Law Practice Today

Law firms are not exempt from the legal requirements to operate a workplace free from discrimination.  That means ensuring that characteristics other than an individual’s skills, experience and knowledge do not become factors in making employment decisions.  However, firms by their traditional nature as partnerships are often highly subjective and personalized environments, in which employment decisions are more arbitrary than the law allows.  Consider your firm in light of the following trends and considerations for various types of firm members and ask yourself if your treatment of similar individuals can be considered fair and unbiased.  If not, you may well be risking a discrimination lawsuit.

Partners

Historically, law firm partnerships have not been subject to discrimination laws because partners, as the co-owners of an enterprise, were considered employers, and therefore did not have protected status.   However, early in 2005 the U.S. Equal Employment Opportunity Commission filed a class action lawsuit against the megafirm today known as Sidley Austin.  The suit alleged that the firm had maintained an illegal "age-based retirement policy" since at least 1978 and had arbitrarily forced out 32 partners (all older than 40) in 1999.

The EEOC alleged that the "retired"/"fired" lawyers were partners in name only because they had no voice in the firm's management — including hiring, firing and salary decisions.  The rationale was that, as at other large law firms, governance had fallen to a very few in the organization ("the management committee"). The remaining "partners" thus become de facto “employees,” not owners.  Consequently, as employees, the lawyers were entitled to the protections of the Age Discrimination in Employment Act (ADEA).

In October 2007, the defendant reached a settlement with the EEOC in which it will pay $27.5 million to the 32 lawyers.  Far more significant are the terms of the settlement agreement.  The firm agreed, “that each person for whom the EEOC has sought relief in this matter was an employee within the meaning of the ADEA.”  Moreover, the agreement also bars the firm to the end of 2009 from “terminating, expelling, retiring, reducing the compensation of, or otherwise adversely changing the partnership status of a partner because of age.”

The message seems clear.  However, it is absolutely fascinating that firms are not addressing this issue with greater urgency. In fact, many firms are still adamant that their mandatory retirement age will not change. They are still of the mind to de-equitize partners on reaching a given age, usually between 62 and 70.  More claims of wrongful termination may be the inevitable result.

Associates

Associates are employed at will and should realize that they cannot and will not remain with their firm unless it is profitable for the firm to keep them – if not for every month, then on an annualized basis.  While new, high-priced associates may not earn more than they cost the firm in the beginning, at some point that situation must change. In fact, large-firm managing partners agree that it takes, on average, from three to five years to break-even on the investment in a new lawyer.  The associate's responsibility is to do the work assigned in the most effective and efficient way possible, and in the shortest amount of time. Fulfilling this responsibility in a way that produces net profits for the firm is the standard to keeping an associate's job.

If a law firm feels it’s necessary terminate an associate who has not attained the level of desired quality, written standards that define a lack of or deterioration in performance are essential.  Associates may have their expectations set too low about how they’ve performed against the standard, particularly when the firm did not explain clearly what kind of performance is expected as a financial and service baseline.  That can be problematic for those firms that don’t believe in sharing financial information with associates. Ultimately, sharing of such information benefits the firm as a whole because it gives associates the means to understand their place in the profit and loss calculation – and to accept the inevitable if they are deemed to fall short of the standard.

Senior Administrators

An administrator or executive director one day is told by the managing partner that he/she will no longer be employed by the law firm. Is this action arbitrary?  Often what’s lacking is a written statement of the firm’s responsibilities to the administrator.  These responsibilities should foster the communication and accountability necessary to effectively evaluate the administrator.

Measurements for success must be clearly defined in the statement so that the administrator understands the criteria by which the firm will make its evaluation.  The following elements can shape the understanding:

• If there are certain organizational criteria for success – profits per partner, revenue growth, and number of clients – it must be clear which ones are considered to be within the administrator’s control, and which ones are not.
• The administrator must be told specifically what he or she must do, and how performance of those responsibilities will be evaluated.
• There should be precise definition of the administrator’s base level of compensation, and precise definition of bonuses or other additional compensation if the measures for success of the administrator are met or exceeded.

Such clarity allows each party to understand and focus on its real areas of responsibility.  The senior administrator is responsible for profits, organization and efficiency.  Senior lawyers (whether as Managing Partner or as an Executive or Management Committee) are responsible for the strategy and future growth of the firm.  These are two separate and equally important roles.  Spelling them out clearly is the best way to ensure that employment decisions affecting the administrator are not viewed as arbitrary.

Administrative Staff

A sure way to create conflict with staff is to allow the impression that people are being treated unfairly.   Often the perception of unfairness is created inadvertently in one of two ways:

• Failure to understand legal requirements.  What firms don’t know about their legal responsibilities really can hurt them.  For example, federal law requires that employers affirmatively support and reasonably accommodate an employee’s religious beliefs in the workplace.  Efforts to “spare” a female employee from travel and the resulting childcare expense could support sexual discrimination claims under the Equal Pay Act, Pregnancy Discrimination Act and Family Medical Leave Act.  Welcoming back a reservist from active duty while expressing the hope that military leave won’t be necessary again risks violating the Uniform Services Employment and Reemployment Rights Act These are just a few of many possible examples where the burden of compliance is fully on the firm.  A law office must treat all employees in a non-discriminatory manner as defined by law.
• Failure to develop clear job descriptions. Having a comprehensive job description for every staff position in the law office is essential to avoiding allegations of unfairness.  The absence of such descriptions promotes inconsistency and threatens objectivity.  Descriptions should include the specific, significant tasks of each position and the performance standards by which the accomplishment of these tasks is judged.

The Bottom Line

The requirement that a law office, like any other business, must treat all employees in a non-discriminatory manner as defined by law would seem reinforced beyond question.  As law firms take on more characteristics of their corporate clients, they will have to adhere to the same business principles required of their clients and they will have to comply with all the laws applicable to their clients.  Failure to do so risks penalties that could jeopardize the firm’s existence.