This week, the Supreme Court has convened to hear the landmark case of Leslie Seldon, who took his firm Clarkson, Wright and Jakes to an Employment Tribunal for unlawful age discrimination when he was retired from the partnership at the age of 65.

Whether or not the judgment will uphold the Court of Appeal’s rejection of his claim, the case has already exposed the increased vulnerability of firms in terms of age discrimination issues.

It has also stirred up a hornet’s nest regarding inter-generational career development. The tough question: how can younger lawyers progress if you can’t get anyone to retire?

Impact of the Seldon case

Law firm partnerships have always enjoyed exemption from default retirement age (DRA) regulations. But this has also meant that firms have had to justify their use of a retirement age. While the DRA was in force this was relatively straightforward.

But now the DRA of 65 for UK employees has been repealed, a new playing field looks likely to emerge. Partner or otherwise, it is no longer deemed reasonable to retire somebody purely on the basis of their age.

In the Seldon case, the Court of Appeal held that the firm had legitimate reasons for imposing a retirement age of 65. These included:

1. The firm’s need to promote succession, thus ensuring associates can move up the rungs to partnership;
2. Enabling partnership planning – i.e, accurately forecasting workforce requirements across departments; and
3. Supporting collegiality by avoiding the need for using performance management to exit partners.

However, in the light of the DRA’s repeal this rationale may now be questioned.

Performance management

It’s understandable that a firm might not want to suddenly introduce performance management measures to a partner approaching retirement who has given good service for years.

But where firms have been implementing sophisticated performance management systems against which all lawyers are appraised and rewarded, why should partners approaching retirement age be exempt?

Some might argue such an approach discriminates against younger lawyers, who are penalised if they don’t meet their performance targets – while older partners seem to be allowed to ‘slack off’.

At the very least it might not support the ‘congenial and supportive culture’ that Clarkson, Wright and Jakes have sought to protect with their avoidance of performance management.

Partnership planning

For sure, partnership planning might be easier if you know that everyone will retire at the age of 65. But there are surely a couple of spanners in the works here too.

What about those who choose to retire early? How do you plan for them? And where firms have increasingly tightened their equity structures in recent years, partnership numbers have been in flux anyway.

Another poser: where the whole profession is debating the future of the traditional partnership model, how do you create a solid plan for partner numbers in the long-term?

The big one: succession

A clear line of succession is perhaps the biggest argument in favour of a DRA: it ensures younger lawyers can move up through the ranks by opening up vacancies at the top.

This succession issue isn’t confined to the legal profession. Ditching a mandatory retirement age has long been cited as harmful to the younger generation as a whole, because the whole career ladder is clogged up by people refusing to climb off the top.

There are some solutions coming into view, however. Several law firms in the UK top 30 are now offering older partners who want to stay on alternative opportunities to fee earning, including business advisory or consultancy roles.

This allows older partners to continue to provide valuable expertise –albeit in a different capacity – while also ensuring the succession path is clear.

Such creativity will make it increasingly difficult for firms to use the succession issue as a legitimate reason for imposing a compulsory retirement age.

Going forward

We await the judgement of the Supreme Court in the Seldon case. But what is already clear is that law firms will have to be very careful if they want to retire anyone just because they have hit 65, or any other age.

The risk of age discrimination claims is undoubtedly higher than it was. On the other hand, there is a bigger opportunity to think creatively about retaining the expertise of an older generation, while supporting the aspirations of the young.

The challenge is set. And this one isn’t just to keep out of the Employment Tribunals. It is about thinking hard to resolve a rising tension that could damage inter-generational harmony. CP

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