Forcing Lawyers to Retire … an Age-old or Just an Old Age Problem?

GUEST: Mark Zauderer, Esq.
VTR: 01/22/2007

I’m Richard Heffner, your host on The Open Mind.

And I’ll be the first to grant both that when I began this program more than fifty years ago I was probably too young to deal with today’s subject wisely enough, and that today I may well be too old to deal with it dispassionately enough.

But, hey!, let’s just go with what we’ve got. For surely law firms’ practice of mandatory retirement for partners is of real interest to everyone growing longer and longer in the tooth.

And that’s why when I saw my distinguished attorney friend Mark Zauderer, President of the Federal Bar Council, had Chaired the New York State Bar Association’s Special Committee on Age Discrimination in the Legal Profession, I determined to get him here to parse its findings and its recommendations.

Of course, Shakespeare said only “First, let’s kill all the lawyers”. He didn’t say anything about forcing them to retire.

And I want to ask Mark Zauderer just what special problems there may be in the legal profession relating to retirement that focused his and his distinguished colleagues’ attention on the subject quite so vigorously…certainly enough to urge law firms “Not to Force Retirements,” as a New York Times headline read the other day. Mark, what, what’s at the bottom of all this?

ZAUDERER: Well, there are many changes that have occurred in society over the past few decades that have really brought this issue of mandatory retirement into focus.

For one thing, as I think we’re all aware, the Baby Boom generation, those born post war are now entering their sixties and many more will be over the next decade. So we’re going to have a huge number of people in the workforce who are of that age … over 60 and into their seventies.

We also have changes in, in … throughout society in the health of our population. We used to think of people in their sixties or seventies as confined to a rocking chair. Today we see them jogging in the street.

So we’ve got a large number of people who are in great health and many who have many, many years to look forward to, to live and have a financial interest in seeing that they have a way to earn a living for a long period of time.

On the other hand, we have a cross current here. Which is creating problems for so many people. In that law firms like other professional organizations more and more are focused on running themselves as … on the business model. Which means a very great emphasis on the bottom line.

We don’t take issue with that, but we thought we would find a way to reconcile the interests of lawyers who have a tremendous amount to contribute to society, to their clients and to … and as mentors to younger lawyers. And the so-called business interests of law firms, who have an economic model that they want to allow younger lawyers to work their way up into the system and have enough of the pie for them to share in.

And we think that there is a false dichotomy sometimes posed between the interests of the senior lawyers and the younger lawyers, who at times, see senior lawyers ultimately as an impediment to their financial aspirations.

So all of these cross currents are, are coming into play. They’ve made the issue very timely and we thought we would take a look at it and, and put the microscope to it. And that’s what we’ve done.

HEFFNER: And what did you see?

ZAUDERER: Well, what we saw is some false assumptions. But before I talk about those. Let me say that there’s lurking here something that we did not take a position on in the issuance of our report, but is going to have a very real affect on the law profession.

And that is that we’re in a society today were Federal law protects most workers in the workforce from age discrimination. We don’t have mandatory retirement, it’s illegal except in the very, very top executive positions.

Now law firms have traditionally been run as partnerships. And the mangers of law firms have typically viewed partners as quote “owners” who are not covered by the Federal age discrimination laws and therefore if a partner complains that he or she is being forced to retire, the law firm would take the view that the age discrimination laws don’t apply to partners.

Now, what the courts have done … so far … and this has not been finally resolved by the US Supreme Court is they have refused to accept at face value the notion that a partner is an owner, for the purposes of the age discrimination laws.

And they have set down a legal template where somebody sues a law firm claiming age discrimination, which requires a fact analysis of the particular law firm and the power or decision making ability that the individual partner has.

Does the partner have a say in compensation? Does the partner have a say in the running of the firm? And whatever we say, as a Bar Association, and we stayed away from making a legal judgment about the legality of forced retirement … the fact is that there is in the back drop a legal environment that may actually determine more than we will in or recommendations what practices law firms must follow in the decades to come.

HEFFNER: What’s the status now of that case?

ZAUDERER: Well, the case has reached the Court of Appeals, Circuit Court of Appeals level, it’s not finally resolved. It came up in a procedural way that caused the Court of Appeals to set forth some guidelines for the future administration of the case and it’s those guidelines which have been followed by some other lower courts, which have imposed the template that I’ve referred to, that is going to allow the legal process to continue. And some of these cases are going to be finally determined and when they are, I think we’ll have greater clarity about what the legal standard is.

