Legal Business Blogs

Partner retirement policies withstand latest challenge but pressure remains for law firms to cross the tees

Expectations that law firms would come under mounting pressure to avoid compulsory retirement of partners have been once again upset as the final chapter in a much-watched legal battle over age discrimination concluded this week.

The Employment Tribunal (ET) made a final rejection of a claim by solicitor Leslie Seldon against his former law firm Clarkson Wright & Jakes (CWJ) that he suffered age discrimination in being required to retire at the age of 65.

The ruling will be seen as giving some comfort to law firms looking for guidance on whether they can justify asking partners and fee-earners to leave on the grounds of age, a factor that has been further highlighted by the abolition of the UK’s default retirement age in 2011.

The long-running battle began in March 2007, when the former equity partner took his claim to the ET alleging age discrimination and victimisation after the Kent-based law firm rejected his proposal to work beyond 65 and withdrew a goodwill payment of £30,000 when Seldon threatened proceedings.

The ET found in CWJ’s favour but Seldon, backed by the Equalities and Human Rights Commission (EHRC) and supported by Age UK, appealed to the Court of Appeal and subsequently the Supreme Court.

The Supreme Court largely backed CJW’s defence of justifying age discrimination inherent in a mandatory retirement policies on the grounds of a proportionate means of achieving a legitimate business aim but referred the case back to the ET to consider whether a set age of 65 was justified.

Blackstone Chambers Thomas Croxford and Emily Neill represented CJW alongside the firm’s head of commercial litigation, Amanda Mehlin. Seldon was advised by BP Collins employment head Jo Davis and Cloisters’ Robin Allen QC.

From the outset CWJ argued that the firm’s retirement clause was necessary to ensure career progression, to limit the need to expel partners by way of performance management, to encourage partners to make adequate financial provision for retirement, and to protect the partnership model.

In this latest and final decision, the ET found that the retirement age was justified – based on the need to ensure succession, the fact that the UK’s default retirement age at the time was 65, and that Seldon had consented in writing to the partnership deed that contained the age clause.

However, the decision looks unlikely to foster a more cavalier approach to forcing out older partners given the facts of the case, the general development of employment law and the demographic issues facing law firms.

Mehlin told Legal Business: ‘This case always has turned on its own facts and doesn’t mean it’s OK to discriminate against people at 65. It was decided before the redundancy age of 65 was abolished and it may well be that if a case was dealt with now on similar facts, there might be a different outcome. Consent was a relevant factor but by no means determinative.’

In addition, there is consensus among employment lawyers and partnership specialists that there is mounting pressure on law firms to have robust policies justifying compulsory retirement, even for equity partners who stand outside much employee-protection law. By the same token, law firms are increasingly expected to show that they have considered individual cases, rather than simply deferring to general policies. In the context of economically-squeezed partnerships and contrasting pressures for individuals to work later in life, challenges of a similar nature look likely.