Changing Aspects of Law Firm Partnerships

In his concurring opinion to Judge Richard A. Posner's Oct. 24, 2002 decision in the much-publicized EEOC v. Sidley Austin, LLP case, commenced by the Equal Employment Opportunity Commission (“EEOC”) on behalf of 32 former partners of Sidley Austin, LLP (“Sidley”) who had been “de-equitized” or forced into mandatory retirement, Judge Frank H. Easterbrook commented that the majority had “missed [an] opportunity,” to clarify the “legal status” of law firm partners and to answer the question, “Can large law firms adopt mandatory-retirement rules?” EEOC v. Sidley Austin, LLP, 315 F.3d 696 (7th Cir. 2002).

In January 2007, the Special Committee on Age Discrimination in the Profession of the New York State Bar Association issued a Report and Recommendation on Mandatory Retirement Practices in the Profession, commenting that the practice of mandatory retirement of law firm partners was “of prime importance.” New York State Bar Association Report and Recommendation on Mandatory Retirement Practices in The Profession (January 2007) (the “NYSBA Report”). The changing demographics of today's law firms bear this out. As the NYSBA Report summarized, until only recently, lawyers over the age of 50 were in the minority ' in 1960, the median age of lawyers was 46. By 1980, baby boomers entered the profession and the median age dropped to 39. As the baby boomers grew older, so did the median age in the profession. And the profession has grown exponentially, from 300,000 lawyers in 1960 to more than one million today. This expansion has been accompanied by a dramatic growth in the size of law firms, and changing expectations and goals for retirement in today's society.

Mandatory Retirement

A 2005 survey conducted by the law firm consultants Altman Weil showed that 38% of the 202 responding law firms required mandatory retirement. Of those, 57% of firms with 100 or more attorneys had mandatory retirement policies, requiring retirement at between 65 and 70. Altman Weil study reported in Leigh Jones, Pitfalls of Law Firm Management Mandatory Rules Could Spark Suits, 5/23/05 Nat'l L.J. 1 (Col. 1) (“Jones”).

Historically, most big law firms have required mandatory retirement. Therefore, many older partners not ready to retire have left a firm with a mandatory retirement policy and moved (frequently with their business) to other firms with no policy. Yet, the undeniable changes in the realities and demographics of law firm practices today is changing this status quo, and causing the profession to address the issue head on.

In January 2007, the NYSBA Report concluded that “[a] lawyer's age, standing alone, is not an appropriate criterion for determining professional capacity or employment status. A blanket policy of mandatory retirement of law partners is, at best, shortsighted. It also short changes not only the individual lawyers but the law firm and society as a whole.” The NYSBA Report ' while explicitly declining to forecast the law ' recommended that mandatory retirement provisions be avoided and that a “senior partner can and should be evaluated individually in accordance with his or her unique attributes and interests and the firm's generally applicable performance criteria, including the full range of strategic and tactical legal abilities and lawyering skills.”

In August 2007, the American Bar Association's House of Delegates approved the recommendations of the New York State Bar Association and also endorsed dropping of the practice of mandatory retirement in law firms.

Against the backdrop of these reports, on Oct. 4, 2007, the Northern District of Illinois So Ordered a Consent Decree entered into in the closely followed EEOC v. Sidley Austin case, in which Sidley Austin agreed to an injunction requiring it to refrain from:

• Terminating, expelling, retiring, reducing the compensation of, or otherwise adversely changing the partnership status of a partner because of age;
• Maintaining any formal or informal policy or practice requiring retirement as a partner, or requiring permission to continue as a partner, once the partner has reached a certain age or age range;
• With the intent to bring about the departure or change in partnership status of a partner because of age, requesting or suggesting the retirement or change in partnership status of a partner in such fashion that a reasonable person in the partner's position would believe that a refusal is likely to bring adverse consequences;
• Requiring partners to cease their service on any firm committee (except the Executive or Management Committees), or as a practice group head, because of age;
• Retaliating against any person seeking relief in regard to the EEOC.

Sidley Austin agreed that for purposes of the resolution of the lawsuit, each former partner “for whom EEOC sought relief in this matter was an employee for the purposes of the ADEA.”

The ADEA

Sidley was decided under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. ' 621(b), and posed the (as yet unanswered) question, in what circumstances is a law firm partner an “employee,” as opposed to an “employer”?

