The controversial issue of retirement policies at law firms has come to the forefront again, as another partnership finds itself in the crosshairs of the federal government's discrimination watchdogs.
The U.S. Equal Employment Opportunity Commission sued Kelley Drye & Warren for age bias on Thursday for its practice of requiring partners who turn 70 to give up their ownership interests in the firm.
The case comes about five years after the EEOC hit Chicago-based Sidley Austin with a lawsuit on behalf of 32 former partners after they had been "de-equitized," or forced out of the partnership because of their age. While the Sidley suit was much publicized, it did not resolve the question of whether mandatory-retirement rules for partners violated federal law. Sidley settled the case in 2007 by paying $27.5 million to the 32 ex-partners.
"With so many baby boomers reaching traditional retirement age, (retirement policies) are probably one of the biggest issues facing law firms today," said Leslie Corwin of Greenberg Traurig, who advises law firms on partnership law. "Some firms have a policy, some don't."
The firms that don't have formal policies may have more informal ways of encouraging aging partners to leave voluntarily.
The suit against Kelley Drye, similar to the Sidley case, will likely hinge on a central question of whether partners have unique status or are employees, and thus protected by federal statutes that ban age discrimination.
Forced-retirement practices may be hard to defend in big law firms that are centrally managed, where most partners do not participate in decision-making, employment lawyers say. In such a governance structure, partners could be considered employees.
Even before the Sidley case, courts have found that partners in large accounting firms who had no meaningful vote in firm decisions and no job security were "employees."
At New York-based Kelley Drye, which has a Chicago office, partners who reach 70 become "life" partners and receive annual payments similar to pension benefits, according to EEOC officials. Those who continue to practice also are eligible for a yearly bonus at the discretion of the firm's executive committee.