Professional Practices: lockstep system of remuneration 'could be discriminatory'

A large number of professional practices - including many law firms - are ill-prepared for forthcoming age discrimination legislation, research has revealed.


The legislation, which takes effect from 1 October 2006, outlaws direct and indirect age discrimination as well as age-related victimisation and harassment.


A survey of 113 practices - around two-thirds of which were law firms - found that 34% maintained there was no need to amend their partnership agreement to take into account the changes. A further one in ten admitted that they did not know if it was necessary to make any changes.


Just 12% of respondents said their partnership agreement was under review, while 44% acknowledged that they needed to make changes.


Simon Mabey, chairman of the professional practices group at accountancy firm Smith & Williamson, which commissioned the survey, said: 'The worrying truth is that it looks as if [many] professional firms may not have appreciated the far-reaching implications of this legislation - not to mention the time it takes to update a partnership agreement. Few firms will be untouched by the new rules.'


Tina Williams, senior partner of City firm Fox Williams and a partnership specialist, said the number of firms that recognised action needed to be taken was 'incredibly low'.


Ms Williams warned that a lockstep system of partnership remuneration in particular could be seen as discriminatory, either against younger lawyers 'as it operates on grounds of length of service', or against older lawyers because 'there are lots of lockstep systems where partners reduce down the lockstep in the years preceding retirement'.


Almost two-thirds (63%) of respondents said partner promotions in their firm are influenced by seniority, while half also said that partner remuneration reflects seniority.


However, Ms Williams added that lockstep could be justified as having a legitimate aim, for example in acting as a loyalty payment to partners who have contributed to a practice's goodwill over a long period. 'The real question for lockstep is whether it is proportionate or not,' she said.


Ms Williams warned that damages 'might be very considerable' if the forcing out of a partner is later found to be discriminatory.


She also advised that firms tempted to cull partners ahead of the October deadline ran the risk of breaching the duty to act in good faith.


Ms Williams recommended that firms reassess their criteria and procedures for recruitment, promotion and appraisal.


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