Seven partners at Mendes & Mount have departed to launch a boutique after at least one of the partners failed to persuade the firm to amend its mandatory retirement policy.
The new firm, Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, consists of the bulk of Mendes & Mounts' aviation practice and will have offices in New York and Los Angeles, said partner Ralph V. Pagano. The firm will be made up of 24 lawyers from Mendes & Mount, including the partners, one of whom joins as special counsel. Mendes & Mount will be left with about 109 lawyers.
"It's a pretty big break-off," Pagano said.
Anthony Spain, the chairman of Mendes & Mount, said in an e-mail that the firm "continues to have a strong and viable aviation practice group and we anticipate that the departures will have a minimal or negligible impact on the ongoing business of the firm." The firm's website lists three lawyers in the practice. John P. Falcone, now at Biedermann, Reif, Hoenig & Ruff in Manhattan, confirmed Monday he will join Mendes as an equity partner this week to head the aviation practice. He declined further comment.
Fitzpatrick & Hunt will focus primarily on representing aircraft product manufacturers in products liability suits. Garrett J. Fitzpatrick in New York will be managing partner. Pagano said all of their clients and most matters have followed them to the new firm.
While the Mendes & Mount partners left for various reasons, Pagano said one of the main issues stemmed from the firm's policy of requiring partners to retire at 65.
In December, the most senior member of the group, James W. Hunt, was forced to retire and become a contract partner, according to Pagano. Three years earlier, Hunt was relieved as head of the practice in the Los Angeles office after hitting 62, which Mendes maintains as a "step-down" age," Pagano said.
Meanwhile, Fitzpatrick, who headed the practice in New York, was set to hit 62 this year, which would mean stepping down as leader of that group, Pagano said.
Hunt had discussed with Mendes & Mount's management committee last year whether it could amend the partnership agreement to eliminate the retirement policy, according to Pagano.
"They were not receptive to it," he said.
The aviation partners gave notice March 9 and then solicited clients and staff about joining them at their new firm. The group was advised by Arthur Ciampi, a partnership law expert at Ciampi LLC in Manhattan and a New York Law Journal columnist.
The events at Mendes & Mount come at a time of renewed attention to mandatory retirement policies. In January, the Equal Employment Opportunity Commission sued Kelley Drye & Warren for age discrimination over its policy of de-equitizing partners at 70.
Both the New York State Bar and the American Bar associations in 2007 came out against the policies, with advocates contending they discriminate against older lawyers. But while a few firms dropped the requirement, many in New York and nationally continue to enforce them. A 2008 survey by Altman Weil Publications Inc. found that 58 percent of responding firms with more than 100 lawyers had a mandatory retirement policy.
James Cotterman, a consultant at Altman Weil, said what happened at Mendes & Mount was "certainly consistent with the risks firms face if they don't address mandatory retirement," that partners who still had the interest and ability to keep working would seek out opportunities to continue to do so, possibly taking business with them.
"I would have probably expected them to take [their practice] to another firm," he said. "But certainly if the practice is sufficient enough and they have a team of people who support that practice," Cotterman said, departing attorneys could start their own firms.
Like other firms, Mendes & Mount adopted its retirement policy so that younger partners would not face a "logjam" as they climbed through the ranks, said Pagano.
He said while the mandatory retirement age was a factor for Hunt and Fitzpatrick, there were different concerns for other partners. In his case, Pagano said he saw the opportunity to launch a more nimble firm.
"It should allow us to be more aggressive with flat fees and alternative fees, which many of our clients are demanding," he said.
Ciampi said that in the past 18 months he has seen an uptick in advising lawyers interested in spinning out of large firms and creating boutiques.
Five-partner Chaffetz Lindsey launched in May 2009 with partners from Clifford Chance in New York. In September, four-partner Molo Lamken opened in New York and Washington, D.C., with lawyers from Shearman & Sterling and Baker Botts.
"I think they feel they could do it better themselves," Ciampi said.