Ageism in UK and US law firms

Guest blog by Merrill April, a partner at CM Murray specialising in partnership and employment law

April: Should law firms do more to retain older partners?

Wise law firm management committees recognise that the practices, freedoms and restraints that operate across the partner group in a law firm, are essential to its culture and that culture can determine the success of a law firm, perhaps more than any other single factor.

Since several generations are now working alongside each other, even at partner level, there is a greater need than ever for unwritten expectations and unarticulated assumptions to be revealed and discussed; to promote understanding across the generations for the benefit of the firm.

Age is one of those complex issues that has recently come to the fore as a result of a number of factors, including the changing remuneration structures in UK law firms; the merit-based structures in US law firms that attract older successful partners; the rise of the “retireby40” aspiration; and, increasingly, partner awareness that age discrimination law may offer some ammunition to individuals who do not wish to, or are possibly not in the financial position to, bow to unwanted pressure to retire, or to handover clients and valuable contacts.

Associates and junior partners need to be able to see that they have the potential for a long-term career in a business if they wish it, and that their loyalty to the firm will be rewarded, in a respectful and dignified way, later in their careers.

The presence of supportive older partners can go way beyond the potential to benefit from client and referrer introductions, and include the demonstration of skills that are often learned, rather than innate, such as resilience and fearlessness in the face of tough business crises presented by clients’ challenges and global economic upheaval.

Perhaps for this reason, many sophisticated clients are requesting clear evidence of partner diversity as part of client pitches, and firms that present diverse teams are often at a competitive advantage.

The development of legal technology will also mean that the experience and strategic judgement of older partners will be needed to ensure that this technology can be harnessed to best effect, in collaboration with younger partners, who have already embraced it and are keen to invest in it.

Accordingly, firms that fail to address and embrace these diverse factors risk not only losing valuable older partners but also damaging or even destroying the cultural ‘glue’ that has made them successful in the past.

Many UK firms (unlike US firms) continue to have a mandatory retirement age (MRA) in their partnership agreement, often with a discretion to extend, on the same or less favourable terms, and normally limited in time.

Partners reaching that barrier often find themselves forced to challenge the MRA as potential age discrimination and/or seek to negotiate the best terms they can get for a limited extension.

Many also look to move to US and UK law firms and accountancy firms with legal services functions which do not operate a partner MRA; set up on their own with younger colleagues; or join a corporate law firm model to allow them to continue their career.

But should UK firms do more to retain these partners, and what are the additional risks to those firms if they don’t?

Ethical and principled leadership is a powerful tool in a competitive market and as the world of work continues to evolve following the impact of the pandemic, law firms are not immune to the growing need to differentiate themselves from the competition, not only by embracing new ways of working, but also by acting in a principled way. This includes driving, rather than resisting or merely tolerating, flexibility and diversity.

The SRA principles support this type of enlightened leadership as well as providing an enforcement framework in cases of unlawful and unprincipled behaviour. They require firms and individuals to act in a way which upholds the rule of law and encourage equality, diversity and inclusion.

In addition, the code of conduct contains obligations on both firms and individuals to treat others fairly.

The Solicitors Regulation Authority (SRA) has previously made clear that an adverse employment tribunal finding (including of discrimination) would not in itself be a sufficient reason to trigger a regulatory investigation, but there remains the prospect of breaches of the principles and the conduct rules leading to unwanted SRA interest, questions or even an investigation.

So, what are the solutions?

  • Take the time to consult openly with partners at all levels of the partnership about their needs and expectations, including in relation to the MRA and the age at which it is set;
  • Consider fresh options for a fair remuneration structure, based on a view of merit that recognises all contributions and the professional requirements imposed by the SRA on all individuals and the firm itself to treat partners fairly;
  • Consider the statistically proven success of the US meritocracy model in keeping older partners in the partnership, whilst also allowing ambitious partners to progress at any age; and
  • Remember that, as we are all experiencing a seismic change in the world of work, the things that partners of all ages want out of work and what they are willing to invest to achieve that, is unlikely to be the same as it was in the past decade. The most successful firms in the next decade will be those that understand and leverage this to the best advantage for partners of all ages.

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