Law firms are not a 'social service', Lord Hope says as Seldon appeal rejected

Law firms are 'exposed to all the forces of competition' and are not a 'social service', Lord Hope said today as the Supreme Court rejected an age discrimination claim brought by former senior partner Leslie Seldon.

Seldon brought the claim because his firm's partnership deed obliged partners to retire at the age of 65 and he wanted to keep working.

Giving the leading judgment in Seldon v Clarkson Wright and Jakes [2012] UKSC 16, Lady Hale said that, as he reached his 65th birthday, Seldon realised that for 'financial reasons' he would have to go on working for another three years.

'Early in 2006 he made a series of proposals to his partners with a view to continuing to work as a consultant or salaried employee for another three years,' Lady Hale said.

'These proposals were rejected by the other partners in May 2006 on the basis that there was no sufficient business case, but an ex gratia payment of £30,000 was offered as a goodwill gesture to reflect his long service with the firm.'

Lady Hale said that when Seldon told the firm he was seeking legal advice on the age regulations, which came into force in October 2006, the ex gratia offer was withdrawn. He ceased to be a partner, in accordance with the partnership deed, on 31 December 2006.

The firm made it clear it was not relying on poor performance by Seldon and put forward six 'legitimate aims' to justify their treatment of him.

Three of these were later recognised as legitimate by an employment tribunal. They were ensuring that associates had the opportunity of partnership, facilitating workforce planning by having realistic expectations about vacancies and limiting the need to expel partners by performance management to encourage a 'congenial and supportive' culture.

The EAT accepted that staff retention and workforce planning were 'legitimate aims', as did the Court of Appeal, which also accepted the 'collegiality' argument.

Lady Hale said Seldon and Age UK 'argued that these were individual aims of the business' rather than the sort of social policy aims contemplated by the equal treatment directive.

'I do not think that that is fair,' she said. 'The first two identified aims were staff retention and workforce planning, both of which are directly related to the legitimate social policy aim of sharing out professional employment opportunities fairly between the generations'.

Lady Hale said all three aims had been recognised as legitimate by ECJ case law. She said limiting the need to expel partners by way of performance management was directly related to the 'dignity' aims accepted by the ECJ and it was clear the aims could be related to the particular circumstances of the type of business concerned.

'The employment tribunal did not unpick the question of the age chosen and discuss it in relation to each of the objectives,' Lady Hale said. 'It would be unduly constraining to deny them the opportunity of doing so now.

'I would emphasise, however, that they are considering the circumstances as they were in 2006, when there was a designated retirement age of 65 for employees, and not as they are now.'

Lady Hale dismissed Seldon's appeal and remitted the issue of whether it was proportionate to set the age limit at 65, as opposed to another age, to the employment tribunal. Lord Brown, Lord Mance and Lord Kerr agreed. Lord Hope agreed, for his own reasons.