Imagine a highly productive partner with a stand-out book of business
that other firms would salivate over, years of experience and accumulated
wisdom, and deep ties to blue-chip clients. What are the
odds a firm would introduce a clause in its partnership agreement
drastically cutting his compensation in the immediate future and
booting him out altogether in a few years?
Actually, the odds are excellent; it’s called mandatory retirement.
I pose this minor thought experiment after having been confronted
with a collision between sturdy economics, politically correct
employment discrimination law, and an apparent convulsion of mass
phobic delusion by some of the English-speaking world’s most prestigious
firms.
Revealing is the language required to describe this truly bizarre
collision in terms that seem to lend it a gloss of rationality. Consider
this, from The New York Law Journal:
"For decades, law firms have depended on the orderly
retirement or slowing down of senior partners to make room in the
hierarchy for rising stars.
[…]
"An even greater challenge to firm
retirement policies may be posed by the growing number of older
partners who feel they have remained highly productive and insist
on holding onto privileged positions, either by negotiating special
arrangements or by decamping to other firms. […] "[Younger partners’] resentment often
centers on the belief that older partners are unfairly maintaining
a stranglehold on client relationships and business origination
credit that could just as easily go to other partners."
How surreal, not to mention just plain evasive, is this? Let
me count the ways:
- Neither is the "hierarchy" a fixed pie nor is achieving
and maintaining partnership status a zero-sum game. Assuming
standards are not debased—a different issue, shall we say—anyone
carrying their weight should be more than welcome. No one
is "making room" for anyone; each has rightfully earned it. - Likewise, those who "have remained highly productive" are
insisting on "holding onto" precisely zero "privileges;" what
they are insisting on is no more than the ordinary recognition
due under the partnership compensation system (expressly not including
an "ageism" thumb on the scales). Lastly: - Any partner of any age—for that matter, any associate—who
is able to single-handedly maintain a "stranglehold" on client
relationships has not been properly socialized about collaborative
and cooperative practices within a firm. Need I add that
any partnership agreement that permits this type of
antisocial behavior deserves equal, if not greater, blame.
In short, where there is no "room" in a fundamentally elastic
body, where earnings are "privileges," and where people "resent"
individuals for doing precisely what the system permits them to
do: Well,
we have a stunning failure of coherent analysis.
Fortunately, a saner, albeit anonymous, voice also weighs in.
"An older partner at a top firm who asked to remain unnamed
said such disputes are the firms’ fault. He said most tried to
placate younger partners by dangling a carrot of higher compensation
as they aged. But firms then tried to lower older partners’ compensation
as quickly as possible.
In that regard, he said, older partners are seeking
to vindicate their rights in a manner no different than their younger counterparts." [emphasis
supplied]
Now, at last, the root of the problem is exposed: Outdated
notions about productivity, aging, and even retirement itself are
irrationally skewing firms’ handling of these situations (this is
the "delusion" I initially referred to).
Problems
demand solutions, and in this case we have two candidates: Employment
discrimination law, or economics.
The former, most conspicuously on display in the EEOC’s suit against
Sidley-Austin for a purge of older partners a few years ago, brings
with it the meretricious re-introduction of "privileges" in the
truest sense—unearned entitlements doled out on a basis
divorced from merit. In short, it puts us right back in Unintended
Consequences Land, where rules intended to ensure fair play guarantee
that no such result will obtain because one party has been granted
a valuable bargaining chip deus ex machina.
I suppose
I should be pleased, in an odd way, to be able to report that this
perverse intervention is also afoot in
the UK, where anti-age-discrimination legislation, reportedly
designed expressly to apply to partners, will come into effect
in October 2006. Evidently, only one in 20 partners in City firms is over 55. The result?:
"Notably, the tactic of ‘managing out’ partners
will be considerably complicated, with firms coming under pressure
to show that exiting partners are being selected on performance
grounds, not knee-jerk ageism. This, considering the scarcity of
partners over 55 at top 10 London firms will prove challenging,
both culturally and logistically. Likewise, law firms will come
under pressure to revise mandatory retirement ages …."All of which could be seen as an unnecessary hassle for UK firms,
though the casual observer might wonder why they don’t just look
to their US rivals, who are far more skilled at utilising older
partners and are, after all, far more profitable."
At this point, permit me to state what is I hope the obvious: Robust
economics makes "age discrimination" an empty vessel. Apply
compensation metrics even-handedly, reward performance, and establish
and enforce an incentive structure designed to support the firm
as an institution, with all the collaborative and cooperative consequences
that flow therefrom.
And please, never mistake earnings for a "privilege."
