Mandatory Retirement For Old Law Firm Partners: Good Old-Fashioned Discrimination Or Just Plain Fun?

Recently, former Fox Rothschild equity partner, Michael J. Kline, who alleged age discrimination after being demoted to lower-paying roles and one-year contracts, ended his lawsuit against his former firm.

Kline, 79, filed the suit in May in New Jersey, claiming he was demoted to income partner at age 73 with a reduced salary of $200,000, later becoming an assistant general counsel to the firm earning $150,000. After he complained, the firm offered a $500,000 retirement benefit spread over five years.

The suit alleged he was pressured to sign a contract ending in 2024 and told it was time to “hang up [his] spurs.” The case was dismissed without fees or costs, leaving us to only speculate about a cash settlement.

American life expectancy in the early 1900's, perhaps the heyday of discrimination, was 47 years old against today's 78. While wonderful, that created some problems in the pyramid-scheme organization of law firms.

After decades of paying to support ancient lawyers until they dropped dead, many major law firms now use mandatory retirement policies for partners. The general idea is to require de-equitization at a certain age, typically between 65 and 70. While likely age discrimination in any other context, the owner/partner dynamic of old lawyers allows this to be generally accepted in the profession.

Often times law firm partnership agreements provide a carve out for the firm's leadership to allow exceptions, which inevitably benefit certain old lawyers rather than others.

The ABA continually criticizes the practice, citing age discrimination laws and the value of experience over age but many firms defend these policies as a way to ensure generational turnover and sustain profitability.

Pros of Including a Mandatory Retirement Age in Partnership Agreements

1. Succession Planning: Mandatory retirement ensures a clear pathway for the next generation of leaders, fostering career advancement for younger attorneys and bringing fresh ideas to the firm.
2. Predictable Transitions: It creates a structured timeline for transitions, making it easier for the firm to manage client relationships and financial planning.
3. Encourages Renewal: Regular turnover can prevent stagnation and keep the firm's leadership dynamic and adaptable to market changes.
4. Cultural Norms: Aligning with industry expectations may make the firm more competitive in retaining younger talent seeking advancement opportunities.

Cons of Including a Mandatory Retirement Age in Partnership Agreements

1. Loss of Expertise: Forcing out experienced attorneys may deprive the firm of valuable institutional knowledge, client relationships, and mentorship.
2. Potential Legal Risks: Mandatory retirement policies can expose firms to claims of age discrimination under laws like the Age Discrimination in Employment Act (ADEA).
3. Negative Morale: Perceived age-based bias could harm the morale of senior partners starting to go gray and create a culture of undervaluing experience.
4. Flexibility Issues: A rigid age policy may overlook individual circumstances, such as a partner’s continued productivity and client value.

Balancing Act

Firms considering mandatory retirement policies must weigh the benefits of predictable leadership transitions and renewal against the risks of losing experienced talent and potential legal challenges. Flexible alternatives, such as performance-based reviews or negotiated retirement plans, may offer a more balanced approach to managing senior partners’ careers.

Rather than age, law school graduation year can be a useful tool to transition the Old Guard against their will but as we live longer and longer, this will continue to be a big (and old) problem.

Let's chat about better practice, less stress.