Legal News

Kelley Drye Hit With Age-Bias Suit; More on the Way For BigLaw?

By Ashby Jones

Do law firms’ mandatory retirement policies for partners violate federal law?

While it’s somewhat hard to believe, the courts haven’t fully settled on this. Specifically, it’s unsettled whether partners are more like part-owners or “employees” subject to federal anti-discrimination laws.

The most high-profile case to test the waters, involving the EEOC and Sidley Austin ended in 2007 with the firm paying $27.5 million to 32 former partners. The case had previously gone up to the Seventh Circuit, but the panel, led by Richard Posner, declined to put forth specific criteria for determining when partners are employees, and when they’re something else. (Click here for a recent article by Greenberg Traurig’s Les Corwin on the rather uncertain state of the law.)

Well, the issue could get another hearing, albeit in a different court. On Thursday, the EEOC sued New York’s Kelley, Drye & Warren, alleging that the firm’s policy of de-equitizing partners upon their 70th birthdays violated the Age Discrimination in Employment Act. Click here for a copy of the complaint, filed in federal court in Manhattan.

The firm did not immediately respond to a request for comment.

The complaint alleges that under Kelley Drye’s partnership agreement:

all attorneys who reach the age of 70 and wish to continue to practice law [must] give up any equity interest they may have with Defendant; relinquish their authority to manage or significantly influence the firm; and be compensated for their work performed solely on the basis of an annual “bonus” payment that is wholly discretionary with Defendant’s Executive Committee.

The plaintiff, Eugene T. D’Ablemont (who still appears to be employed at Kelley Drye), claims that after he hit age 70, he “received compensation from Defendant that is significantly less than that paid to younger attorneys in the firm with similar client collections, billings, and other measures of productivity.”

Commentators in recent years have pointed to this issue as one which could really hinder law firms going forward, were the courts start to rule that partners are more akin to employees than owners.

Even prior to the recession, more partners were working later in life, some well into their 70s. If the law starts cutting against them, firms might have to start either buying partners out with big packages or continuing to give them their annual equity slice.

Full post as published by Law Blog - WSJ.com on January 28, 2010 (boomark / email).