New tricks

New tricks
Cover: Pierre Charbonneau
Last December, when the mandatory retirement policy at Stikeman Elliott LLP finally kicked in for Mortimer Freiheit after 43 years with the firm, the Montreal litigator had a clear flight path ahead. Rather than retire or stay on in another capacity following his obligatory withdrawal from the equity partnership at the firm, Freiheit is throwing energy behind a new legal venture, a boutique firm called Freiheit Legal Inc.
The new firm is growing on the solo practice started by David Freiheit, his youngest son and one of four of five children who are lawyers, and is in full expansion mode. Four new lawyers, including the elder Freiheit, have signed on in the past couple of months and initiated a business plan to target artists and entrepreneurs and those who can’t be served by big firms because of their high legal fees or conflicts of interest. “I didn’t want to be a painting on the wall,” says Freiheit, who helped develop and then headed up the business law, insolvency, and commercial litigation practices over a period that saw Stikeman grow from 16 lawyers when he joined in 1968 to more than 500 today. “We will be able to get good work from different law firms that have conflicts or where the type of work or the client is not really appropriate for them because of the hourly rates,” he says, bubbling with enthusiasm about his new life. “Being a smaller firm with a smaller overhead we are able to provide services to them at a cost significantly less than at a major firm.”

Freiheit is a good example of the kind of successful transition many of the bigger law firms want for the growing number of older lawyers in their ranks in order to make room for a new generation of practitioners. He was one of those responsible for imposing a mandatory retirement policy and agrees with it for the same reasons now. “It allows for the transitioning of clients to younger lawyers, so the firm is able to offer continuity to a client even as the lawyer gets older,” he says. “If lawyers keep hanging onto their clients over time, the clients themselves change — there are new people taking over and they don’t necessarily relate as well to the guy that has been there for all those years.”

But Freiheit and others suspect trickier times are ahead in applying the mandatory partnership retirement policies because many more lawyers now want to continue practising beyond the age of 65 — a frequent cutoff age in many age-based partnership agreements — because of financial or professional reasons. The fact is that bigger law firms with age-based policies have pushed the mandatory retirement age lower than it used to be and have started to provide fewer if any options for those who want to stay on longer. “Lawyers are going to resent and resist retiring at early ages despite the policies that are in place, so I predict that there is going to be a change in behaviour because the lawyers who don’t want to retire are not going to transition their clients as easily as they did in the past,” Freiheit asserts. “When you remove from the partner the assurance of a continuing retirement policy that takes him into his later years (after 65, 67, or 68, depending on the agreement), those partners who want to protect their future are going to retain their influence with clients so as to maintain their bargaining position. So what is going to happen is that there is going to be more individual negotiations on a case-by-case basis and an ad hoc retirement policy with all the risks that flow from that, including claims of discrimination, of favouritism, political favours, and all kinds of stuff once you start negotiating individual agreements. It is a difficult situation.”

Those with extra leverage are older lawyers with high billings and a public profile and there is anecdotal evidence that law firms are continuing to make exceptions for them on a discretionary and perceived strategic basis. Those exceptions come at the very time bigger firms with such policies are redoubling efforts to get other older partners to prepare to retire, with an ideal transition typically beginning three to seven or more years before the prescribed cut-off age through more aggressive client transitioning campaigns.

The case of British Columbia lawyer Mitch McCormick, who launched a discrimination suit against Fasken Martineau DuMoulin LLP over a dictate that he comply with mandatory retirement from the partnership at age 65 and accept no possibility of continuing employment after that, adds more uncertainty to the mix. Law firms with mandatory retirement policies have been analyzing their partnership agreements and combing their wording in the wake of the B.C. Human Rights Tribunal decision that it did indeed have jurisdiction to hear the merits of the McCormick case, a decision upheld by the B.C. Supreme Court that is set for another hearing before the B.C. Court of Appeal in April.

