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In a case the big law firms have been watching for years, the Equal Employment Opportunity Commission (EEOC) sued Sidley Austin Brown & Wood last week, charging that the firm discriminated against 31 partners when it expelled them from its partnership. Though EEOC lawyers emphasized in an interview that the case is about one law firm, not an industry, a law professor who is an expert on partnerships called it “an important case” that is going to have “profound implications across the world in law firms.” The partners were permitted to remain with the firm if they accepted their demoted status. All were older than 40 at the time; 18 were over 50, an EEOC lawyer said. They were targeted, the suit alleges, solely due to their age. The government seeks reinstatement or front and back pay, and various forms of injunctive relief. EEOC v. Sidley Austin Brown & Wood, No. 05 C 0208 (N.D. Ill.) THE CRITICAL ISSUE The key issue, both sides agree, is whether the law firm’s partners are actually employees, and therefore entitled to protection under the Age Discrimination in Employment Act. “If you look at the way the law evolved,” said Robert Hillman, the expert on partnerships who is a professor at the University of California, Davis School of Law, “partners were not covered by anti-discrimination laws because they are employers. They control the firm.” The EEOC contends, however, that Sidley’s partnership is different. The complaint contains few details, but EEOC attorneys elaborated in interviews. John Hendrickson, regional attorney in the EEOC’s Chicago office, which brought the suit, said the investigation began after “a confidential government informer from within Sidley” complained about the 1999 demotions. Periodic media coverage tracked the investigation, which large firms have followed closely. “I will tell you anecdotally,” Hendrickson said, “that while this matter became publicly known, people would say, ‘All these big firms have management committees now.’” Hendrickson responded by asking: “Do those other firms have committees where no one ever gets to vote on anything — even who sits on the committees? That usually stops them in their tracks,” he said. A 2003 Supreme Court decision ( Clackamas v. Wells, 123 S. Ct. 1673) supports his agency’s contention, he said, that calling someone a partner does not a partner make. Sidley, the nation’s fifth-largest law firm (with about 1,600 lawyers), responded in a prepared statement: “The firm has always been committed to a policy of equal opportunity and non-discrimination. We will vigorously defend against the EEOC action, which has no merit.” In one of many briefs the firm filed in an attempt to quash the investigation, it argued that no court has ever found a partner in a professional partnership to be a covered ‘employee’ where partners shared in profits and losses, were liable for partnership debts, contributed significant capital and could bind the firm. Real estate attorney David Alan Richards, one of the demoted partners, has worked as an associate at Paul, Weiss, Rifkind, Wharton & Garrison; as a partner at Coudert Brothers, both in New York; started Sidley’s New York office and, following 19 years there, joined McCarter & English’s New York office, where he is now co-managing partner. “Sidley was unique,” he said. All decisions were made by the seven-member management committee, which also appointed the 30-plus members of the executive committee. “Modifications to the partnership agreement were distributed for signatures, not for discussion.” Now 59, Richards said that on his 54th birthday he was given a letter to sign that offered special counsel status with a salary and a commitment to bill 1,800 hours a year. His 18-month contract could be extended, at the firm’s discretion, but he would retire at age 60. If he refused to sign, he would leave the firm on Dec. 31, 1999. He doesn’t want to return to the firm, he said, but he does feel he’s owed something and doesn’t rule out a private suit. The question for Sidley, said Hillman, is this: “If you’re subject to being laid off, how can it also be said that you’re an employer?” The control a partner exercises is key and gray areas abound, he said. He pointed to the rapid growth of nonequity partners. “They very well may be protected by the anti-discrimination laws. This is huge.” “We’re in a new age,” he said.

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