Mandatory Retirement of Partners in Law Firms

One of the interesting developments during the summer slowdown we failed to note here on Slaw was the BC Court of Appeal decision in John McCormick’s case against Fasken Martineau. McCormick is an equity partner in Fasken’s Vancouver office who resisted the mandatory retirement at age 65 required by the partnership agreement, arguing that it contravened the BC Human Rights Code’s prohibition on age discrimination with respect to employees. The critical hinge to his action is whether an equity partner in a law firm should be regarded as an “employee” for the purposes of the Code, thus giving the Human Rights Tribunal jurisdiction over his complaint. From the Court of Appeal judgment in Fasken Martineau DuMoulin LLP v. British Columbia (Human Rights Tribunal) 2012 BCCA 313:

[2] The British Columbia Human Rights Tribunal and a Supreme Court chambers judge on judicial review decided that for the purposes of human rights legislation, a partnership may be treated as a separate legal entity from its partners and as the employer of a partner, with the result that the Tribunal has jurisdiction to hear a complaint by a partner of discrimination in his employment. The partnership appealed, claiming the Tribunal does not have jurisdiction to hear the complaint, because in law a partnership is not a separate entity from its partners, and cannot in law employ a partner.

The court overturned the lower decisions, deciding that the traditional view of a partnership should prevail, with the result that “a partner cannot be an employee of the partnership of which he or she is a member, because he or she cannot employ him or herself” and that this view was not to be “over-ridden by a broad, liberal and purposive interpretation of the Code.”

I’m unaware of whether leave will be sought to appeal this decision in the Supreme Court.

Unsurprisingly, mandatory retirement of partners has become a matter of interest in the profession recently. Canadian Lawyer Magazine’s March cover story dealt with this, examining the options available to both firms and partners. Most obviously, firms need to be able to retain the services (and the influence over clients) of talented senior lawyers despite the arbitrary running out of some clock and at the same time make room at the top for fresh talent — particularly, I’d say, talent that is embodied by others than white men. For their part, of course, equity partners facing retirement from the controlling group need to figure out how best to manage the significant number of years remaining to them.

Population data make clear that these are issues that will only grow in importance over the next decade or so. First of all, the leading edge of the baby boom (1946 – 1964) has just turned 65 and there’s quite a bulge behind it, as this graphic from Canadian demographer David Foot shows:

(There’s a fascinating animated “population pyramid” on Foot’s website showing how the shape of things has changed since 1871 and will change in the decades to come.)

Next it’s important to note that this tsunami of pre-retirees will live to a considerably ripe old age; 65 is damn near the new middle age. Recent statistics have life expectancy in Canada at age 65 as twenty years, a figure that has been, and will likely continue, rising.

This is a turbulent time in the practice of law for all the reasons that have been rehearsed here and in every professional organ. It’s natural to see “solutions” or at least responses to the many besetting problems facing the profession as coming from youth, that protean group on whom we tend to project our hopes. Mitch Kowalski’s excellent recent post here, Only the New Can Change the Profession is a good example. He says:

The established, older set of partners in charge of many of this country’s firms have no reason to change what they are doing and are simply eyeing the finish line of their careers.

But it would be a mistake, I think, to ignore the potential to be found in that growing number of highly experienced practitioners facing “liberation” from partnership and a score of years to play with. These people have not simply the time but the means as well to experiment with modes of practice, and there are enough of them coming down the pike that some, at least, will do very interesting things.

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