Scott: “Vindicated”
Well-known Leeds law firm Walker Morris discriminated against a senior partner by making him retire at the age of 63, an employment tribunal has ruled.
The evidence did not support the firm’s argument that its retirement policy achieved the legitimate aim of “ensuring inter-generational fairness and maintaining collegiality”.
“The impact of the retirement policy on those affected by it is significant,” said the tribunal, chaired by Judge Eyre.
“Forced retirement results in the end of a successful career as a partner in a reputable law firm, and in the loss of earnings which, in some cases, could be more than £1m a year.”
The firm’s 2018 partnership agreement set retirement at 60 but gave partners the right to make the case to stay on for three more years if they could show an ‘exceptional contribution’ and also agree to pass their practice on.
They could then apply to continue until 65 but would have to show they were continuing to make an exceptional contribution.
The tribunal said: “The possibility of an extension did not mitigate the discriminatory impact substantially, because of the high bar set to achieve an extension, which excluded many partners, and of the conditions attached to an extension, such as the handing over of goodwill and client relationships, and the imposition of a restrictive covenant.”
The claimant was Martin Scott, who had been an equity partner since 1997, having set up the construction and engineering department in 1990.
He turned 60 on 13 August 2019 and, under the agreement, was to retire on 30 April 2020, the end of the financial year.
He was granted a three-year extension to his partnership and gradually handed over his work and client contacts. However, when he sought a further two years, both the firm’s board and then the wider partnership refused.
This was blamed on his wish to work on a new practice of mainly one-off contingent or third-party funded claims. This had not yet been approved by the firm’s risk committee and the work could even be loss-making – “and, in any event, far from being an exceptional contribution”, he was told.
Walker Morris told the tribunal that the decisions were because Mr Scott did not meet the criteria for a second extension, and not due to age.
The tribunal said it was also “clear” that Mr Scott had, at least from 2021 onwards, “little respect for the management of the firm… and that he was a disruptive force”.
It explained: “He would on occasion send emails to [former managing partner Malcolm] Simpson which were critical of him and copy in the rest of the partner group to the emails. He also behaved inappropriately towards other staff.”
The tribunal held that Mr Scott was clearly treated less favourably because of his age – partners below the age of 60 were not required to demonstrate an exceptional contribution to the business.
The next question was whether this was a proportionate means of achieving a legitimate aim.
The tribunal held the firm had two legitimate aims for its retirement policy. First, workforce and succession planning to ensure it had sufficient partners to run its business profitably. “In our view this fits within the social policy aim of intergenerational fairness.”
Second, maintaining a “collegiate and cohesive atmosphere amongst its partner group in the interests of the business”.
But there was no evidence that Walker Morris needed to free up equity in order to give progression opportunities to younger partners.
It was unable to identify anyone who had left due to perceived lack of progression opportunities and the evidence indicated a harmonious partnership.
The tribunal said: “On the contrary, there was evidence to suggest that a mandatory retirement age could result in a reduction in the number of partners in the firm. There was also evidence to suggest that [it] was making lateral hires and recruiting partners from other firms.”
Senior partners were not “hogging the equity”, while Walker Morris did not impose a limit on the number of equity points, so more points could be allocated as necessary.
“We accept however that [it] did not want to ‘dilute’ the value of profit points. The number of points has dropped over the years however and there did not seem to be a problem with equity distribution.”
The firm argued that maintaining collegiality and cohesion required robust performance management to ensure partners remained at a high level.
The tribunal said: “Mr Simpson’s suggestion that the performance of many, or even most partners begins to decline in the latter years of their career was not supported by any documentary or objective evidence. It was entirely anecdotal and based upon his personal beliefs and perception.”
There was also no evidence that poor partner performance was an issue for Walker Morris.
The panel added that Mr Simpson’s comments were the type of assumption that age discrimination legislation was designed to counter.
Further, there were a number of less discriminatory alternatives that Walker Morris could have adopted, including requiring partners to hand over equity and influence whilst retaining the partner tag, and allowing them to work until they were older whilst incentivising retirement.
Upholding Mr Scott’s claim, the tribunal noted that Walker Morris was actually “bucking the trend” in the wider UK workforce by insisting on a presumptive retirement age of 60.
Mr Scott’s solicitor, Giles Ward, a partner at Leeds firm Milners, said the ruling fully vindicated his client’s “compelling” case, adding that it served “as a warning bell to others”.
In a statement, Walker Morris said: “We are disappointed by the findings of the employment tribunal and will be considering our response.
“In common with other professional services firms, our partnership has agreed rules covering the retirement of partners which we follow in a full and fair manner. These rules were intended to open-up partnership opportunities for future generations.
“Mr Scott voted in favour of changes to our retirement rules and indeed benefitted from them when his retirement date was extended in 2020.”
A remedy hearing will be held in May.
Leave a Comment