The EEOC itself distinguishes an “employee” from a “partner,” stating that, regardless of title, “[i]n most circumstances, individuals who are partners, officers, members of boards of directors, or major shareholders will not qualify as employees.” See EEOC Compliance Manual ' 2-III (May 2000), quoted in NYSBA Report at 15. The ADEA does not prohibit mandatory retirement for an employee who was either a “bona fide executive or a high policymaking position for the last two years of his or her employment and who is immediately entitled to a nonforfeitable annual retirement benefit of at least $44,000.” 29 U.S.C. ' 631(c)(1).

EEOC v. Sidley Austin

In 2001, the EEOC filed an action seeking enforcement of an administrative subpoena duces tecum pursuant to the EEOC's investigation of Sidley Austin's implementation, in 1999, of a plan changing the mandatory retirement age for partners from 65 to a discretionary retirement age between 60 and 65, in connection with which the law firm demoted 32 partners, 30 of whom were over age 40, to counsel and senior counsel status.

In response, Sidley provided documents showing that it is a partnership and, on that basis, refused to provide documentation regarding the development of its retirement plan or particular information about the partners including the reasons the 32 partners were demoted. Sidley argued that the EEOC lacked jurisdiction to investigate members of the firm, because so long as an individual is a “true partner,” under state law, an EEOC subpoena could not be enforced. The EEOC argued that the 32 partners were covered by the ADEA subject to its own six factor test. In determining whether an individual is an employer or an employee for ADEA purposes, the EEOC considers: 1) whether the organization can hire or fire the individual or set the rules and regulations of the individual's work; 2) to what extent the organization supervises the individual's work; 3) whether the individual reports to someone higher in the organization; 4) to what extent the individual is able to influence the organization; 5) whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and 6) whether the individual shares in the profits, losses and liabilities of the organization. Without deciding whether either standard was appropriate, the district court ordered Sidley to comply with the subpoena in full. Sidley appealed, arguing that an individual was not an employee if he or she met the following four criteria: 1) whether the individual's income included a share of firm profits; 2) whether the individual contributed capital to the firm; 3) whether he or she was liable for the firm's debts, and 4) whether the individual had some administrative or managerial responsibilities.

In October 2002, the Seventh Circuit, in an opinion rendered by Judge Posner, also rejected Sidley's jurisdictional argument and ordered Sidley to comply with the subpoena. The court held that an individual who was a partner for state law purposes may still be an employee under federal anti-discrimination laws. Further, Judge Posner noted that, although Sidley had over 500 partners, “all power resides in a small, unelected committee” of 36 members. He was not persuaded by Sidley's argument that the entire partnership directed the firm because the committee exercised its “absolute power by virtue of delegation by the entire partnership in the partnership agreement.” Judge Posner found that the partners had no management authority, and he found unpersuasive the fact that partners could commit the firm because corporate employees “regularly commit” corporations to liability. With respect to profit-sharing, Judge Posner compared the partners to executive employees of corporations and noted that courts have found shareholders of professional corporations to be employees for purposes of federal anti-discrimination laws. And, with respect to the partners' personal liability for firm debts, Judge Posner recognized it as a characteristic of partnership, but stated it did not dispose of the necessity of considering other factors. Indeed, Judge Posner commented that the 32 terminated partners “were not empowered by virtue of bearing large potential liabilities” when they had no control over the management. One who has no bona fide ownership interest, no right to participate in the partnership's management decisions, or to vote for those who do, and whose compensation is not based on firm profits, appears to be an employee within the meaning of federal anti-discrimination statutes.

As Judge Easterbrook noted in his concurrence, the court did not address the issues directly, and suggested that the Illinois definition of a bona fide partner was the appropriate definition of whether the ADEA applied. Citing Hishon v. King & Spalding, 469 U.S. 69 (1984), Judge Easterbrook noted that the U.S. Supreme Court had assumed that a “bona fide partner of a large law firm is not an employee for purposes of Title VII.” Finding that not every lawyer who was designated as “partner” was necessarily a bona fide partner, but was nevertheless faced with a mandatory retirement age, Judge Easterbrook concurred in the opinion finding that the EEOC was entitled to investigate the policy.

After receiving documents in accordance with the court order, the EEOC determined, pursuant to its six-factor test, that Sidley had violated the ADEA by downgrading some partners, and after some unsuccessful conciliation meetings filed suit on Jan. 13, 2005. In an opinion in 2006, the Seventh Circuit again declined to provide guidance on the broader issue while denying Sidley's motion for partial summary judgment as to the individual relief for the affected partners based on procedural arguments that the EEOC could not sue. In October 2007, Sidley and the EEOC settled the lawsuit, pursuant to the Consent Decree providing for the injunctive relief detailed supra, and also a $27.5 million settlement payment.

