Age-old problem

Tough legislation will lay bare law firms’ vulnerability to age discrimination claims, reports Rachel Rothwell, while on page 20 we talk to lawyers who entered the profession later in life

When it comes to the US, it seems that whatever they have over there, we soon find it coming our way – the Atkins diet, Starbucks and bling, to name a few recent examples. In October 2006, the same will go for age discrimination legislation.

While the law to be introduced in the UK will not mimic the US legislation exactly – over here it will apply to the young as well as to the over-40s, for starters – it would be foolish to ignore any lessons on how the legislation might affect the legal profession. Judging from the multi-million dollar lawsuit facing US law firm Sidley Austin Brown & Wood, the impact could be considerable.



Sidley Austin is being sued by the US Equal Employment Opportunities Commission, claiming it breached US age discrimination law by allegedly downgrading older partners or forcing them to take early retirement (see [2005] Gazette, 20 January 1). The damages are unlimited – which will almost certainly be mirrored in the UK legislation – so the potential payout in partners’ back pay is huge.

The firm says it is vigorously defending the action, which it adds should not have been brought because of an earlier ruling that it is a partnership and so not covered by the US’s age discrimination law. However, partnerships in the UK will have no such protection. Owen Warnock, an employment partner at national firm Eversheds, says: ‘The one thing that you can predict confidently about the UK age discrimination legislation to be introduced next year, which has still not been drafted by government, is that the awards will be substantial. Just like claims for discrimination on the basis of disability, the claimant will be able to say that it will be hard for them to find another job, and so damages will be assessed on the basis that they will never work again.’ One reason why law firms could find themselves hit harder by this legislation than other sectors is the inherent link in many firms between age and seniority. Nothing embodies that thinking more than that bedrock on which many partnerships are built – the lockstep remuneration system. Mr Warnock says: ‘A lockstep partnership is certainly a service-related benefit, and justifying a five- to ten-year career ladder when the new law comes in could be tricky. A safer way to promote people would be to identify the different attributes you are trying to reward in the partnership structure and find an objective way of assessing them, for example by billable hours.’ Ashley Norman, an employment partner at national firm Pinsents, suggests there could be a justification for keeping the lockstep. He says: ‘Where you are promoting on the basis of years of service, there will be a carve-out that this might not be discriminatory if it is done to encourage loyalty. This could possibly be used as a justification for a lockstep system.’ But that does not mean firms should sit back and do nothing: ‘To use the loyalty argument, firms will need to show that they have gone through some sort of process and assessed that the lockstep is the best way of encouraging loyalty, by undertaking staff surveys and looking at the market-place. It is a bit like doing maths in school – it’s not just about having the right answer, but showing the working out.’ M4 corridor firm Morgan Cole is at the forefront of progressive thinking on age discrimination, and won an Age Positive award for its efforts last June. Employment partner Helen Goss explains: ‘We do not promote on the basis of length of service. All our partners are performance assessed, with 360-degree appraisal forms that are completed by a broad selection of people they work with, including junior colleagues. ‘We have no time limit before staff are able to join the pension scheme, and no extra holidays based on length of service. To select partners, we hold partnership assessment centres once a year, where the people we think have partnership potential are assessed on their ability to bring in and retain clients. ‘The candidates are told to come with a problem that they have in their working life, and discuss it – we see how they interact, how they get their view across and how they disagree with someone. If the solicitor is successful, we then see if there is a business case for making up a partner in their area.’ It is not just the way partners are selected and promoted that could put firms at risk of a tribunal claim, however, but also how they are persuaded to make an exit. Mandatory retirement clauses will still be permitted in partnership agreements, but not below the relatively ripe age of 65 – far older than many firms’ current arrangements. Like captains of industry, lawyers are often expected to quit well before then. As golf clubs everywhere will testify, there is no shortage of partners who found their firms suggesting they spend more time on their backswing while they were barely into their mid-40s. Mr Norman says: ‘You could try to justify a retirement age below 65 on the basis of succession planning, to bring in younger partners. But you would have to show that it was necessary, which is a very high threshold. Instead, partners will need to be performance-managed more – but law firms have not been particularly accomplished at dealing with these sorts of human resources (HR) issues, especially in smaller law firms where they do not have in-house HR capabilities. Firms will have to get used to telling partners if they are not pulling their weight and bringing in the fees. That will be a crunch point for some.’ Simon Jeffries, an employment partner at City firm Cameron McKenna, agrees. He says: ‘Law firms will need to be more frank and open about their reasoning for getting rid of a partner and record those reasons more carefully. But if you let someone go and you don’t have the objective evidence because you were too soft to make it clear to them, then you won’t have the objective evidence you need and you will be at risk from a discrimination claim.’ He adds: ‘If a partner’s practice area is not performing well, a firm may have to consider offering that partner the opportunity to re-train and be re-deployed to another practice area. The firm won’t be able to just decide it’s not worth it.’ The new law will require a sea- change in solicitors’ attitudes to recruitment, with the post-qualification experience (PQE) requirements specified by many firms as a matter of course taking on a far more sinister aspect. Mr Norman says: ‘When firms are thinking about recruitment, the first thing they look at is years of PQE. It is an entrenched concept that the level of qualification is a central plank of recruitment and reward. But firms need to look carefully at that.’ Norman: firms will need to justify lockstep to encourage loyalty

He continues: ‘It can be reasonable to ask for experience, but firms must be able to demonstrate why they need a particular number of years’ PQE. Five to ten years’ PQE will be a lot more difficult to justify than two to three years, because you are excluding more people. Once you get up to a higher degree of experience, it is better to focus on the actual skills and experience required. What is the real difference anyway between seven years’ and ten years’ PQE?’

Mr Jeffries adds: ‘Instead of saying you don’t want anyone of more than ten years’ PQE, you can simply specify that you will not pay more than, say, £30,000. It will no longer be acceptable to use PQE as a shorthand for what you are looking for – firms will have to be blunter and talk in terms of the value of the position and the career expectations on offer.’


Firms will face some tough decisions to prepare for this legislation, but ultimately they could benefit from taking a fresh, less stereotyped approach to recruitment and promotion. Ms Goss says: ‘This legislation will be a shock for many law firms, and it will have much more impact than the laws against discrimination on grounds of sexual orientation and religious belief, because you are always too old or too young for something. People think you are too young to manage a team, or too old to have fresh ideas. But those kind of stereotypes are not helpful.’

Mr Norman adds: ‘All these issues are manageable as the right systems are put in place. But law firms need to get on top of these issues now and plan for change.’