In the UK, They Call it "Ostrich Law"

Imagine a highly productive partner with a stand-out book of business that other firms would salivate over, years of experience and accumulated wisdom, and deep ties to blue-chip clients.  What are the odds a firm would introduce a clause in its partnership agreement drastically cutting his compensation in the immediate future and booting him out altogether in a few years?

Actually, the odds are excellent; it's called mandatory retirement.

I pose this minor thought experiment after having been confronted with a collision between sturdy economics, politically correct employment discrimination law, and an apparent convulsion of mass phobic delusion by some of the English-speaking world's most prestigious firms.

Revealing is the language required to describe this truly bizarre collision in terms that seem to lend it a gloss of rationality.  Consider this, from The New York Law Journal:

"For decades, law firms have depended on the orderly retirement or slowing down of senior partners to make room in the hierarchy for rising stars. [...]
"An even greater challenge to firm retirement policies may be posed by the growing number of older partners who feel they have remained highly productive and insist on holding onto privileged positions, either by negotiating special arrangements or by decamping to other firms. [...]
"[Younger partners'] resentment often centers on the belief that older partners are unfairly maintaining a stranglehold on client relationships and business origination credit that could just as easily go to other partners."

How surreal, not to mention just plain evasive, is this?  Let me count the ways:

• Neither is the "hierarchy" a fixed pie nor is achieving and maintaining partnership status a zero-sum game.  Assuming standards are not debased—a different issue, shall we say—anyone carrying their weight should be more than welcome.  No one is "making room" for anyone; each has rightfully earned it.
• Likewise, those who "have remained highly productive" are insisting on "holding onto" precisely zero "privileges;" what they are insisting on is no more than the ordinary recognition due under the partnership compensation system (expressly not including an "ageism" thumb on the scales).  Lastly:
• Any partner of any age—for that matter, any associate—who is able to single-handedly maintain a "stranglehold" on client relationships has not been properly socialized about collaborative and cooperative practices within a firm.  Need I add that any partnership agreement that permits this type of antisocial behavior deserves equal, if not greater, blame.

In short, where there is no "room" in a fundamentally elastic body, where earnings are "privileges," and where people "resent" individuals for doing precisely what the system permits them to do:  Well, we have a stunning failure of coherent analysis. 

Fortunately, a saner, albeit anonymous, voice also weighs in. 

"An older partner at a top firm who asked to remain unnamed said such disputes are the firms' fault. He said most tried to placate younger partners by dangling a carrot of higher compensation as they aged. But firms then tried to lower older partners' compensation as quickly as possible. In that regard, he said, older partners are seeking to vindicate their rights in a manner no different than their younger counterparts."  [emphasis supplied]

Now, at last, the root of the problem is exposed:  Outdated notions about productivity, aging, and even retirement itself are irrationally skewing firms' handling of these situations (this is the "delusion" I initially referred to). 

Problems demand solutions, and in this case we have two candidates:  Employment discrimination law, or economics.

The former, most conspicuously on display in the EEOC's suit against Sidley-Austin for a purge of older partners a few years ago, brings with it the meretricious re-introduction of "privileges" in the truest sense—unearned entitlements doled out on a basis divorced from merit.  In short, it puts us right back in Unintended Consequences Land, where rules intended to ensure fair play guarantee that no such result will obtain because one party has been granted a valuable bargaining chip deus ex machina. 

I suppose I should be pleased, in an odd way, to be able to report that this perverse intervention is also afoot in the UK, where anti-age-discrimination legislation, reportedly designed expressly to apply to partners, will come into effect in October 2006.  Evidently, only one in 20 partners in City firms is over 55. The result?:

"Notably, the tactic of ‘managing out’ partners will be considerably complicated, with firms coming under pressure to show that exiting partners are being selected on performance grounds, not knee-jerk ageism. This, considering the scarcity of partners over 55 at top 10 London firms will prove challenging, both culturally and logistically. Likewise, law firms will come under pressure to revise mandatory retirement ages ....

"All of which could be seen as an unnecessary hassle for UK firms, though the casual observer might wonder why they don’t just look to their US rivals, who are far more skilled at utilising older partners and are, after all, far more profitable."

At this point, permit me to state what is I hope the obvious:  Robust economics makes "age discrimination" an empty vessel.  Apply compensation metrics even-handedly, reward performance, and establish and enforce an incentive structure designed to support the firm as an institution, with all the collaborative and cooperative consequences that flow therefrom.

And please, never mistake earnings for a "privilege."