'Partnership v. Employee'

Courts considering the “partnership v. employee” question have in the past looked to similar, yet undefined considerations of partnership. In small partnerships, courts generally have found that partners were not employees. Thus, in Serapion v. Martinez, 119 F.3d 982 (1st Cir. 1997), the First Circuit found that the plaintiff law firm partner was not an employee under Title VII, based on a consideration of the relevant categories of ownership, management, compensation based on profits, capital contributions, development of firm policy and liability for firm debts. In Ehrlich v. Howe, 848 F.Supp. 482 (S.D.N.Y. 1999), the Southern District of New York concluded that a law firm partner was not an employee under ERISA, and had a breach of fiduciary duty claim against his firm. In Devine v. Stone, Leyton & Gershman, P.C., 100 F.3d 78 (8th Cir. 1996), the Eighth Circuit found that law firm shareholders were not employees under Title VII, because they owned and managed the business, including participating in firm policy, capital contributions, liability for debts and profit based compensation. In Levy v. Schnader, Harrison, Segal & Lewis, 232 A.D.2d 321 (1st Dep't 1996), the New York Appellate Division, First Department, found that a law firm partner lacked standing to sue for age discrimination under the New York State Human Rights Law because he was not an “employee.” In Ballen-Steir v. Hahn & Hessen, L.P., 284 A.D.2d 263 (1st Dep't 2001), the same court held that plaintiff was a bona fide partner, who could sue under the New York State Human Rights Law based on events occurring when she was an associate, but not events occurring after she became a partner. The considerations in Sidley ' total lack of control ' were not present in those cases.

In a non-law firm context, in Sheeler v. Hurdman, 825 F.2d 257 (10th Cir. 1987), the Tenth Circuit found that a partner in a centrally managed, 500-person accounting firm was not an employee under Title VII, ADEA and the Equal Pay Act, where she participated in the firm's profits and losses, had partial ownership of assets of the firm, was exposed to liability as a partner, had voting rights in the firm, and had an investment in the firm. But, in Simpson v. Ernst & Young, 100 F.3d 436 (6th Cir. 1996), a partner in a centrally managed 2,200-member accounting firm was an “employee” under ADEA, because he “had no bona fide ownership interest, no fiduciary relationship, no share in the profits and losses, no significant management and control, no meaningful voting rights, no meaningful vote in firm decisions, and no job security.” In Caruso v. Peat, Marwick, Mitchell & Co., 644 F. Supp. 144, 717 F. Supp. 218 (S.D.N.Y. 1989), the Southern District of New York held that a “principal” in a centrally managed, 1350-partner accounting firm could be an employee under ADEA where he did not participate in operation and control of the enterprise, his decisions were subject to approval by senior partners, he could not make personnel decisions, and his vote had lesser weight than other principals, inter alia.

Conclusion

Unfortunately for the profession, there is no current, definitive guidance with respect to retirement. The NYSBA determined that “mandatory retirement ' is not an acceptable practice,” as a matter of policy, let alone potential issues created by Sidley. The NYSBA calls mandatory retirement “unwarranted,” “unwise,” and “shortsighted,” and recommends that “best practices” require “flexibility and individual consideration of the needs of both the firm and the individual partner,” and the merits of each individual partner should be reviewed. It may be safe to say that discriminatory practices of all kinds, including age discrimination, should be avoided by law firms which may face either ADEA or breach of fiduciary duty claims in today's climate.

In the wake of Sidley, some have cautioned that law firms which keep mandatory retirement policies “should examine their partnership structures and make sure they aren't too similar to Sidley's.” Martha Neil, Damages Still Hang over Sidley Suit, 5 No. 8 A.B.A.J. E-Report 2 (Feb. 24, 2006). Firms wishing to institute or keep mandatory retirement provisions and to remove their equity partners from the provenance of EEOC and ADEA may consider taking measures to give to those equity partners the “control” that appears to be the touchstone of partnership, ensuring meaningful participation in and voting on decisions affecting the partnership, with an opportunity to voice concerns or objections. Law firm partnerships should hold regular meetings and, to the extent authority is vested in Executive or other Committees, those committees should report to the general partnership, and be regularly elected. While many issues surrounding mandatory retirement remain unanswered in today's environment, they can no longer be ignored.

Leslie D. Corwin, a member of this newsletter's Board of Editors, is a Shareholder at Greenberg Traurig, LLP, resident in the New York office.

