Of Layoffs and Lawsuits

Published November 10, 2009

In a previous Tips column we wrote about how difficult it is for an older lawyer who has been terminated by a law firm to prove that age discrimination was the reason. The Supreme Court’s decision in Gross v. FBL Financial Services, Inc. raised the bar for plaintiffs to prove a discrimination claim, and law firms have great latitude in evaluating when an older lawyer’s performance has diminished to the point where termination is justified.

Nevertheless, 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 downgrades, layoffs and terminations. However, firms that are subjective and personalized in employment decisions more arbitrary than the law allows can face legal snares.

One decided suit 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. An arbitrator found that the lawyer did seek billable work and was available, and that his contract did not otherwise require that he reach the firm’s billables benchmark.

Associates are employed at will. Fulfilling their responsibilities to do their assigned work in the most effective and efficient way possible 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. A comprehensive description of job tasks and performance standards for every law office staff position can disprove allegations of unfairness in the event of layoff.

It’s not surprising that there is little evidence of increased lawsuits against law firms regarding termination issues. Having advised corporate clients for years on these issues, firms that act in what is perceived as a fair fashion, that have appropriate and non-discriminatory criteria for job actions, and that provide some assistance to the persons let go, are likely to escape scrutiny and litigation. Also, since another lawyer is likely to be needed to file suit, such proactive steps by the law firm will significantly reduce potential damages and discourage contingency lawyers—and the fired person usually can’t afford a lawyer paid by the hour. There is one caveat: watch out for the law firm that fails to address these issues when laying off its lawyers or staff.

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Audience type: Large Law Firms