Cecily Zamora
Law firm partners are not employees of the law firm but are co-owners of the partnership and are entitled to a share of the profits as equity partners. While it is rare for a partner to be forced out by fellow partners, it is not impossible. A partner can be fired for a variety of reasons, including but not limited to committing a crime, malpractice, disruptive mental illness, or not contributing to the firm's profitability.
Can Law Firm Partners Be Fired?
| Characteristics | Values |
|---|---|
| Position in the firm | Partners are co-owners of the firm and are entitled to a share of the profits as "equity partners." |
| Reasons for termination | Crime or malpractice, disruptive mental illness, failure to contribute to the firm's profitability, engaging in conduct that discredits or injures the reputation of the firm, failure to generate enough revenue, lying, poor-quality work, offensive behavior, etc. |
| Firm structure | Many law firms have a "two-tiered" partnership structure, with "salaried partners" or "non-equity partners" who do not share in profits, and "equity partners" who do. |
| Firm policies | Some firms have an "up or out" policy, where associates who do not make partner are required to resign. Some large firms also have a forced retirement age for partners. |
| Procedural considerations | Termination decisions are typically made by the firm's Management Committee, which may present the request to the Equity Partners for approval. |
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What You'll Learn
- Law firm partners are co-owners, not employees
- Law firm partners can be fired for committing a crime or malpractice
- Poor work quality and low billable hours can lead to termination
- Racial, ethnic, and gender-directed slurs can be grounds for expulsion
- Law firm partners can be forced to retire at a certain age or due to an up or out policy
Law firm partners are co-owners, not employees
A law firm partner is not an employee of the law firm but a co-owner of the partnership. Partners are entitled to a share of the profits as "equity partners". The title can also be used in corporate entities where equity is held by shareholders. In law firms, partners are primarily senior lawyers responsible for generating the firm's revenue.
Many law firms have a “two-tiered” partnership structure, in which some partners are designated as “salaried partners” or "non-equity" partners. They are allowed to use the "partner" title but do not share in the profits. This position is often given to lawyers on track to become equity partners, serving as a “probationary” status. The distinction between equity and non-equity partners is often internal to the firm and not disclosed to clients.
While it is rare for a partner to be forced out by fellow partners, it can happen if the partner commits a crime, malpractice, experiences disruptive mental illness, or fails to contribute to the firm's profitability. Some large firms have included a forced retirement age for partners in their partnership agreements, which can be anywhere from 65 and above.
Partners can also lose their jobs for various reasons, such as billing too few hours, lying, or producing poor-quality work. Law firms are sensitive to their reputations, and partners can be dismissed for conduct that reflects poorly on the firm, such as making offensive statements or engaging in racial, ethnic, or gender-directed slurs using the firm's email system.
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Law firm partners can be fired for committing a crime or malpractice
Although a law firm partner is not an employee of the law firm but a co-owner of the partnership, they can be fired or forced to resign. This is a rare occurrence, but it can happen if the partner commits a crime or malpractice, experiences disruptive mental illness, or fails to contribute to the firm's profitability.
For instance, a partner at a major law firm who got drunk at a firm Christmas party was asked to find a new job a few months later, despite billing a lot of hours. In another case, a partner was forced to resign due to evidence of escalating threats posed by the Democratic People's Republic of Korea (DPRK) IT workers.
Law firm partners can also be fired for various other reasons, including lying, poor-quality work, and political happenings within the firm. For example, a partner who puts on an offensive skit at a firm party or makes disparaging remarks about a local judge, damaging the firm's reputation, may be fired. Additionally, branch offices are more vulnerable to job loss than main offices as important firm decisions are typically made in the main offices.
Given the complexity and sensitivity of these situations, it is crucial to seek guidance from a skilled attorney to navigate the legal process and protect the interests of both the firm and the partner involved.
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Poor work quality and low billable hours can lead to termination
Law firms, like any business, rely on billable hours to sustain their operations and profitability. As a result, attorneys who consistently fail to meet billing targets risk losing their jobs. Poor work quality and low billable hours are often interconnected, as attorneys who produce subpar work may receive fewer assignments, leading to a further decrease in billable hours.
Several factors can contribute to an attorney's inability to meet billing targets. For example, they may be struggling with the mental load of managing multiple clients and cases, or they may be facing challenges with time management and organization. Additionally, interpersonal conflicts, a lack of rapport within the firm, or a perceived deficiency in work ethic can also impact an attorney's ability to generate billable hours.
When evaluating an attorney's performance, it is essential to consider the context and external factors. For instance, a firm's overall success and the current state of the legal market can influence an attorney's billing capacity. It is also common for law firms to experience personnel changes during mergers, with the dominant firm setting the terms and conditions. In such cases, partners and senior attorneys who fail to bring in sufficient business or work in unprofitable practice areas may be let go.