While any favourable decision for McCormick could spawn other age-based discrimination suits against other firms, not everyone believes lawyers will rise up in a tide against the firms where they worked for so many years. And some suggest that law firms will keep, but adapt, any mandatory retirement policy on any judgment ruling that lawyers are employees rather than owners of a law firm through the partnership and continue to focus on the upcoming generation to secure their survival.

In the meantime, the ongoing imperative of client transitioning and the general enforcement of mandatory retirement is a situation that has other consequences both for firms and individual lawyers. Some lawyers — Ottawa litigator and former McMillan LLP partner Eugene Meehan is one of them — are taking a proactive approach by setting up their own firms and taking clients with them long before any discussion of the required time to leave. “Some firms expect you to do a quiet exit at 65 and just as quietly hand over your whole book of business — all the clients you have spent up to four decades assembling and servicing,” says Meehan. “I am 59, I feel very young, I think I act quite young, my children sometimes tell me so, I run marathons faster or slower than them, depending on the day, and I’ve got tons to contribute! So in my case, I am pre-planning the future on the basis that I prefer to make decisions now rather than have decisions made later for me.”

Judges work with full compensation until the age of 75, says Meehan — why can’t lawyers? In January, Meehan, along with two other lawyers and a support staff of seven, launched Supreme Advocacy LLP, an appellate advocacy and agency boutique that will help other lawyers take cases to the Supreme Court of Canada and offer specialty advice in complex legal opinions on any area of law.

Other lawyers are switching to firms that do not have mandatory retirement policies, crossing the street to work for competitors, or are seen as acquisition targets by firms who value the benefit of an experienced lawyer on their team and potential business they bring, says Shekhar Parmar, a director in Calgary for The Counsel Network, a legal recruiting firm. “In lots of ways, the candidates we’ve talked to, it is more than just an economic issue, it is quite personal, tied into their sense of worth and they are basically being asked to transition away from what they have spent their lives defining themselves as,” says Parmar. “There is some real sensitivity when they hit mandatory retirement about the files because the understanding is that when you are ready to retire you are leaving your practice behind as opposed to taking it away.”

Parmar says there are new opportunities like contract lawyering as projects like infrastructure builds and resource exploitation heat up. He points to McLeod & Co. LLP, a Calgary law firm that is benefiting from a talent recruitment plan designed to boost its own fortunes while providing concrete financial incentives to older lawyers in return for transitioning over their clients and business. For almost three years, McLeod has been actively courting older lawyers, typically “55- to 63-year olds on the far side of partnership” as part of its strategic plan to grow and become more of a regional player in the Alberta legal market, says managing partner Robin Lokhorst, noting the firm has grown to 45 lawyers today from 26 in 2005.

Senior practitioners at the big national firms and lawyers from smaller local firms have different concerns, says Lokhorst, “but many of the concerns relate to their exit strategy and in the big firms the exit strategy will often be dictated by whatever policies are in place. And they may certainly intend to have these folks transition their practices to younger lawyers, but then, often, the senior lawyers are faced with the dilemma of compensation and a lot of the large firms haven’t fully explored and dealt with how you compensate someone for giving away work.”

Lokhorst says: “We structure a program where we actually compensate them and it is entirely customized to the individual, what we want from them and what they want from us. We track certain financial measures and we compensate them for transitioning clients and transitioning knowledge to people that we have in-house. They know to the penny how these things are calculated and they catch on very quickly and see the benefits.” Lokhorst says the firm has hired five older lawyers as a complement to the hiring of younger lawyers and is planning to ramp up the program given its success so far.

