The last four years have seen an increase in claims by employees against their firms, a relatively new issue in the legal profession.
William Granger, partner at Campbell Hooper explains: “This rise is partly due to new laws and codes of professional conduct, and partly the pressure for accountability and openness. After centuries of closing ranks, there is a tangible feeling that the tide of claims among the professions is rising.”
The main issues that affect the legal profession, and sometimes lead to claims, are: racial and sexual discrimination; work-life balance and flexible working, and work-related stress.
Age discrimination and employee consultation are increasingly affecting the profession, and this will escalate when new legislation is introduced in 2006.
Racial and sexual discrimination
In the case of law firm Charles Russell, a black female secretary came across an e-mail about her from one partner to another, saying “Can we have a busty blonde next time?” She successfully sued the firm for sex and race discrimination, and the firm appealed, but lost. In her final claim, the firm was censored by the Law Society for institutional racism, as it had not taken any action against the partner to illustrate that his behaviour was unacceptable.
At Sinclair Roche & Temperley, two female partners brought a 7m claim alleging they had been blocked from partnership promotion. They won, but on appeal, the significant sum of money they had been awarded was reduced.
In sexual or racial harassment claims, it is the effect of the behaviour on the individual that matters. As a result, while some claims seem spurious or ridiculous to some, they are not to others: Nabarro Nathanson faced a sexual harassment claim after it handed out chocolate penises to its staff. And law firm Edward Lewis suffered a crushing sexual harassment claim, because people objected to ice statues, depicting male and female genitalia out of which one could drink, at the firm’s Christmas party. The financial devastation on the partnership was so severe, the firm dissolved as a result.
Susan Thompson, partner at Magrath & Co says: “There are a lot of genuine sexual harassment cases, as covert sexism and racism still exist.” She cites the example of a 10-12 years post qualification experience at a US firm who worked incredibly hard for years. After she got pregnant and had a miscarriage, her department stopped giving her work. She brought a discrimination claim and won, but suffered long-term depression.
Unfair or wrongful dismissal
Unfair or wrongful dismissal claims occur because firms do not follow correct procedure, now made mandatory in legislation passed on 1 October 2004.
Fraser Younson, partner at McDermott Will & Emery, notes that partners also need to become better at counselling fee earners for poor performance. “In some firms in particular, partners need to understand that they need to coach employees on an on-going basis, not just mention their shortcomings at appraisals.”
However Allen & Overy partner, Mark Mansell, has a more cautious view on this claims culture: “It is still quite rare for solicitors to sue their law firms, but this is changing with the advent of new legislation.”
Younsan agrees: “When it comes to employees suing law firms, firms still have a lot of leverage as the stigma is likely to affect the employee’s future career.” The stigma, or negative publicity, works both ways. Many law firms settle sexual or racial harassment claims to protect their reputation.
However, Younson points out that the same reticence does not always apply when it comes to claims at partnership level. These cases often reach the courts and are usually brought by people who have not been made a partner, and allege discrimination. The burden of proof is on the employer to show that there is no discrimination. Says Younson: “Partners can be their own worst enemies when they say things like ‘she just didn’t have the X-factor,’ as a reason for not making partner.”
Partners are usually technically excellent and able to target clients, but are not necessarily good managers of people. Firms spend a lot of money training partners to become better managers, for this reason. Management teams at firms are increasingly made up of employment lawyers, as firms realise that their greatest asset are their fee earners and employment lawyers are well versed in how fee earners should be treated.
Thus sexual and racial discrimination are still issues that affect the legal profession. The key issue at the moment however, is work-life balance. Many lawyers believe the long hours culture needs to be addressed and replaced by flexible work policies. Brian Palmer, partner at Charles Russell, points out: “Firms put considerable time, effort and money into training people to be lawyers. If they leave once they are three to five years post qualification experience, this a huge waste of talent for their firms and may retard the career progression of the individual.”
Susan Thompson says: “In terms of flexible working practices, law firms have not yet caught up with their clients, most of whom have adopted a flexible working culture. The key is being flexible yourself, managing your clients’ expectations and demonstrating by example to your colleagues that working flexibly can work for you and the firm.”
In some areas of practice, lawyers can manage their workload on a part-time basis. However, transactional departments include work that is multi-jurisdictional in nature, involving different time zones and tight deadlines. While technology, such as the Blackberry, enables people to respond at all hours and work from home, clients in transactional departments expect swifter responses as a result. It is therefore very difficult to accommodate part-time lawyers
Crucial to the flexible work argument, is the fact that women make up 64% of those entering the profession, yet few are represented as partners.
Chris Seaton, partner at Burges Salmon says: “Law firms are still grappling between client demands and the need to retain women after maternity leave and offer them a flexible working environment.”
