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For decades law firms have depended on the orderly retirement of senior partners to make room in the hierarchy for rising stars. But mandatory retirement, and similar policies, are under increasing scrutiny. Earlier this year the U.S. Equal Employment Opportunity Commission sued Sidley Austin Brown & Wood, alleging age discrimination in the firm’s systematic dismissal and demotion of older partners. Now an even greater challenge to firm retirement policies may be emerging. Increasing numbers of older partners who believe they can remain productive are trying to hold onto privileged positions, either by negotiating special arrangements or by decamping to other firms. An ongoing suit by a top partner in the New York office of Chicago-based Winston & Strawn offers a rare glimpse of the challenges facing firms struggling to accommodate both aging rainmakers and the younger partners eager to take their places at the top of the compensation scale. In 2003 Anthony LoFrisco, a 73-year-old partner at Winston & Strawn, sued the firm in a New York court for allegedly breaching an agreement he says would have allowed him to avoid “decompression,” the process by which most partners’ compensation at the firm was reduced each year after age 65. Through decompression, LoFrisco claims his compensation decreased dramatically even as his billings rose dramatically. In 2002, he claims he originated around $10 million and was paid $2.3 million. The following year, he says his billings rose to almost $13 million, but his compensation dropped to $1.3 million. By 2004, LoFrisco claims his billings reached almost $19 million, for which he says he should have received about $4.8 million in compensation. Instead, the executive committee awarded him $350,000. LoFrisco is seeking to recover the amounts he says he is due. Neither LoFrisco nor his lawyer, Michael Carlinksy of Quinn Emanuel Urquhart & Hedges, would comment on the case. Winston & Strawn and its lawyer, Philip Forlenza of Patterson Belknap Webb & Tyler, also declined comment. Leslie Corwin, a partner at Greenberg Traurig specializing in law firm disputes but not involved in LoFrisco’s case, said decompression provisions are a common feature of firm partnership agreements. But he said firms are increasingly willing to cut special deals with their older rainmakers, who have also become prized targets for lateral recruitment. “People are living longer, staying active longer,” he said. “It’s having an effect.” Indeed, older partners have been among the highest-profile lateral hires by firms in recent months. Barry Bryer, 58, recently left Wachtell, Lipton, Rosen & Katz, the most profitable firm in the nation, to join the New York office of Latham & Watkins. He cited Wachtell’s mandatory retirement age as the reason for his departure. Older partners are in demand in part because older clients are sticking around as well. Citigroup Chairman Sanford Weill, 72, recently sought to step down from his position, not to enjoy retirement but to launch a new financial enterprise. And media mogul Sumner Redstone, 82, only just announced he would step down as chief executive officer of Viacom Inc., though he would remain as chairman. Partners who are contemporaries of such business titans have recently been highly sought after, a trend that Jonathan Lindsey, a legal recruiter with Major, Lindsey & Africa, noted was the reverse of the Internet boom of the late 1990s. “Back then, everyone wanted 35-year-old partners who could talk to 25-year-old CEOs,” he said. Though firms in the past had a strong preference for partners in their 40s and early 50s, said Lindsey, few now seem to have qualms about hiring partners past traditional retirement age, provided the partners can still bring along a decent book of business. $100 MILLION IN BILLINGS For many years, LoFrisco’s book of business was more than decent. He claims he has generated over $100 million in billings since he joined Winston & Strawn in 1991, the second-highest total for any partner in that period. The General Electric Co. was his most important client, and LoFrisco claims a close personal relationship with former GE Chairman Jack Welch. LoFrisco said Winston & Strawn’s special agreement with him, drafted in 1994, contained a formula guaranteeing his compensation was equal to at least 13 percent of his origination, a ratio meant to rise as the firm’s profitability increased. The agreement was to expire in 2001, when LoFrisco turned 67, but he claims it was amended that year because he continued to originate a large amount of business. The amendment allegedly required the firm to continue his pay formula and pay him a bonus designed to offset his losses through decompression. Such an agreement would not be that unusual for major rainmakers. Stephen Fraidin, a top mergers and acquisitions partner who