Old but Gold: UK law firms rethink ageism

April 7, 2022

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3 min read

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What's going on here?

UK city law firms that have previously driven out partners in their fifties are now encouraging high-performing solicitors to stay by adapting their centuries-old remuneration models to mimic US-style merit-based pay.

What does this mean?

There is a perception in UK city firms that once a partner reaches their mid-fifties, they are offloaded to make room to allow younger and more ambitious talent to progress. According to 2021 data from the Solicitors Regulation Authority (SRA), solicitors over the age of 65 make up only 4% of partners in UK law firms which marked no change from 2019 data.

The introduction of the Employment Equality (Age) Regulations in 2006 made it unlawful for employers to unreasonably discriminate against their employees on the grounds of age in the UK. However, if shown to be justified, such discrimination can be permitted. Firms are therefore able to lawfully insert a mandatory retirement age into a partnership deed as a “proportionate means of achieving a legitimate business aim”. However, the percentage of firms using such mandatory retirement ages has decreased from 74% in 2011 to 31% in 2019. This suggests that age profiles of solicitors might be set to change in the UK.

In the US it is common for lawyers to work into their seventies, with 21% of partners in the largest 200 US firms being over 60. Examples include 95-year old corporate governance lawyer, Ira Millstein, who works at law firm Weil, as well as the late Mordie Rochlin who reportedly worked three days a week at Paul Weiss after turning 100.

What's the big picture effect?

Previously, UK firms used a lockstep pay structure whereby partners were paid based on their seniority and the time they have served in the organisation, a system thought to encourage equality and collegiality. However, this model has begun to fall out of favour. This is due to the lack of incentive for senior partners to perform or meet targets, leading to complaints of partners coasting on the hard work and merit of colleagues whilst earning some of the highest profit shares. This rigid compensation structure therefore facilitated the need for firms to cut partners in their fifties to minimise the risk of them underperforming. Furthermore, this pay style led to UK firms struggling to attract outstanding performers as well as causing existing top-performers to be poached by firms which have salaries that are synonymous with performance.

Comparatively, in US firms, a merit-based remuneration system is used to attract and retain partners. Described as “eat what you kill”, this method ensures that every employee pulls their weight and allows partners who continue to perform and bring in work into their seventies and eighties to remain as a full equity partner in spite of their age. As these firms have expanded their businesses and increased their presence in London, fierce competition for talent has intensified.

Many UK firms, while not switching to the extreme “eat what you kill” style pay, are beginning to adopt a hybrid model known as modified lockstep. Magic Circle firms Allen & Overy and Freshfields Bruckhaus Deringer reported a change to a more flexible pay structure in 2020, Clifford Chance in July 2021. Most recently, Linklaters announced in December 2021 that they too were shifting their remuneration model to reward their top performers with the biggest pay cheques. Slaughter and May are yet to impose an “eat what you slaughter” model, yet they are deemed to be an “elite exception” due to the fact that they have abstained from a full-scale global expansion instead focusing on the “upper crust” of UK deals as well as steering away from making lateral hires.

As competition for the best legal talent hots up, salary structures and forced retirements will likely become ever more important.

Report written by Lucy Reynolds

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