave gracefully, transitioning their client relationships to other lawyers in the firm, thereby enabling the firm to retain the business as the retiring lawyer steps back.
Perhaps the modern law firm will create an alumni club of retired partners similar to the formal alumni of associates created by some larger firms. Some law firms are finding these groups are good networking and referral sources for future business. With the aging of our population, new standards will emerge. Let’s hope that lawyers transition gracefully into their “second season.”Tags: Cash, Finances, Management, Marketing