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Law firms need to change their ageist ways
The Lawyer
19 February 2007
Poor old Freshfields Bruckhaus Deringer. That is not an often heard remark but as well as the report of 100 equity partners being culled, the firm faced considerable publicity last week concerning an age discrimination claim brought by one of their partners.
It is one of the first claims against a law firm and Freshfields may feel slightly aggrieved that it is their firm in the frame when they were one of the few law firms publicly taking steps to meet the challenge of the age discrimination legislation introduced in October last year. For example, the firm announced that the requirement for a date of birth on application forms was to be removed and, more eye-catchingly, their graduate recruitment department was renamed “trainee solicitor recruitment,” so as to limit any ageist connotations of the term “graduate”. These were small steps but at least they were steps.
Perhaps the surprise is not that the claim is being brought against a City law firm but that it has taken 4 months to happen. Law firms are an obvious target for a legal challenge under the age discrimination legislation. Their culture is ageist from start to finish.
City firms still target traditional universities for trainee recruitment. It is unlikely that any real efforts have been made to change the scope of the “milk round” to take into account institutions where older candidates may wish to be considered.
In the recruitment process at a later stage, the dreaded acronym “PQE” still dominates adverts (simply look at this edition of The Lawyer!). Whilst it is now very rare to see an upper limit in the PQE required, the mere use of this concept is open to challenge.
Rather than using PQE, law firms should set out the experience and competencies required. PQE is a very blunt instrument. Someone who is “3 years PQE” may have less relevant experience than a “1 year PQE” at another firm.
Moving further along the career of a lawyer, the next major focus where age discrimination is likely to be triggered will be the involuntary termination of senior lawyers.
The following scenario is common: a law firm needs to implement a “reorganisation”, i.e. a redundancy exercise. The lawyers in the frame tend to be senior assistants or salaried partners. They are highly paid compared to most members of the department in question. They are selected for redundancy and the usual explanation is their high relative costs.
Indirect age discrimination includes the use of selection criteria which, although applied to all employees, have the effect of disadvantaging people of a particular age, unless this is a proportionate means of achieving a legitimate aim. Here, the selection criterion would be cost. Would such a criterion be proportionate and legitimate? Under the ACAS Guidance for employers, “proportionate” should mean that there is no reasonable alternative to the action that the employer is taking. Also, “legitimate” might include economic factors such as business needs and efficiency. But the ACAS Guidance is very clear: “Economic efficiency may be a real aim but saving money because discrimination is cheaper than non discrimination is not legitimate”. In these circumstances the senior lawyer made redundant because of cost now has an extra argument to run in any claim.
Finally, the third area where legal challenges are likely to be focused is not challenges to Lockstep (it is recognised that Lockstep is likely to be allowed at least for the foreseeable future) but in the mandatory retirement of partners.
Unlike the position of employees, there is no default retirement age for partners. A fixed mandatory retirement age will therefore be potentially unlawful and discriminatory unless it can be justified. It is not easy to see how any law firm can justify a uniform compulsory retirement age for all partners. In what way would a retirement age of 60 be justified, rather than 65, or indeed 70? Why 70 and not 71? Moreover, if a firm is simply retaining the retirement age which it has used prior to the introduction of the age discrimination legislation, then how can it be justified when it was introduced before there was even a requirement to consider whether a retirement age could be justified.
So law firms seeking to retire partners face a real difficulty. It is easy to envisage claims being pursued by disgruntled retired partners: they are likely to have the resources to fund such claims, and little disincentive (in terms of potential damage to reputation) not to pursue them in the public arena. Also, the claims will have potentially high value.
The culture of age discrimination will not change until public hearings take place and awards are being made under the age discrimination legislation. The “wait and see,” approach of most law firms “will work, but only for a limited period. The question now is how long that limited period will be.