HEFFNER: Well, I certainly … I shouldn’t really say this to you, but … set the legal standard in what it may ultimately be aside … what did your group recommend?

ZAUDERER: Yes. And that’s precisely what we did. We set the legal standard aside. But proceeding on the premise that there is no natural division between the interests of the senior lawyers in the law firms, we highlighted ways in which we thought there could be a win-win situation produced for both.

Senior lawyers, particularly as any professional who’s had many years of experience have a great deal of wisdom, not a monopoly on wisdom, but a great deal of wisdom. They have the ability to mentor younger lawyers. And to simply, at a pre-determined, arbitrary age cut them off from the law firm serves nobody’s interests.

Now issues of compensation can be addressed in accordance with the individual abilities and the ways in which the senior partner can contribute. But what we have recommended is to do away with arbitrariness, to do away with decisions based solely on age. And look at each senior lawyer in terms of the contributions that he or she can make to the law firm, to the lawyers in the firms and to the clients.

You know, by the time a lawyer has reached his sixties, he may have very significant client relations with, with important clients of the firm. Firms generally now want those relationships to be transitioned to younger lawyers. That’s perfectly okay, firms can do that. But why cut out the senior lawyer in the process? The senior lawyer has an enormous amount of knowledge and, and experience that can play a role.

There are other areas in which senior lawyers can contribute. Firms are increasingly doing pro bono work. Senior lawyers are, are particularly well situated to oversee that work, they have judgment, they have experience with it and can work with younger lawyers in the firm to bring about very, very positive and useful results.

HEFFNER: Is there a … is there a moral issue here? A socially, morally charged issue here?

ZAUDERER: Some say there is. We didn’t take a moral position. We did not see ourselves as the arbiters of moral virtue. But certainly many have said that it is not moral for an organization, even if it has the legal right to do so, to simply cast off those who reach a certain age.

Now there’s a counter argument that’s been made by many law firms. And that is that those lawyers who have reached that point in their professional careers have benefited handsomely from a system that was, that came about because of the retirement of those who preceded them. So if a law firm has a finite financial pie and those at the bottom of the totem pole, so to speak, want to advance. They feel that it may depend on the retirement of the those who have benefited so well over the years. In looking at this we think that that’s not so. That the retention …

HEFFNER: Statistically? Is that the result of figures that you’ve accumulated?

ZAUDERER: No. It … not as a result of figures, but as a result of our analysis of the kind of work that senior lawyers can do and our knowledge of how law firm income is produced. Senior lawyers can still bill time as the younger lawyers do. If they bill less time either because of their restraints that age may have imposed, or because they may have other interests, compensation can be adjusted accordingly. They have the ability to make the pie larger rather than to share in a pie that is of a fixed dimension.

And our recommendation is law firms look at that. And I think part of what has motivated law firms not to look at it, and it’s understandable, is a desire not to confront what, for many is an uncomfortable situation.

Because one can conclude that among older people, at some point there’s going to be a point in time when performance may slip. And in an organization, particularly a partnership, it can be a delicate issue to confront. For a firm to have to say to a lawyer, “Look you’re not performing as well as you used to, we think you should leave.”

But we don’t think that that inconvenience or discomfort outbalances the need to make productive use of partners who are senior and to evaluate them on an individual basis and confronting, if it needs to be confronted in the particular case, the diminished performance of a partner and thereby not disadvantaging many, many lawyers of senior age who can make significant contributions.

HEFFNER: Mark, I, I don’t mean to pry … literally …

ZAUDERER: Go for it.

HEFFNER: … but there must have been divisions in the Commission and I, I wonder how you could reflect back on those.

ZAUDERER: Sure. There certainly was a range of views. There are some who have experience as partners in law firms who were law firm … people with managerial responsibility … who made very cogently and vigorously the argument that I have just outlined about the need of the law firm to preserve itself as an institution for everybody … senior lawyers have done very well … they have, in many cases, very fine golf club memberships and the ability to enjoy life after retirement. So there were some that felt that way.

There were others … particularly those on the, on the Committee, who were in the public sector where there is no mandatory retirement, who felt very, very strongly the other way.

HEFFNER: In the public sector where there is no …

ZAUDERER: That’s right. In the public sector, employees, legal employees except perhaps the top legal employee, who would be the General Counsel, is protected, as a lawyer …

HEFFNER: I see.

ZAUDERER: … in a legal department to the same extent as all non-legal employees because there’s no argument to be made that they’re partners and not covered by the age discrimination laws.