left Fried, Frank, Harris, Shriver & Jacobson in 2003 to join the New York office of Kirkland & Ellis, was 64 when he made the move, prompting speculation that he had faced mandatory retirement at Fried Frank. But a source familiar with the situation at Fried Frank said impending retirement was not an issue in Fraidin’s decision because he, as well as another senior partner, Arthur Fleischer, negotiated special arrangements with Fried Frank that let them maintain their high level of compensation well into their 70s. The source said the arrangements had caused some resentment among other partners. Such resentment often centers on the belief that older partners are unfairly maintaining a stranglehold on client relationships and business origination credit that could just as easily go to other partners. Corwin noted that firm partnership agreements frequently obliged senior partners to gradually hand over client relationships to younger partners. LoFrisco’s suit states that Winston & Strawn’s aim in reaching an agreement with him was to induce him to stay at the firm and “institutionalize” his clients there by introducing them to other partners. Winston & Strawn managing partner James Neis and compensation committee chairman Thomas Reynolds allegedly cited complaints from younger partners with large billings as well as high billable hours when they told LoFrisco in May 2002 the firm would no longer continue to compute his compensation in the same manner. In his suit, LoFrisco acknowledges that his value to the firm does not lie in the number of hours of work he is billing. LoFrisco claims he protested the firm’s alleged repudiation of the 2001 amendment but also offered to bill 1,500 hours a year that he would otherwise have spent on non-billable client development. Reynolds allegedly replied that that would not be a good idea for “a man of [LoFrisco's] age.” CLIENT RELATIONSHIPS Employment lawyer Pearl Zuchlewski of Goodman & Zuchlewski said transitioning client relationships among partners was a frequent source of conflict within firms, exacerbated by frequent turnover on the client side. “In-house counsel used to be a sinecure,” she said. “Now in-house people change so rapidly.” She noted partners also had a harder time maintaining client relationships as corporations insisted on strict policies for retaining counsel. Indeed, LoFrisco’s chief client, GE, has been a leader in implementing bidding processes for legal service providers and otherwise forcing firms to compete with one another on price and other factors. A senior partner’s ability to claim credit for business origination on work often mainly performed by others is also at issue in a suit filed last year in Manhattan Supreme Court against Coudert Brothers by the estate of former antitrust partner Gordon Spivack. Spivack, who died in 2000 at 71, joined Coudert in 1986, bringing a large practice from the now-defunct Lord, Day & Lord. One of Spivack’s major clients was the Coca-Cola Corp., and a 1995 agreement allegedly guaranteed him 10 percent of all fees on matters in which he was designated originating partner as well as 50 percent of his own time charged. But Spivack’s suit claims the firm stopped following the agreement in 1997, when Coca-Cola antitrust matters in Paris previously listing Spivack as originating partner were attributed to other partners. Spivack’s estate is now seeking $240,000 of the $2.4 million in fees it says Coudert Brothers’ Paris office collected from Coca-Cola in 1997 and 1998. An older partner at a top firm who asked to remain unnamed said such disputes are the firms’ fault. He said most placate younger partners by dangling the carrot of higher compensation as they age. But later, firms try to lower older partners’ compensation as quickly as possible. Moreover, he noted, despite the increasing number of active older partners, there remains a large percentage whose productivity does decline with age. It is partners like these, unable to negotiate special exemptions, who are at issue in the EEOC’s suit against Sidley Austin. The EEOC began investigating Sidley Austin in 2000, shortly after the firm demoted more than 32 partners. The agency contends that virtually all of those lawyers, most of whom were in their late 50s and early 60s, were involuntarily demoted because of age. At issue in the closely watched case is whether partners at large firms run by unelected executive committees should be classified as “employers,” and thus be exempt from federal anti-discrimination laws, or as “employees” protected by such laws. The suit could result in millions of dollars in back pay to former Sidley Austin partners and force large centralized law firms to adopt radically different management structures and practices.
Anthony Lin is a staff writer for the New York Law Journal , an ALM publication.

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