Legal Village

Tribunal appeal reignites partner age discrimination debate

Posted 28/07/2008 by Clare Murray

Recent age discrimination challenges highlight clearly that age discrimination remains a thorny topic for law firms. Although firms may have thought the finishing line was in sight when the Bloxham v Freshfields decision was published last year, it is apparent that there is still a long way to go.

Leslie Seldon, who spent 35 years at the law firm of Clarkson Wright & Jakes (CWJ), has appealed against the Employment Tribunal’s (EAT's) decision that the firm was justified in mandatorily retiring him at 65; the EAT has just been hearing his appeal. The case coincides with the Heyday case in the European Court of Justice this month, which challenges the legitimacy of the Government setting a default retirement age of 65. While that default retirement age does not apply to partners, the age debate and its impact on law firms is still very much alive.

Seldon’s case revolves around whether a compulsory retirement age in a general partnership deed is unlawful discrimination on the grounds of age. The firm argued that the expulsion of Seldon from the partnership when he reached 65 was objectively justified as a proportionate means of achieving a legitimate aim. Some of the aims which the Tribunal at first instance accepted as being legitimate included: ensuring that associates were given the opportunity to become partners by reducing partner numbers and limiting the need to start partner performance management, which they said would affect the friendly and congenial atmosphere of the firm.

In his appeal (backed by the Equality and Human Rights Commission and Age Concern), Seldon is challenging the Tribunal’s rationale that a compulsory retirement age allows younger lawyers the opportunity to be promoted to partner. Part of the appeal centres on whether there are other ways in which the same aim could have been reached. Seldon’s barrister has asked why his client was not given an opportunity to be a consultant rather than immediately expelled. Indeed, it is difficult to understand how Seldon’s removal from the partnership was a proportionate means of achieving a legitimate aim. One would have expected consideration of alternative solutions such as allowing him to continue beyond the age of 65 subject to the usual performance review, part time working and pro-rata profit sharing, even de-equitisation if necessary, among others.

As the Bloxham case showed us, the threshold for objectively justifying age discrimination is high; Freshfields went through an extensive consultation with their partners before ultimately changing its pension scheme. On an initial view, it does not appear that CWJ set such a standard in dealing with Seldon’s position.

Seldon is also appealing the Tribunal’s finding that the firm’s aim of creating a congenial atmosphere was better achieved by having a mandatory retirement age than by following a performance management process. Central to this argument is the assumption that when partners reach the age of 65 (or whatever lower retirement age applies in the particular partnership), they are no longer able to perform their duties to the required standard.

In reaching its conclusion, the EAT will need to consider ways in which a law firm should manage the situation of those sufficiently high performing partners who have reached the partnership’s normal retirement age but who wish to continue working, compared to their peers who also wish to remain in partnership but whose performance does not meet the expected standard for partners in the firm.

Therefore, law firms are not yet in the home strait on age claims despite Freshfields’ high profile win. They should still have clear rationale for any decisions that they take and look at other possible ways of achieving their end objective. In defending an age discrimination claim, a law firm will be expected to have considered a range of solutions such as flexible targets, alternative roles, different profit sharing arrangements, and possibly de-equitisation. It is likely to be a rare case indeed where expulsion from the partnership will be justified without consideration of a range of options and appropriate consultation with the partners affected.

Law firms also need to use appropriate measures to reach that aim. A recent discrimination decision against the GMB union emphasises the importance of employers not using underhand tactics to reach their goal. Even if a firm has an objectively justifiable aim, the unfair use of pressure or aggressive tactics may damage their defence.

We, therefore, await the decision of the EAT with interest – if Seldon succeeds, law firms will need to reassess their own internal processes as partners approach 65. Even if he loses, the case may well fight on to the higher courts. The more relaxed, laissez-faire approach that the decision in Bloxham bizarrely seems to have engendered among senior management in a number of firms is likely to be an expensive strategy which can harm both the firm’s reputation and profits per equity partner. Managing the risk of partner age discrimination claims should remain high on executive committee agendas.

Clare Murray and Charis Damiano are partners at CM Murray, a specialist employment and partnership law firm