Life is unfair – but layoffs shouldn’t be

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Law firms are not exempt from the legal requirements to operate a workplace free from discrimination. That means ensuring that characteristics other than an individual’s skills, experience and knowledge do not become factors in making employment decisions — including layoffs and terminations. Firms that are subjective and personalized in employment decisions and are more arbitrary than the law allows can face substantial legal snares.

With aging lawyers working longer, and firms continuing to hire (although at a greatly reduced rate) new, lower-paid lawyers out of law schools in order to increase their leverage, something has to give. In many firms there is a direct relationship between de-equitization and leverage: letting go of older partners who may have higher rates but bring in less business while hiring and using young associates as a cost-effective way to do billable work that boosts profitability.

Firms that terminate older lawyers must guard against litigation. One suit already decided involved an older partner at a major firm who refused to accept a downgraded status. The law firm argued that the lawyer breached his employment agreement by failing to produce sufficient billable hours. The lawyer argued that he merely had to be available to do work, that he did not have rainmaking responsibilities.

The issues revolved around interpreting an employment contract, and the arbitrator found that the lawyer did seek billable work and was available. The contract did not otherwise require that he reach the firm’s billables benchmark. By extension, inconsistency in the benchmarks used to identify groups of lawyers who are de-equitized when past a certain age can spur wrongful termination claims.

Associates will not be retained by a firm unless the firm can make money from their effort. Completing their assignments in a way that produces net profits for the firm is the standard to keeping an associate’s job. If a law firm feels it is necessary to terminate an associate who has not attained the level of desired quality, written standards that define a lack of or deterioration in performance are essential. If the firm has not explained clearly what kind of performance is expected as a financial and service baseline, associates may claim their treatment was unfair or biased.

Similarly clear standards are vital for staff persons also. Having a comprehensive job description for every staff position in the law office is essential to avoiding allegations of unfairness in the event of layoff. The absence of such descriptions promotes inconsistency and threatens objectivity. Descriptions should include the specific, significant tasks of each position and the performance standards by which the accomplishment of these tasks is judged.

These are not new concerns to Corporate America, and law firms must similarly comply with all the laws applicable to their clients. The requirement that a law office, like any other business, must treat all employees in a non-discriminatory manner as defined by law is beyond question.