In his concurring opinion to Judge Richard A. Posner's Oct. 24, 2002 decision in the much-publicized EEOC v. Sidley Austin, LLP case, commenced by the Equal Employment Opportunity Commission (“EEOC”) on behalf of 32 former partners of Sidley Austin, LLP (“Sidley”) who had been “de-equitized” or forced into mandatory retirement, Judge Frank H. Easterbrook commented that the majority had “missed [an] opportunity,” to clarify the “legal status” of law firm partners and to answer the question, “Can large law firms adopt mandatory-retirement rules?” EEOC v. Sidley Austin , LLP , 315 F.3d 696 (7th Cir. 2002).

In January 2007, the Special Committee on Age Discrimination in the Profession of the New York State Bar Association issued a Report and Recommendation on Mandatory Retirement Practices in the Profession, commenting that the practice of mandatory retirement of law firm partners was “of prime importance.” New York State Bar Association Report and Recommendation on Mandatory Retirement Practices in The Profession (January 2007) (the “NYSBA Report”). The changing demographics of today's law firms bear this out. As the NYSBA Report summarized, until only recently, lawyers over the age of 50 were in the minority ' in 1960, the median age of lawyers was 46. By 1980, baby boomers entered the profession and the median age dropped to 39. As the baby boomers grew older, so did the median age in the profession. And the profession has grown exponentially, from 300,000 lawyers in 1960 to more than one million today. This expansion has been accompanied by a dramatic growth in the size of law firms, and changing expectations and goals for retirement in today's society.

Mandatory Retirement

A 2005 survey conducted by the law firm consultants Altman Weil showed that 38% of the 202 responding law firms required mandatory retirement. Of those, 57% of firms with 100 or more attorneys had mandatory retirement policies, requiring retirement at between 65 and 70. Altman Weil study reported in Leigh Jones, Pitfalls of Law Firm Management Mandatory Rules Could Spark Suits, 5/23/05 Nat'l L.J. 1 (Col. 1) (“Jones”).

Historically, most big law firms have required mandatory retirement. Therefore, many older partners not ready to retire have left a firm with a mandatory retirement policy and moved (frequently with their business) to other firms with no policy. Yet, the undeniable changes in the realities and demographics of law firm practices today is changing this status quo, and causing the profession to address the issue head on.

In January 2007, the NYSBA Report concluded that “[a] lawyer's age, standing alone, is not an appropriate criterion for determining professional capacity or employment status. A blanket policy of mandatory retirement of law partners is, at best, shortsighted. It also short changes not only the individual lawyers but the law firm and society as a whole.” The NYSBA Report ' while explicitly declining to forecast the law ' recommended that mandatory retirement provisions be avoided and that a “senior partner can and should be evaluated individually in accordance with his or her unique attributes and interests and the firm's generally applicable performance criteria, including the full range of strategic and tactical legal abilities and lawyering skills.”

In August 2007, the American Bar Association's House of Delegates approved the recommendations of the New York State Bar Association and also endorsed dropping of the practice of mandatory retirement in law firms.

Against the backdrop of these reports, on Oct. 4, 2007, the Northern District of Illinois So Ordered a Consent Decree entered into in the closely followed EEOC v. Sidley Austin case, in which Sidley Austin agreed to an injunction requiring it to refrain from:

• Terminating, expelling, retiring, reducing the compensation of, or otherwise adversely changing the partnership status of a partner because of age;
• Maintaining any formal or informal policy or practice requiring retirement as a partner, or requiring permission to continue as a partner, once the partner has reached a certain age or age range;
• With the intent to bring about the departure or change in partnership status of a partner because of age, requesting or suggesting the retirement or change in partnership status of a partner in such fashion that a reasonable person in the partner's position would believe that a refusal is likely to bring adverse consequences;
• Requiring partners to cease their service on any firm committee (except the Executive or Management Committees), or as a practice group head, because of age;
• Retaliating against any person seeking relief in regard to the EEOC.

Sidley Austin agreed that for purposes of the resolution of the lawsuit, each former partner “for whom EEOC sought relief in this matter was an employee for the purposes of the ADEA.”

The ADEA

Sidley was decided under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. ' 621(b), and posed the (as yet unanswered) question, in what circumstances is a law firm partner an “employee,” as opposed to an “employer”?

