So, will this be the year you retire? Will it have to be? Two major cases in Canada and England last year upheld mandatory retirement clauses in law firm partnership agreements, in seeming contrast to a 2007 case in the US. All three put into play some serious questions about the life cycle of the traditional law firm partnership, and how we define a life at – and beyond – work.
The key legal question has been essentially the same in all three countries: are law firm partners employees? And, if so, are their partnership agreements covered by human-rights provisions barring age discrimination? With the general abolition of mandatory retirement, the question also had consequences for accounting and consulting practices. Equity partners might be able to stay on as “counsel,” but firms have argued consistently that the entire business structure is predicated upon renewal that mandatory retirement permits.
In the first of our cross-border case trilogy, a 30-year partner in the Vancouver office of a major national firm challenged the firm's mandatory retirement provision at age 65 before the BC Human Rights Tribunal. In a unanimous judgment, the Supreme Court of Canada upheld the status quo. The court held that the tribunal had no jurisdiction over the case, as the partner in question had status that allowed him to exercise too much control over his workplace to be considered an employee under the protection of the BC Human Rights Code.
The UK case arrived at effectively the same outcome, but in a different way. In 2006, a solicitor brought a challenge against his firm after being asked to leave at the age of 65. Before the case could be decided, the UK government took it upon itself to abolish mandatory retirement. Exceptions, however, were allowed if they could be justified on the grounds that they were “proportionate means of achieving a legitimate aim.”
The UK Supreme Court decided in 2012 that the firm did indeed have such “legitimate aims,” and the case went back to the Employment Tribunal to rule on the appropriate age. After yet another appeal, the Employment Appeal Tribunal held that a narrow range – 64-66 – was “reasonably necessary” and 65 was fine as chosen.
Both of these decisions seem to run counter to the 2007 settlement reached by the US Equal Employment Opportunity Commission (EEOC) for $27.5 million on behalf of 32 former members of the Sidley Austin LLP law firm. In 1999, an “operational restructuring” had reduced its mandatory retirement age from 65 to a sliding scale between 60 and 65. Nearly three dozen partners were forced to depart or accept demotions from equity partner to “counsel” or “senior counsel.”
A 2002 decision by Judge Richard Posner from the US 7th Circuit Court of Appeals pointed to the firm's highly centralized management structure. In essence, he held, an individual technically classified as a “partner-employer” under state partnership law might still be considered an “employee” for federal anti-discrimination purposes, and therefore protected by the Age Discrimination in Employment Act.
All of these cases grapple with what is both an institutional and a highly personal decision: when should someone retire? When do the interests of the firm in renewal clash with what an individual thinks can be their continuing contribution? Perhaps the answer lies in what you do with retirement. For lawyers in large firms whose focus for years has been the billable hour, and whose identity is almost singularly defined by their professional status, it's no wonder that they've been way too busy to consider anything else.
If “Freedom 55” isn't completely illusory, then preparing for retirement – whether mandatory or voluntary – is essential. So maybe this new year's resolution can be to at least start thinking about it. And that will be one important step forward.
Paul Paton is the Wilbur Fee Bowker Professor and Dean of Law at the University of Alberta. He can be reached at [email protected].