And so therefore in the public sector, you know whether it’s in the state government or Federal government we have thousands and thousands of lawyers who were well into their eighties and performing very, very well. And they have found ways to deal with individual situations, to match the work to the abilities of the lawyers. So the private sector has a lot to learn from the public sector. And one of the things we recommend is that in further studies of this issue that we look very, very closely at the successes in the public sector of retaining and usefully employing senior lawyers.

HEFFNER: You don’t mean only the successes? You’re going to have to study as well, or some Commission will … the failures of that approach.

ZAUDERER: That’s certainly true. I mean a study has to be an open study and it has to take account of both successes and failures, obviously.

HEFFNER: What, what happens outside the world of the law? Is the prohibition against mandatory retirement rules just so widespread that you don’t find this in other professions?

ZAUDERER: Well, the country seems to have accepted it. I mean most employees in the Untied States, millions of employees are covered by the age discrimination laws without question. It’s because law firms still have the identity of private partnerships that has set them apart from the workforce at large. And there … another factor which is, I think, bringing this into sharp focus … I mentioned earlier the desire of law firms to run their firms on an economic model is … we’re seeing much larger law firms than we had decades ago.

Law firms that practice law in one city as real partnerships, many of those have now expanded to firms that have thousands of lawyers, offices in dozens of cities and they are run by executive committees and CEOs very much on a corporate model. And that’s made it more difficult in many cases to appreciate the value of a senior lawyer where lawyers’ performance is often measured by a few objective criteria … how many hours a lawyer is able bill, how much business in a law firm is attributable to that lawyer. And we think it particularly important for firms, as they’ve grown larger, to develop mechanisms for evaluating the particular lawyer at issue who’s senior and who is at what has traditionally been the retirement age of the law firm.

HEFFNER: And the question of business model versus profession …

ZAUDERER: Yes.

HEFFNER: … does that enter into this whole consideration?

ZAUDERER: Yes, it does. And if I might express my own view on this, this is not an official view of the Committee, is that we have seen the business model which has produced some very good results for the professions carry with it a negative side. We’ve seen this in law, we’ve seen this in accountancy, and we’ve seen this in medicine.

You know a hallmark of a professional as we’ve always understood it, is the ability to operate independently. We want our accountants to operate independently so they make fair judgments of the businesses they’re auditing. We want our lawyers to be able to advise clients and sometimes tell them what they don’t want to hear, just as a doctor will.

But there is a common thread here as economics has been, has become superimposed on the professions that much of that independence has been questioned or compromised.

I think a good example of that that we’re familiar with is the Enron situation. The Arthur Andersen law firm which is now defunct …

HEFFNER: The accountants.

ZAUDERER: The accounting firm. You had an audit partner in charge of that account who, like many accountants today in major accounting firms … the compensation is very much dependent on the business attribution. And you have the same things with lawyers.

If a lawyer is being evaluated very closely based on the amount of business attributed to that lawyer and the lawyer has a very important client, and let’s say, hypothetically, the client is engaged in or wants to engage in some business that’s questionable.

Will the lawyer exercise the necessary degree of independence he or she might have 20 or 30 years ago … because in the background is the notion that if the client doesn’t like the advice, the client is lost, the lawyer’s compensation will be … will reflect that.

That’s much more true today than it was decades ago when particularly we had what was called “lock-step” compensation in law firms where lawyers advanced to different tiers over the years with increasing compensation and didn’t have to fear that if a client was lost that it would reflect on his compensation.

So the business model has these negative implications for the professions, where unlike the business … the manufacturing business … a particularly important hallmark of the profession is independence, and that can be compromised.

HEFFNER: Now, Mark, you started talking about this particular issue by saying, “May I say something personal and not talking for the Commission.” Does that reflect a real split in the Commission? In this … in talking about this question of business versus profession?

ZAUDERER: I don’t think it was so much a split in the Commission in that they, that the Commission really wanted to avoid divisiveness because there are different views about that, just as there are different views about the extent to which the business model is appropriate in a law firm.

And we tried to find consensus, which I, I think we did. But it certainly is something that was, was in the minds of many of the Committee members and different views were found among Committee members on this issue.

HEFFNER: What about other countries?

ZAUDERER: Yes.

HEFFNER: And in the law … what is the situation in parallel Western countries?

ZAUDERER: Well, one country familiar to us … Britain has now passed sweeping legislation essentially to outlaw age discrimination in the law firms and that’s going to be something that I think American firms are going to be looking at, as well. And that’s very, very recent.

