A New York law firm appears close to reaching an age discrimination settlement with the Equal Employment Opportunity Commission in a closely watched case that targets a common practice among U.S. law firms: stripping elderly partners of their ownership stakes.
Many law firms have policies designed to encourage older partners to retire, in part to make room for younger partners.
But the lawsuit filed against Kelley Drye & Warren LLP by the EEOC on behalf of one of the firm's partners, comes amid heated debate in the legal community about how law firms handle the growing group of aging lawyers who want to keep working. Lawyers have rarely challenged long-standing mandatory-retirement rules in the past.
Terms of a possible agreement between the parties could not be determined and discussions could fall part. But lawyers for Kelley Drye and the EEOC are expected at a settlement conference on Friday in U.S. district court in Manhattan, according to a two-page order filed Tuesday by Magistrate Judge Michael Dolinger.
Kelley Drye and the EEOC declined to comment.
EEOC brought the age-bias case in 2010 on behalf of Eugene D'Ablemont, a labor lawyer who claimed the firm's policy of "de-equitizing" partners at age 70 violates the federal Age Discrimination in Employment Act.
At the time the lawsuit was filed, Mr. D'Ablemont was practicing as a "life partner," receiving a pension and an annual bonus that ranged from $25,000 to $75,000. He has said the bonus amounts to between one-seventh and 1/20 of what he estimates he would have earned if he had remained an equity partner.
In court papers, the firm questioned Mr. D'Ablemont's work ethic and accused him of demanding tens of thousands of dollars of free legal services from the firm's lawyers for himself and his family.
The firm abandoned its mandatory retirement policy in 2010. Mr. D'Ablemont, 81, who is listed as a partner on Kelley Drye's website, didn't return calls seeking comment. He has previously rejected the firm's characterization of his work record.
Half of U.S. law firms with more than 50 lawyers had mandatory retirement policies, according to a 2007 survey by legal consulting company Altman Weil Inc., the most recent data available.
Any settlement in the Kelley Drye case would likely leave unanswered the question of whether such mandatory retirement policies are legal. Federal antidiscrimination law protects employees—not owners.
In the only other EEOC case to address the issue, Chicago-based law firm Sidley Austin LLP in 2007 agreed to pay a $27.5 million to 32 former partners who were demoted to counsel status under the firm's mandatory retirement policy.
The EEOC said in the Sidley case that federal antidiscrimination laws protected the former partners because they were managed by a smaller, unelected group of partners. In other words, they were more akin to employees than owners.
A New York state judge ruled in December ruled that a former New York partner at law firm Holland & Knight LLP suing for age discrimination wasn't covered by federal or state antidiscrimination laws because he had a stake in the firm and had the right to elect the firm's managing partners.
Mike Delikat, a partner at Orrick, Herrington & Sutcliffe LLP who represented Holland & Knight, said the ruling was the first time that a judge ruled on whether partners in a large law firm are covered by such laws. Mr. Delikat, who heads the firm's employment practice, said federal courts haven't had many opportunities to consider the issue.