Retirement-Age Probe Could Affect Firms: Business of Law

The Equal Employment Opportunity Commission is investigating whether mandatory retirement provisions at Deloitte LLP violate federal employment law.

The American Institute of Certified Public Accountants, the trade association for the profession, entered the fray yesterday, essentially urging the EEOC to back off.

The dust-up could have ramifications for those law firms, including slightly less than half of the largest ones, that still have mandatory retirement ages for their partners.

Ronald Cooper, a partner at Steptoe & Johnson LLP who was a general counsel of the EEOC, said that while it’s impossible to predict the outcome, “the EEOC will probably say that a giant operation that calls itself a partnership where individuals have little or nothing to say about the way the business is conducted isn’t likely to be viewed as an old-style partnership of three or four members.”

As a result, those firms could face liability under the Age Discrimination in Employment Act for forcing out partners of a certain age.

Jim Cotterman, of consulting firm Altman Weil Inc., last studied law firms with mandatory retirement policies in 2007. He said in a phone interview yesterday that few of the firms with these provisions eliminated them during the recession, but he expects that to change.

The EEOC’s stance isn’t the issue, he said. Rather, the frenzied lateral hiring market can put firms with mandatory retirement provisions at a distinct disadvantage. Partners in their early 60s often don’t want to retire and may have a significant “book of business” making them attractive to other law firms.

Justine Lisser, an EEOC spokeswoman, declined to comment on Deloitte, citing the confidentiality of investigations.

In September, however, Deloitte general counsel William Lloyd said in congressional testimony that “the EEOC began a directed investigation in 2010, meaning that no individual filed a charge with the EEOC alleging discrimination. To date, we are not aware of any retired partner who has complained to the EEOC about age discrimination.”

Two law firms -- Sidley Austin LLP and Kelley Drye & Warren LLP -- faced EEOC claims over mandatory retirement. Because Sidley settled in 2007 and Kelley Drye settled in 2012, neither case created any precedent, Cooper said.

“It will be a rare law firm that will want to take it on and duke it out with the agency rather than settle for money,” according to Cooper.

Facebook, Zuckerberg Sue Lawyers in Ceglia’s Ownership Case

Facebook Inc. and its chief executive officer, Mark Zuckerberg, sued four law firms, including DLA Piper LLP, for representing Paul Ceglia in his fraudulent suit claiming a substantial ownership of the social media giant.

In addition to DLA Piper, the defendants include former New York Attorney General Dennis Vacco and New York-based Milberg LLP.

Ceglia sued Facebook and Zuckerberg in 2010, claiming he was due 84 percent of the social-network company. He later reduced the demand to half. The suit, now dismissed, was based on a contract that was ruled a forgery by a federal judge. Ceglia, who is appealing the dismissal, faces federal fraud charges in New York based on the claim against Facebook.

From the start, Facebook, based in Menlo Park, California, argued that the claim was fraudulent.

Peter Pantaleo, DLA Piper’s general counsel, said in a statement yesterday that Facebook’s suit is baseless and intended to intimidate lawyers from suing the company.

“DLA Piper, which was not part of this case at its outset or its conclusion, was involved for 78 days,” Pantaleo said. “Facebook and Mr. Zuckerberg claim that they were damaged in those 78 days, yet a mere 10 months after DLA Piper withdrew from the case and while the litigation was still pending, Facebook went to market with an initial public offering that valued the company at $100 billion.”

Calls to Vacco and Milberg weren’t immediately returned.

The case is Facebook Inc. v. DLA Piper LLP (US), 653183/2014, New York State Supreme Court, New York County (Manhattan). The contract case is Ceglia v. Zuckerberg, 10-cv-00569, U.S. District Court, Western District of New York (Buffalo). The criminal case is U.S. v. Ceglia, 12-cr-00876, U.S. District Court, Southern District of New York (Manhattan).

U.K. Law Firm Market Returns to 2008 Levels on Merger Activity

The U.K. legal-services market bounced back this year, as revenue and profit per equity partner reached levels not seen since the global financial meltdown in 2008, according to a survey published Oct. 17.

About 80 percent of the 250 law firms polled reported increased revenue, compared with 63 percent last year, PricewaterhouseCoopers LLP said in a statement. Average profit per equity partner surpassed 1 million pounds ($1.6 million) at the top 10 firms for the first time since 2008 and improved at all firms, according to the report.

The improvement was driven by increased merger activity and a general return to growth in the U.K., PwC said. Takeovers of U.K. companies have risen 47 percent so far this year to $142 billion, according to data compiled by Bloomberg.

“The survey paints a brighter picture for the future of law firms than a year ago,” David Snell, a PwC partner and leader of its law firm advisory group, said in a statement. “Corporate activity has re-ignited, with a corresponding uplift in transactional work, and firms are busy again.”

The economic downturn that followed the 2008 financial crisis and an excess supply of legal services damped down results in subsequent years, PwC said.