LOS ANGELES � Early this week, Masood Sohaili, an equity partner at O’Melveny & Myers, took advantage of an early retirement package the firm was temporarily offering. He is 50 years old.

“Everything lined up perfectly,” said Sohaili, who is moving his affordable housing practice to Manatt, Phelps & Phillips as an equity partner. “I was thrilled about the opportunity at Manatt, and I was thrilled that I was able to take the retirement � everything worked out great.”

O’Melveny & Myers’ recent offer of early retirement, first reported Friday on The Recorder‘s Legal Pad blog, is a sign the firm is trying to improve two years of flat PPP, observers say.

“In general, when a firm does this, it’s not directed at partners that have large, self-sustaining books of business,” said L.A. recruiter Peter Ocko of Major, Lindsey & Africa.

As the push for higher numbers continues, O’Melveny is in the company of many top firms taking measures to boost profitability. Partners who are no longer eager to bill 2,000 hours a year, or whose practice areas are less profitable, are being given incentives to retire or find better environments for their specialties.

“It’s strictly voluntary,” the firm said in a statement Tuesday. “We’ve implemented this type of program in the past and this is nothing new for our firm or law firms in general.”

That may be true, but age 50 is something new.

“They haven’t pioneered this theory, though going at it at age 50 is a little younger than most,” said William Nason of L.A.-based Watanabe Nason Schwartz & Lippman. “Frankly, I think the majority of top firms would like to feel they can ask their more senior partners to voluntarily get out of the equity pool.”

O’MELVENY’S MOVE

Early this year, a memo came out detailing the temporary early retirement option, said a former O’Melveny partner. Typically, O’Melveny partners with sufficient service can qualify for full retirement benefits at 65, or partial benefits at 55. Attorneys started gossiping in the hallways, wondering how many people would take the firm up on it.

It wasn’t the first time the firm had offered an early retirement option. Several years ago, the firm put out a similar package, though with a higher age minimum. At that time, the firm was going through “an adjustment,” since it lost partners with long-standing client relationships, the former partner said.

“It surprised people that they started to do it again,” he said. “But, after flat PPP for several years, they clearly wanted to make some adjustments.”

While there was no official veto on who could take the offer, the firm could be encouraging in one way or another, that source said.

So far, Sohaili is the only person to have left O’Melveny under this deal, and Manatt Managing Partner William Quicksilver said last week he’s glad Sohaili took the offer.

“Certainly what Masood brings is a focus on real estate and finance, particularly here in Southern California � we are looking to build those areas on a national basis in our key markets,” he said. “He’s an exciting acquisition.”

Other requests to cash in on the retirement offer are still pending, a source close to O’Melveny management said. The window to apply, which lasted about two months, has closed.

Offering such an early retirement option can also be used to open up opportunities for younger partners who may be able to transition into more significant client relationships, said Newport Beach legal consultant Peter Zeughauser. But mostly it’s used as a means to increase profitability.

“It’s another technique for dealing with unproductive partners who might be incentivized to opt out � you don’t have to counsel them out � it’s their decision,” he said.

While other top firms have lowered early retirement to 55 or 60 � compared with the traditional 65 � Zeughauser said he hasn’t seen it lowered to 50, even on a temporary basis.

VARIOUS FIRM STRATEGIES

The O’Melveny move comes at a time when a lot of firms are reconsidering retirement policies, moving away from mandatory retirement to have more discretion in their comings and goings.

There are differing approaches when it comes to older partners and profitability, legal observers say.

Some firms have eliminated early retirement as a way to keep productive partners around, Ocko said. And eliminating forced retirement has become a trend in the legal field. At the same time, firms may want to eliminate folks who aren’t pulling their weight as the drive for profitably increases.

“It’s a balance,” Ocko said. “On a certain level, every firm from the global-sized to midsized eventually has to make decisions as to what’s going to leave the firm in the best position for the upcoming year.”

Firms have implemented these approaches in various ways, some which were met with unsavory public relations � and legal implications.

Richard Kolodny, president of L.A. partner placement firm The Portfolio Group, pointed to Mayer Brown, which de-equitized a large number of partners last year, and Sidley Austin, which faced an age discrimination suit after demoting some of its older partners to counsel status.

Now, firms are learning from missteps and creating options that are voluntary � and legally sound � such as O’Melveny’s recent effort.

“While this may have created some short-term morale issues, I am quite certain in the longer run O’Melveny will emerge stronger, more focused and more profitable,” he said.