EEOC: Kelley Drye Compensation System Discriminates Against Older Partners

EEOC Sues Kelley Drye for Age Bias Against Older Partners

Nate Raymond

New York Law Journal

The Equal Employment Opportunity Commission sued Kelley Drye & Warren Thursday for its use of a compensation system that the agency claims discriminates against attorneys based on their age.

The lawsuit, filed in the Southern District of New York, was brought on behalf of labor and employment partner Eugene T. D'Ablemont, 79, and a class of other "similarly situated employees." The EEOC claims Kelley Drye discriminated against D'Ablemont and other partners by forcing them to give up their equity at age 70 and earn less than younger attorneys in the firm with similar collections and billings.

"Law firms that single out older attorneys for adverse treatment simply because of their age run great risk of violating the federal prohibition on age discrimination," Stuart J. Ishimaru, acting chairman of the EEOC, said in a statement. "This lawsuit should serve as a wake-up call for law firms to examine their own practices to ensure they comport with federal law."

James Kirk, the managing partner of Kelley Drye, said the firm does not believe the suit is of any merit, "and we intend to vigorously defend the firm."Employment lawyers said the suit appeared to turn on whether partners like D'Ablemont would actually be deemed employees under federal law."The question of whether law firm partners can be employees under the federal discriminatory laws has been on the radar screen for a while," said Mark Risk, a Manhattan solo practitioner who often represents employees.

The lawsuit comes more than two years after Sidley Austin agreed to pay a $27.5 million settlement to resolve an EEOC suit in Chicago accusing the firm of discriminating against 32 partners on the basis of age. That suit stemmed from Sidley Austin's 2000 decision to de-equitize those partners. A ruling by Judge Richard Posner of the 7th U.S. Circuit Court of Appeals in 2002 held that the EEOC had sufficiently alleged the Sidley partners might qualify as employees. As part of the 2007 settlement, Sidley Austin agreed that "each person for whom the EEOC has sought relief in this matter was an employee."

In the Kelley Drye case, the EEOC claims the employment practices at issue have been in operation since at least 2001. Under the firm's partnership agreement, all lawyers who reach age 70 who want to continue practicing must give up their equity interest and management duties, the complaint states. Senior lawyers are then compensated through an annual bonus whose amount the EEOC says is at the discretion of Kelley Drye's management committee.

The suit is analogous in broad-brush strokes to the Sidley Austin case, said Jeffrey Burstein, a senior trial attorney at the EEOC in Newark, N.J., assigned to the case. "But there are different components to this in the particulars," he said.

D'Ablemont, who remains at the firm, was forced to give up his equity interest after he turned 70, according to the EEOC. From then on, he earned "significantly less than that paid to younger attorneys in the firm with similar client collections, billings, and other measures of productivity," the complaint says.

The EEOC said in a press release that D'Ablemont routinely brought in more than $1 million annually in client fees.

"A law firm's compensation for its attorneys should be based on ability and productivity, not on age-based stereotypes about declining effectiveness," Elizabeth Grossman, regional attorney in the EEOC's New York office, said in a statement.

In 2008, the bonus Kelley Drye paid to D'Ablemont was reduced to $25,000 from $75,000, the complaint says. The reduction came even though D'Ablemont's collections and other productivity measures remained similar to prior years, according to the suit.

The EEOC claims D'Ablemont's bonus was reduced in retaliation for his complaints about the compensation system and for filing a charge with the EEOC. The complaint was filed in February 2008, Burstein said.

The EEOC is seeking a permanent injunction preventing Kelley Drye from further age discrimination and an order that the firm implement and enforce policies providing equal employment opportunities for lawyers over age 40. The agency is seeking back pay for D'Ablemont and other lawyers who were allegedly discriminated against, as well as compensation for D'Ablemont's pain and suffering. It also seeks punitive damages.

Equal Employment Opportunity Commission v. Kelley Drye & Warren, 10 cv 0655, has been assigned to Judge Laura Taylor Swain.

D'Ablemont graduated from Fordham University School of Law in 1959. A management-side labor lawyer, his practice has involved negotiating labor contracts in the television, automotive and health care industries, according to his firm biography.

A review of court records show he remains active as a lawyer. In December, he made an appearance as the attorney-of-record for Boening Bros. Inc. in a lawsuit filed last summer by an employee benefit welfare plan alleging violations of the Employee Retirement Income Security Act.

FOCUS ON AGE

The issue of how to treat senior attorneys was hotly debated in 2006 and 2007, and the New York State Bar Association and later the American Bar Association both recommended the industry eliminate mandatory retirement policies. Some firms, such as K&L Gates, announced they would eliminate their age caps. But since then, the issue has largely faded.

Mark H. Alcott, a partner at Paul, Weiss, Rifkind, Wharton & Garrison who pushed for the elimination of mandatory age rules as president of the state bar, said Thursday that while he thought there had been some changes "for the better," they are far from eliminated.

In a 2008 survey by Altman Weil Publications Inc., 47 percent of firms surveyed had a mandatory retirement age.

"They still exist in a significant number of firms," Alcott said.