The EEOC itself distinguishes an “employee” from a “partner,” stating that, regardless of title, “[i]n most circumstances, individuals who are partners, officers, members of boards of directors, or major shareholders will not qualify as employees.” See EEOC Compliance Manual ' 2-III (May 2000), quoted in NYSBA Report at 15. The ADEA does not prohibit mandatory retirement for an employee who was either a “bona fide executive or a high policymaking position for the last two years of his or her employment and who is immediately entitled to a nonforfeitable annual retirement benefit of at least $44,000.” 29 U.S.C. ' 631(c)(1).

EEOC v. Sidley Austin

In 2001, the EEOC filed an action seeking enforcement of an administrative subpoena duces tecum pursuant to the EEOC's investigation of Sidley Austin's implementation, in 1999, of a plan changing the mandatory retirement age for partners from 65 to a discretionary retirement age between 60 and 65, in connection with which the law firm demoted 32 partners, 30 of whom were over age 40, to counsel and senior counsel status.

In response, Sidley provided documents showing that it is a partnership and, on that basis, refused to provide documentation regarding the development of its retirement plan or particular information about the partners including the reasons the 32 partners were demoted. Sidley argued that the EEOC lacked jurisdiction to investigate members of the firm, because so long as an individual is a “true partner,” under state law, an EEOC subpoena could not be enforced. The EEOC argued that the 32 partners were covered by the ADEA subject to its own six factor test. In determining whether an individual is an employer or an employee for ADEA purposes, the EEOC considers: 1) whether the organization can hire or fire the individual or set the rules and regulations of the individual's work; 2) to what extent the organization supervises the individual's work; 3) whether the individual reports to someone higher in the organization; 4) to what extent the individual is able to influence the organization; 5) whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and 6) whether the individual shares in the profits, losses and liabilities of the organization. Without deciding whether either standard was appropriate, the district court ordered Sidley to comply with the subpoena in full. Sidley appealed, arguing that an individual was not an employee if he or she met the following four criteria: 1) whether the individual's income included a share of firm profits; 2) whether the individual contributed capital to the firm; 3) whether he or she was liable for the firm's debts, and 4) whether the individual had some administrative or managerial responsibilities.

In October 2002, the Seventh Circuit, in an opinion rendered by Judge Posner, also rejected Sidley's jurisdictional argument and ordered Sidley to comply with the subpoena. The court held that an individual who was a partner for state law purposes may still be an employee under federal anti-discrimination laws. Further, Judge Posner noted that, although Sidley had over 500 partners, “all power resides in a small, unelected committee” of 36 members. He was not persuaded by Sidley's argument that the entire partnership directed the firm because the committee exercised its “absolute power by virtue of delegation by the entire partnership in the partnership agreement.” Judge Posner found that the partners had no management authority, and he found unpersuasive the fact that partners could commit the firm because corporate employees “regularly commit” corporations to liability. With respect to profit-sharing, Judge Posner compared the partners to executive employees of corporations and noted that courts have found shareholders of professional corporations to be employees for purposes of federal anti-discrimination laws. And, with respect to the partners' personal liability for firm debts, Judge Posner recognized it as a characteristic of partnership, but stated it did not dispose of the necessity of considering other factors. Indeed, Judge Posner commented that the 32 terminated partners “were not empowered by virtue of bearing large potential liabilities” when they had no control over the management. One who has no bona fide ownership interest, no right to participate in the partnership's management decisions, or to vote for those who do, and whose compensation is not based on firm profits, appears to be an employee within the meaning of federal anti-discrimination statutes.

As Judge Easterbrook noted in his concurrence, the court did not address the issues directly, and suggested that the Illinois definition of a bona fide partner was the appropriate definition of whether the ADEA applied. Citing Hishon v. King & Spalding , 469 U.S. 69 (1984), Judge Easterbrook noted that the U.S. Supreme Court had assumed that a “bona fide partner of a large law firm is not an employee for purposes of Title VII.” Finding that not every lawyer who was designated as “partner” was necessarily a bona fide partner, but was nevertheless faced with a mandatory retirement age, Judge Easterbrook concurred in the opinion finding that the EEOC was entitled to investigate the policy.

After receiving documents in accordance with the court order, the EEOC determined, pursuant to its six-factor test, that Sidley had violated the ADEA by downgrading some partners, and after some unsuccessful conciliation meetings filed suit on Jan. 13, 2005. In an opinion in 2006, the Seventh Circuit again declined to provide guidance on the broader issue while denying Sidley's motion for partial summary judgment as to the individual relief for the affected partners based on procedural arguments that the EEOC could not sue. In October 2007, Sidley and the EEOC settled the lawsuit, pursuant to the Consent Decree providing for the injunctive relief detailed supra, and also a $27.5 million settlement payment.