I don’t know the situation in the so-called “civil law” countries. We have a common law system in the UK and, and the Untied States. We haven’t studied that and I don’t think I can speak knowledgeably on that. But I do think it fair to say that the notion of using people productively at any age, provided they can be productive is one that is increasingly prevalent. It’s certainly true in the United States both by law and by culture now.

We don’t question it here any more. You asked earlier about what is the situation in the US and, as I say, most people are covered by the age discrimination laws. And it’s not something that’s, that’s questioned.

You know there are many individual cases where there’s claimed discrimination and the issue is, “Is somebody being discriminated against because of age.” But nobody is questioning in any significant way the overall concept that people in our society should be allowed to work. And it’s productive for the society as well, for people to work instead of being retired. I mean there’s an economic benefit to society obviously as well as to the individual if people can work as long as they are able and want to.

HEFFNER: But, of course, there is the point that for those who are younger, there is economic disadvantage as the older partner, or the older employee, whichever he is, or she is … stays and stays and stays.

ZAUDERER: Yes, but we’ve questioned that premise at least as far as …

HEFFNER: I gathered that.

ZAUDERER: … the legal profession is concerned. And certainly the opposite has not been demonstrated to us and I think the proponents of that, of that thesis have not demonstrated it. So …

HEFFNER: What do you think the impact of your report will be?

ZAUDERER: I hope that’s it’s going to generate more discussion. We’re beginning to see a lot of discussion of this issue in the profession. The loss of the so-called Sidley and Austin lawsuit, which is the one I referred to in the Court of Appeals … has generated a lot of interest not only in the legal press, but in the popular press. And I think, like so many issues that, that gain momentum, it’s touched upon a nerve in society, one that’s become increasingly important to people because, as, as we talked about earlier, we’re going to see so many people in good health in their sixties and seventies able and willing to work. And I think the norms in our society and the law, to a great extent, is going to adjust to that, as it always has.

HEFFNER: Peculiar question … do you think it might adjust in moving backwards. I mean the anti-discrimination over time and age legislation is comparatively new.

ZAUDERER: It’s new. I don’t see any push-back against it. I think if we look historically at legislation that has empowered groups, it’s rare that we’ve gone backwards.

We have norms that are in place in the labor force in the United States, whether it’s working conditions or wages and hours that have always seemed to only go in one direction. And I doubt whether we’re going to see that there’s going to be any significant movement or any political force to, to drive back the progress that’s made by senior people in participating fully in the workforce.

HEFFNER: You know, it’s strange to me … it’s interesting to me that you mention labor as an indication … labor legislation. It seems to me we have moved backwards and I don’t mean in a reactionary way. We have shifted in terms of what we do in the area of labor. And I, I would persist in the thought that it may well be that we find for the very reason that you offer of so many more people of working age, so many more people around passed what we used to consider a traditional retirement age … 60, 65 … now 70 …

ZAUDERER: Yes.

HEFFNER: I, I see it only as the kind of pressure that you describe on the part of young attorneys who are eager to have a greater share of the pot.

ZAUDERER: Well that remains to be seen. You know you remind me, as we talk about this factor of more and more people being around at older ages. I recently just picked up a dusty book from my shelf … it was the Merck Manual that we’ve seen and I looked up something about heart care, or heart attacks and this was published as relatively recently as 1971 and 1972 … and I looked under heart attack and the advice given was, “if you’ve had a heart attack, you need to resign yourself to a life of peace and quiet and nothing disturbing or upsetting.”

And, of course, today we get people on treadmills very soon after they’ve had heart attacks. I think in a small way that reflects the change in society. Now in part it’s medicine that’s caused it. But there’s a concomitant change perhaps partly because of medicine in our thinking about the productively of people. And people are now not waiting for heart attacks and, you know, we see people, as I say, in their 80s running the New York Marathon. Why shouldn’t they be working?

HEFFNER: Well, the question though in your profession is not, “Why shouldn’t they be working, but why should they be working here? And doing my share in.” And I guess that comes back to the business of business or profession.

ZAUDERER: Yes, it does and we would maintain, again, that this is a false notion that the participation by a senior lawyer with adjustment compensated to take into account the productivity reduces the size of the pie for all.

HEFFNER: Gotcha. And thank you so much for joining me today, Mark Zauderer.

ZAUDERER: My pleasure. Thank you.

HEFFNER: And thanks, too, to you in the audience. I hope you’ll join us again next time. For transcripts of today’s program, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.

Meanwhile, as an old friend used to say, “Good night and good luck.”

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.