Toronto intellectual property litigator Don MacOdrum ended up with a competitor firm after he found the clock ticking on his future with McMillan LLP after the firm officially merged with Lang Michener LLP in January 2011. Lang Michener, the firm he articled and spent his whole career with, did not have an age-based retirement policy but McMillan did, obliging lawyers to leave at 65. MacOdrum, who just turned 70, suddenly found himself with a non-equity partnership arrangement for compensation and a one-year deadline to move on. IP litigation specialists Bereskin & Parr LLP quickly moved in to scoop him up after he casually mentioned that he was looking for a spot during lunch with longtime friend Donald Cameron, who was in the process of merging his IP boutique Cameron MacKendrick LLP with Bereskin.

Montreal law firm Robinson Sheppard Shapiro LLP also saw a chance to add bench strength to its team with the addition of two senior lawyers who did not want to retire but had to move on from their firms. Pierre Bourque, a seasoned litigator, moved over to RSS from Quebec regional firm Lavery de Billy LLP, along with Peter S. Martin, most recently an acquisitions and financing lawyer and former chairman of the business law practice group at McCarthy Tétrault LLP. “It is exciting to have a guy like Peter come to us for at least 10 years and bring talents we need, not just in the actual legal work, but talents of developing clients, how to lead large transactions and get teams put together to work in the interests of clients,” says RSS partner Charles Flam, adding that Bourque, in addition to pursuing his passion for litigation, can pass on the benefit of his many years of experience before the courts to nurture younger RSS lawyers.

The 77-lawyer firm, which now has seven lawyers aged 65 years and older, recently changed its own age-based compensation scheme because it found that some of its senior partners — including one 82-year-old litigator — “were basically as productive if not more productive than before” and that did not mesh with its policy.

Paul Boniferro, national leader of practices and people at McCarthy Tétrault and a labour and employment lawyer, says there are no plans to eliminate the firm’s mandatory retirement plan. But McCarthys for a few years now has aggressively stepped up its discussions with all partners, including older lawyers, to make sure that business objectives of the firm and lawyers are on the same page and track, and that expectations are clear and measured with set compensation incentives in some cases.

In addition to an annual performance review, where lawyers meet with practice leaders to discuss their objectives and business plan, McCarthys is currently in the process of adding a mid-year round of discussions and review, another vehicle to create a culture of “trust and accountability and open and frank dialogue.”

As for client transitioning and lawyers using client relationships as bargaining chips to stay on longer, Boniferro says large mainstay clients have been insisting that the firm work together with them on teams including lawyers of different levels that “mirror their organizations in terms of having peer-to-peer relationships at all levels, so the transition because of retirement of an aging partner is really about the success of the team during the career.”

That being said, “There are unique circumstances where there is a skill set and or a client relationship that is critical to the strategic plan of the firm where we extend people’s relationship with us.”

Daniel Gallivan, the Halifax-based chief operating officer of Cox & Palmer LLP, says the firm also has “clear expectations” for its older lawyers transitioning clients “and that has worked well for us.” The law firm gives lawyers greater latitude than many, with a mandatory retirement at 70, and the possibility of staying on after that as counsel for five years, a situation that means fewer lawyers from the firm are looking for other legal and financial options in their later years.

Retirement policy or not, older lawyers who have forged new careers say the move away from the pressure cooker of a big firm often leads to revitalization and release. “At the end of the day it was an opportunity for me to put my hand on the tiller and say, ‘hey, I can actually go and craft something that is more in line with my style, my values, and culture,’ and where we can release the pressure valve of rates a bit for interesting clients who just couldn’t take the rates of a big firm,” says Jim Titerle, who founded Miller Titerle LLP in Vancouver two years ago after more than 30 years heading up the national environment and climate change group at McCarthys.

Now 60, he had seven years left before mandatory retirement at a “fabulous firm, great people, great work, great support,” but he had wondered about striking out on his own and “if I did not do it now, when? For most of us, it is a very big step to walk away from what we’ve known for many years — the big paycheque, the organization, just fear of falling. To take the step is not easy. It is probably the same as any decision in life. The moment you take the step, you look back and say ‘that was easy’ and there is a whole world out there of people who need legal services.”

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