'Partnership v. Employee'

Courts considering the “partnership v. employee” question have in the past looked to similar, yet undefined considerations of partnership. In small partnerships, courts generally have found that partners were not employees. Thus, in Serapion v. Martinez , 119 F.3d 982 (1st Cir. 1997), the First Circuit found that the plaintiff law firm partner was not an employee under Title VII, based on a consideration of the relevant categories of ownership, management, compensation based on profits, capital contributions, development of firm policy and liability for firm debts. In Ehrlich v. Howe , 848 F.Supp. 482 (S.D.N.Y. 1999), the Southern District of New York concluded that a law firm partner was not an employee under ERISA, and had a breach of fiduciary duty claim against his firm. In Devine v. Stone, Leyton & Gershman, P.C. , 100 F.3d 78 (8th Cir. 1996), the Eighth Circuit found that law firm shareholders were not employees under Title VII, because they owned and managed the business, including participating in firm policy, capital contributions, liability for debts and profit based compensation. In Levy v. Schnader, Harrison, Segal & Lewi s, 232 A.D.2d 321 (1st Dep't 1996), the New York Appellate Division, First Department, found that a law firm partner lacked standing to sue for age discrimination under the New York State Human Rights Law because he was not an “employee.” In Ballen-Steir v. Hahn & Hessen, L.P. , 284 A.D.2d 263 (1st Dep't 2001), the same court held that plaintiff was a bona fide partner, who could sue under the New York State Human Rights Law based on events occurring when she was an associate, but not events occurring after she became a partner. The considerations in Sidley ' total lack of control ' were not present in those cases.

In a non-law firm context, in Sheeler v. Hurdman , 825 F.2d 257 (10th Cir. 1987), the Tenth Circuit found that a partner in a centrally managed, 500-person accounting firm was not an employee under Title VII, ADEA and the Equal Pay Act, where she participated in the firm's profits and losses, had partial ownership of assets of the firm, was exposed to liability as a partner, had voting rights in the firm, and had an investment in the firm. But, in Simpson v. Ernst & Young , 100 F.3d 436 (6th Cir. 1996), a partner in a centrally managed 2,200-member accounting firm was an “employee” under ADEA, because he “had no bona fide ownership interest, no fiduciary relationship, no share in the profits and losses, no significant management and control, no meaningful voting rights, no meaningful vote in firm decisions, and no job security.” In Caruso v. Peat, Marwick, Mitchell & Co. , 644 F. Supp. 144, 717 F. Supp. 218 (S.D.N.Y. 1989), the Southern District of New York held that a “principal” in a centrally managed, 1350-partner accounting firm could be an employee under ADEA where he did not participate in operation and control of the enterprise, his decisions were subject to approval by senior partners, he could not make personnel decisions, and his vote had lesser weight than other principals, inter alia .

Conclusion

Unfortunately for the profession, there is no current, definitive guidance with respect to retirement. The NYSBA determined that “mandatory retirement ' is not an acceptable practice,” as a matter of policy, let alone potential issues created by Sidley. The NYSBA calls mandatory retirement “unwarranted,” “unwise,” and “shortsighted,” and recommends that “best practices” require “flexibility and individual consideration of the needs of both the firm and the individual partner,” and the merits of each individual partner should be reviewed. It may be safe to say that discriminatory practices of all kinds, including age discrimination, should be avoided by law firms which may face either ADEA or breach of fiduciary duty claims in today's climate.

In the wake of Sidley, some have cautioned that law firms which keep mandatory retirement policies “should examine their partnership structures and make sure they aren't too similar to Sidley's.” Martha Neil, Damages Still Hang over Sidley Suit, 5 No. 8 A.B.A.J. E-Report 2 (Feb. 24, 2006). Firms wishing to institute or keep mandatory retirement provisions and to remove their equity partners from the provenance of EEOC and ADEA may consider taking measures to give to those equity partners the “control” that appears to be the touchstone of partnership, ensuring meaningful participation in and voting on decisions affecting the partnership, with an opportunity to voice concerns or objections. Law firm partnerships should hold regular meetings and, to the extent authority is vested in Executive or other Committees, those committees should report to the general partnership, and be regularly elected. While many issues surrounding mandatory retirement remain unanswered in today's environment, they can no longer be ignored.

Leslie D. Corwin, a member of this newsletter's Board of Editors, is a Shareholder at Greenberg Traurig, LLP, resident in the New York office.