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Even as Sidley Austin Brown & Wood and the government battle over whether 31 attorneys should get damages resulting from the firm’s mandatory retirement program, many law firms are sticking to their policies of ushering out partners once they hit a certain age. As early as next month, a federal judge is expected to rule on Sidley Austin’s motion for partial summary judgment in the U.S. Equal Employment Opportunity Commission’s case against the 1,585-attorney firm. In its motion, Sidley Austin argues that the former partners are not entitled to back pay, lost wages and reinstatement to their jobs. But despite the legal wrangling in the much-publicized case, more than half of the larger firms participating in a recent study continue to use mandatory retirement, and they could be more susceptible than ever to lawsuits like the one against Sidley Austin. The EEOC’s lawsuit alleges that in 1999, the law firm, then known as Sidley & Austin, violated the Age Discrimination in Employment Act when it stripped the attorneys of their partnership status and lowered the mandatory retirement age to allow younger attorneys to advance. Although the ADEA usually applies only in employer-employee relationships, the 7th U.S. Circuit Court of Appeals had previously determined that the older attorneys at Sidley Austin functioned as employees of the firm — not as decision-making partners — and therefore were protected by the ADEA. EEOC v. Sidley, 315 F.3d 696 (7th Cir. 2002). Sidley Austin declined comment for this story. AN ‘ATTRACTIVE TARGET’ In the era of the megamerger, when a smaller percentage of a law firm’s partners may participate in a firm’s direction and management, they too might find themselves subject to the restrictions of the ADEA.
COMING OF AGE
Firms with mandatory retirement age (MRA) 37%
Firms of 100 or more attorneys with MRA 57%
Firms of fewer than 10 attorneys with MRA 13%
Common age when retirement required 70
Age when lawyers start early retirement 57
Percentage of retired male lawyers age 65 or older 75%
Percentage of retired female lawyers 65 or older 27%
Sources: Altman Weil and the American Bar Foundation.
( National Law Journal, May 2005)

Law firms could become an “attractive target” for ADEA claims, said Philip Berkowitz, an employment law attorney with Nixon Peabody who is not involved in the Sidley Austin matter. Relegating some decision-making to smaller groups of attorneys is necessary in large firms, Berkowitz said. Indeed, in today’s huge operations such as DLA Piper Rudnick Gray Cary or Greenberg Traurig, having hundreds or even thousands of partners participating in management decisions is impractical. But such organizations can also make murky the question of whether attorneys function as employees or true owners of a business, Berkowitz said. And with that question comes the issue of whether the ADEA, which generally prohibits discrimination based on age, applies to law firms. So far, however, it appears that many big firms are holding fast to their mandatory retirement policies. For example, Holland & Knight, with 1,159 attorneys, has required its attorneys since 1981 to retire at age 70. “It’s in the business interests of the firm to see work transitioned to other partners at age 70,” said Holland & Knight managing partner Howell Melton. The firm has not reconsidered its mandatory retirement policy in light of the Sidley Austin case, Melton said. He added that two years ago it implemented a program in which attorneys at age 66 must begin passing their clients to other partners in anticipation of retirement. Holland & Knight’s position is echoed in a survey released earlier this month by Altman Weil, a law firm consultancy. It showed that 38 percent of the 202 law firms responding to the study required mandatory retirement from their attorneys. Of that group, 57 percent of firms with 100 or more attorneys had such policies. The survey also found that the age of mandatory retirement at law firms generally is between the ages of 65 and 70, with the majority of firms requiring retirement at 70. Historically, most big firms have used mandatory retirement, Berkowitz said, but that practice could change depending on the outcome of the Sidley Austin case. One major reason law firms maintain such programs is that they provide consistency, said James Sicilian, chairman of the executive committee at Day, Berry & Howard. The retirement age at the Hartford, Conn.-based firm is 70. Requiring all attorneys to relinquish partnership status at a particular age alleviates the need for a case-by-case analysis, Sicilian said. He added that for partners no longer bringing in enough business to justify their paychecks, mandatory retirement works well. But it has its drawbacks. “What bright-line rules also take away is the opportunity to continue on with someone who is fully capable of being a huge contributor,” he said. Day Berry is not revising its policy, Sicilian said, since the firm operates as a “true democratic partnership,” despite what the 7th Circuit found in the Sidley Austin case. There, the court determined that since the partners did not vote on issues, and that a self-selecting executive committee made all major decisions, it could be a “de facto” corporation required to comply with the ADEA. But decision-making authority is just one factor in analyzing whether a firm is a true partnership, Berkowitz said. For example, the attorneys’ contributions of capital and their liability for firm debt are considerations that distinguish between an owner and employee. CHANGING OF THE GUARD In addition to providing consistency, another major advantage of mandatory retirement is that it facilitates a routine exodus of older partners, allowing the careers of younger partners to flourish as they take on the work of the old guard. Milbank, Tweed, Hadley & McCloy Chairman Mel Immergut said that having a mandatory retirement age not only provides “one rule applied equally,” but also gives younger attorneys “plenty of opportunity.” Milbank’s retirement age is 65. Immergut also said that most partners at his firm retire earlier, and that he did not recall any complaints about the retirement policy. Such was not the situation at Sidley & Austin. The heart of its dispute in EEOC v. Sidley Austin Brown & Wood, No. 05 CV 0208, is whether the firm violated federal law by discriminating against older attorneys. But currently pending before U.S. District Judge James B. Zagel in Chicago is a clash within the underlying case concerning … what else? Money. In its motion for partial summary judgment, Sidley Austin argues that even if a court determines that the EEOC is entitled to injunctive relief, such as requiring a change in firm policy, it cannot recover money damages on behalf of the attorneys. The amount at issue is not insignificant. Profits-per-partner at Sidley & Austin in 1999 equaled $575,000, according to The American Lawyer. Monetary damages against the firm could include the difference between what the 32 attorneys could have earned as partners and what they earned as of counsel. In addition, the firm could be liable for any loss of income after the attorneys left the firm, plus double damages if the alleged discrimination was willful. Sidley Austin argues in its recent motion that since the individual attorneys did not file a discrimination lawsuit against the firm within the proper statute of limitations period, the EEOC cannot recover monetary damages. The case against the firm arose from a so-called direct investigation initiated by the EEOC, as opposed to an action initiated by the attorneys. In its reply brief, the EEOC asserts that it can seek monetary damages even if the group of attorneys is time-barred from bringing an action on its own behalf. John Hendrickson, regional attorney for the EEOC in Chicago, said that the U.S. Supreme Court has determined that his agency can obtain victim-specific relief in situations like this case. “Whether this court will analyze it that way, I can’t say,” Hendrickson said. He looks for a ruling on the motion in June.

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