While it is uncommon for attorneys to be fired solely based on low billable hours, especially during their first year, it can become a concern if it persists for an extended period. Law firms generally provide a grace period for new attorneys to adjust and learn the art of billing. However, if an attorney consistently underperforms in billable hours and exhibits poor work quality, their job security may be at risk.
To avoid termination, attorneys should actively seek feedback from partners and demonstrate their willingness to learn and improve. Additionally, keeping a record of all billable events, such as phone calls, emails, meetings, and drafting memos, can help attorneys accurately track and increase their billable hours.
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Racial, ethnic, and gender-directed slurs can be grounds for expulsion
While it is challenging to remove a business partner from a partnership, it is not impossible. Law firms are no exception to this, and there are certain situations that can lead to a law firm partner being fired or expelled. One such situation is engaging in racial, ethnic, and gender-directed slurs, which can be considered a violation of the firm's policies and values.
Racial, ethnic, and gender-directed slurs are derogatory remarks that create a hostile and offensive work environment. They are a form of harassment and discrimination, which is illegal under the Civil Rights Act of 1964. This act bans discrimination based on race, color, sex, religion, and national origin. Despite this, racism and discrimination still persist in workplaces, including law firms, and can have serious consequences for both the individual and the company.
When a law firm partner engages in racial, ethnic, or gender-directed slurs, it not only causes harm to those targeted by the remarks but also discredits and injures the reputation of the firm. In today's social climate, where there is a growing focus on diversity, equity, and inclusion, such behavior is abhorrent and can lead to severe backlash and negative consequences for the firm.
To protect their image and values, law firms may find it necessary to expel a partner who engages in such conduct. This decision would be made to uphold the firm's commitment to providing a safe and inclusive work environment for all employees and to maintain their standing in the legal industry and the public eye.
It is important to note that, in some cases, firms may have policies in place that address behavior that can "damage the company's image or brand." These policies can be used as grounds for expulsion if a partner is found to be engaging in racial, ethnic, or gender-directed slurs, regardless of their intention. Therefore, law firm partners must be mindful of their conduct and language to ensure they are upholding the values of the firm and creating a respectful and inclusive environment for all.
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Law firm partners can be forced to retire at a certain age or due to an up or out policy
While law firm partners cannot be fired in the same way that an employee can be terminated, they can be forced to retire at a certain age or due to an "up or out" policy.
Retirement Age
Partnership and members' agreements often contain provisions to remove partners upon reaching a certain age. This is known as a mandatory retirement age or a "hard stop". While age is a protected characteristic under the Equality Act 2010, which protects employees and partners from unlawful discrimination, a firm can lawfully operate a mandatory retirement age if it can establish that it is "a proportionate means of achieving a legitimate aim". For example, a legitimate aim may be to make room for younger partners or to avoid difficult conversations about a diminishing skill set.
In the case of Seldon v Clarkson Wright and Jakes, a former partner challenged a mandatory retirement age of 65. The Supreme Court found in favor of the firm, deeming its approach proportionate. However, it is important to note that each case is decided on its particular facts, and a range of factors will be considered, such as feasible alternatives to mandatory retirement and how the retirement age has been applied.
Up or Out Policy
The "up or out" policy is commonly practiced in the North American accounting, investment banking, and management consulting industries. In law firms, the "Cravath System", named after Cravath, Swaine & Moore, historically expected associate lawyers to achieve partner status within ten years of being hired or to leave the firm. This policy encourages associates to plan their career goals from the minute they step into the firm, as making a partner is the culmination of 7+ years of planning. Associates are advised to leverage their desirability within the 3-5 year range to find a firm that puts them on the right track for making partner.
In summary, while law firm partners cannot be fired like employees, they may be forced to retire due to age or "up or out" policies. These policies are designed to achieve legitimate aims, but they can also present challenges and legal repercussions, requiring skilled attorneys to navigate successfully.
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Frequently asked questions
A law firm partner is not an employee of the law firm but a co-owner of the partnership. However, it is possible for a partner to be forced out by fellow partners if the partner commits a crime or malpractice, experiences disruptive mental illness, or is not contributing to the firm's profitability.
Law firms are sensitive places, and partners can be fired for a variety of reasons. Some examples include getting drunk at a firm event, making offensive statements, and lying.
The process of firing a law firm partner can vary depending on the firm and the specific circumstances. In some cases, the issue may be raised with the Management Committee of the firm, who will then decide on the appropriate course of action. The partner in question may also be given the opportunity to resign before the termination process is initiated.
