EEOC: Mandatory Retirement Policy Violates Age Discrimination ActBy Elenore Cotter Klingler, Litigation News Associate Editor – March 25, 2010
Law firms hoping the attention around de-equitization of partners and mandatory retirement will soon blow over are likely to be disappointed. The federal Equal Employment Opportunity Commission (EEOC) recently filed suit against a law firm, claiming that the firm’s practice of de-equitizing partners after age 70 violates the Age Discrimination in Employment Act. EEOC v. Kelley Drye & Warren, LLP [PDF].
In its complaint, the EEOC alleges that Kelley Drye partner Eugene D’Ablemont was forced to give up his equity in the firm after he turned 70 and forced to accept instead an annual bonus set by the firm’s management committee.
After D’Ablemont brought a discrimination charge, the EEOC claims that his bonus was reduced by two-thirds in retaliation for his complaint. At press time, Kelley Drye’s response to the complaint had not yet been filed in this case. Firm managing partner James Kirk declined to comment, citing the early stage of the litigation.
Making the Transition
The question of how to transition older attorneys to a less active role within a firm is not a new one. According to a 2005 Altman & Weil survey for the National Law Journal [subscription required], 37 percent of law firms nationally and 57 percent of law firms of more than 100 lawyers have mandatory retirement policies.
The issue gained national attention among lawyers in 2002, when the Seventh Circuit Court of Appeals issued an opinion in EEOC v. Sidley Austin Brown & Wood . In that case, the EEOC subpoenaed records from Sidley Austin in support of an investigation into its de-equitization policy. The firm objected to the subpoena, claiming that as a partnership, it was exempt from the Age Discrimination in Employment Act.
The court did not directly decide the issue, but its opinion strongly questioned whether individual partners at Sidley Austin were truly “employers,” given that they had virtually no control over the management of the firm. The case was settled in 2007 for $27.5 million.
The declining state of the economy may well be keeping some partners who had intended to retire at their desks. Although she would not comment on the Kelley Drye case, Elizabeth Grossman, New York, a regional attorney for the EEOC, notes that “modern medical advances in combination with changes in the economy are making people interested in working longer.”
The issue of retirement is “a quandary for law firms,” says P. Arley Harrel, Seattle, cochair of the ABA Section of Litigation’s Employment and Labor Relations Law Committee. Under current law, full partners who qualify as “employers” can be terminated without involving the Age Discrimination in Employment Act, but when firms try to slowly transition older partners to retirement, partners “can start looking like employees,” Harrel says.
Harrel recommends instead that firms look at partners on a case-by-case basis. “How does your productivity look?” he asks.
The issue is not limited to the largest law firms, notes Harrel. Any time a firm moves away from the iconic image of law firms, where a handful of partners share the profits and make consensus decisions, the question of who is an employer can arise.
Some firms may decide to follow the lead of K&L Gates, which formally abandoned its mandatory retirement policy in 2007.
“Employers are seeing that mandatory retirement policies are not in their own interest,” observes Grossman.
ABA Opposes Mandatory Retirement
The ABA House of Delegates formally adopted a policy [PDF] opposing mandatory retirement in 2007. The resolution, which passed by voice vote but was not unanimous, paralleled a report [PDF] by the New York State Bar Association and recommended that firms end age-based mandatory retirement programs. Instead, the report endorsed programs that would individually evaluate partners using performance-based measures.
With the oldest baby boomers now reaching age 65 and likely to be 20 percent of the population by 2030 [PDF], it is clear that the issue of attorney retirement is not going away.
Harrel recommends that firms find a balance that benefits everyone. “They have to think what’s best for the law firm, for society, for clients, and form policies,” he says. “As long as you have your mental faculties and some clients you can work for, you’re still being useful,” Harrel opines.
Keywords: mandatory retirement policy, age discrimination, de-equitization of partners, EEOC v. Kelley Drye & Warren, LLP, EEOC v. Sidley Austin Brown & Wood
- » David B. Wilkins, Partner, Schmartner! EEOC v. Sidley Austin Brown & Wood, 120 HARV. L. REV. 1264 (2007).
- » Leslie D. Corwin, Changing Aspects of Law Firm Partnerships, L. FIRM P’SHIP & BENEFITS REP. (Jan. 2010) [PDF].
- November 10, 2010 – My city adopted the manditory retirement policy for police and fireman. One officer who stayed under the old city plan of retirement refused to leave when his age was reached. The city attorney told him that even if he was under a different retirement plan, the age the city adopted would force him to retire. (60 officer,62 admin). They requested a ruling from the State Attorney General and he said that he did not have to leave because the retirement system he was in was not controled by the system the other people was in, and the age did not matter. My queation is why does one employee age not recognized and the other is. Can the city adopt a age for some and not for others doing the same job. I think this is age discrimination because the same retirement plan that the city adopted for the yonger officers is the same plan I am in that was discontinued years ago. When I asked why I had to leave because I didn't have any benefits other than having to leave at 62. What do you suggest.