Younson points out: “Although a lot of firms espouse family-friendly values, it is often difficult to reconcile this with their preoccupation with billable hours. Law firms get very good value out of female partners who go to work four days a week, but actually do five days or more, without the remuneration.”
In one instance, a female solicitor at a City firm expected to return to her job after maternity leave, on a part-time basis as agreed. A few weeks before going back, she was told that she could not in fact resume her job on a part-time basis, but was offered a part-time professional support role, albeit on lower pay. She accepted the alternative job, but in reality the firm had acted unlawfully.
William Dawson, partner at Simmons & Simmons notes: “No-one appears to have found answers for the post maternity employee yet. Job-sharing involves an element of duplication, and part-time work makes instant answers difficult.”
Yet clients expect to see professional advisers embodying the values that they hold when it comes to diversity, flexibility, corporate responsibility and a work life balance. Firms need to strive to have a maternity policy in excess of the statutory regulations, for women to work part-time and from home.
Mark Mansell suggests: “Firms need to think more creatively about work-life balance and old fashioned views shouldn’t persist. If individuals are committed, there is no reason why job sharing should not work, for example two lawyers working three days a week with a one day overlap and a proper handover.”
Additional strain sometimes falls on those not working flexible hours, as they can feel cheated and see those that do work flexibly as having the best of both worlds. David Morgan, partner at Burness LLP explains: “Like any professional employees, lawyers without families sometimes feel they are carrying those part-time lawyers with families.”
And even when the profession appears to be changing, there are hurdles. Says Thompson: “Some female lawyers don’t do their younger female colleagues any favours. Because they had to compete in a profession on male terms without the opportunities to work part time after maternity leave, they are hard on those that do.”
Work-related stress is an increasing problem in the legal professional because of the increasing pressure of work. As stress levels and hours worked rise, claims have risen. Some years ago a British Medical Association (BMA) report illustrated that medicine remained the profession with the highest stress levels. A recent BMA report showed law now has the highest levels of stress as a profession.
Rachel Dineley, partner at Beachcroft Wansborough says: “The key to avoiding stress and managing work pressures well is good employee communication and good performance management.”
However, absences because of stress and claims are on the increase. Previously, under the Disability Discrimination Act (DDA), to prove disability on grounds of mental impairment one had to show a clinically well-recognised illness. From October, this will no longer be necessary. Dineley says: “As long-term ill health due to stress, anxiety and depression become easier to establish as a disability; together with the consequences it has for employees, there will be an increase in stress-related claims under the DDA.”
Under the DDA, the legal profession has a duty to make reasonable adjustments for its employees. For instance, a particularly stressed solicitor may need their work hours varied or client contact reduced. At the same time, efforts have to be made not to overburden other employees as a result.
Malcolm Pike, partner at Addleshaw Goddard, says: “We endeavour to provide a supportive environment such as free occupational health and counselling services for employees and their families.”
In 2006 new age discrimination legislation will come into force based on European regulations. The impact of this will be profound, as there are no limits on liability in discrimination claims.
It will be more important than ever for employers to manage their staff, and reduce the risk of employees alleging they have been discriminated against as a result of their age, (for example that they are too old or young for the job they are doing, or applying to do).
The legislation will affect the equity or lock-step system of partner remuneration. Hilary Campion, partner at Eversheds, notes: “The lock-step system rewards partners for the length of time they have been partners, not their contribution, which is in essence discriminatory against younger partners.”
The lock-step approach to equity partnership and retirement also conflict, as often partners are expected to retire when their remuneration has only just increased.
As well as remuneration policies, the legislation will affect firms where the compulsory retirement age is quite low and people have to leave when they don’t make it as partner.
Inform and consult
The Information and Consultation Regulations is another piece of legislation that will affect the legal profession. From last month (April) employers have had to put in place an information and consultation process for employees on issues that affect them and the business, where there is an employee request and support for such a process.
Rachel Dineley points out: “Historically, many lawyers in the profession have compared themselves to mushrooms, kept in the dark and not consulted. Employee input ensures the workforce feels more involved in the decision-making process. Where it works well, they can contribute and more actively support that process.”
Malcolm Pike says Addleshaw Goddard already has a process in place: “We favour a direct approach where information is systematically fed up and down the chain through divisional managing partners and executive teams.”
One issue that has worked to the advantage of lawyers is the fact that restrictive covenants are becoming much less enforceable and many clients follow their lawyers when they move firms. Hilary Campion at Eversheds says: “If you are looking for good talent, it can be quite offputting to give an undertaking not to act for clients. The issue is to protect the business from attack when solicitors leave a firm, or have a restrictive covenant clause in the contract that is unattractive when it comes to recruitment. Eversheds don’t have restrictive covenants in its solicitors’ contracts or partnership agreements which is a risk, but a good recruitment tool.”