J. Randolph Evans is a partner in McKenna Long & Aldridge's Atlanta office, where he is the chairman of the financial institutions practice.
Shari L. Klevens is a partner in McKenna Long & Aldridge's Washington office and is the chairwoman of the firm's law firm defense practice.
It happens. Unfortunately, based on recent data, it is happening more frequently.
Legal website Above the Law reported in its Jan. 7 article "Nationwide Layoff Watch: Partners in Peril" that: "Over the past few years, many firms have been quietly showing partners the door, or at least 'de-equitizing' certain equity partners that they're willing to keep at the firm, but not as equity partners."
According to The Wall Street Journal on Jan. 6, a survey by Wells Fargo Private Bank's Legal Specialty Group confirmed that approximately 15 percent of the roughly 120 firms surveyed "intend to cut partners in the first quarter, continuing a three-year trend." In response to an American Lawyer poll, approximately 55 percent of 113 managing partners acknowledged that they planned to ask partners to leave in the coming year.
As The Wall Street Journal article stated: "It used to be that once a lawyer grabbed the brass ring of partnership at a major firm, lifetime employment was virtually assured. But more partners are discovering that those days are over."
The Legal Skills Prof Blog explained why on Jan. 15.:
"That's the upshot of a new report prepared by Citi's Private Bank Law Firm Group and Hildebrandt Consulting concluding that the halcyon days of BigLaw are over and never coming back. Indeed, the report concludes that 'the prosperity [experienced] between 2001 and 2007 was an aberration rather than the norm.' At bottom, the legal services industry is burdened with 'too many lawyers chasing too little work.'"
Asking partners to leave involves risks for both the law firm and the departing partner, arising out of ethical legal, and professional responsibilities.
The reasons
Theoretically, partners do not need a reason for dissolving the partnership or asking an individual or group of partners to leave. The concept of partnership itself connotes a level of confidence and trust that is uniquely personal and subjective. Yet, elevating or dismissing partners is not without limitation.
In Hishon v. King & Spalding, 467 U.S. 69 (1984), the U.S. Supreme Court held that the rules against discrimination apply to law firms in making partnership decisions just as they apply to other businesses. The court held that "[e]ven if [the law firm] is correct in its assertion that a partnership invitation is not itself an offer of employment, Title VII would nonetheless apply."
Against this backdrop, there are objective and subjective reasons for asking a partner to leave. The objective reasons include billings, origination, productivity and similar, quantifiable reasons. So long as these objective criteria are uniformly applied without regard to race, gender, ethnicity or religion, law practices can use them.
