Canadian Lawyer

group of clients, who are also pushing for alterna- tive fees, so firms will be pushing retirement as much as they can legally in order to survive. The continuing case of Mitch McCormick, the " B.C. lawyer who launched a discrimination suit against Fasken Martineau DuMoulin LLP over its mandatory retirement policy, has cast some doubt over just how far law firms can go. The B.C. Court of Appeal heard arguments in April on whether the B.C. Human Rights Tribunal has jurisdiction to hear the merits of the case. The situation is equally unclear south of the border, where law firms were denied a precedent-setting decision when 1,700-lawyer Sidley Austin LLP settled a discrimination case with 32 de-equitized partners in 2007. However, the $27.5-million cost of the settlement is enough for firms there to proceed with caution. Whether they arrived there by virtue of age or substandard performance, de-equitized partners have boosted the ranks of non-equity partners even further. Edge's Wesemann says the short- term focus on profitability that has driven the increase could spell trouble in the long run. "We've created this monster. They're not real part- ners, but they bill like partners, and they have no natural predator, partner-level work at law firms means non- equity partners, particularly long-standing ones, end up doing work that is more appropriate for fourth- or fifth-year associates. "We have a rebel- lion coming. The recession has given us more empowered clients who are actually reading the bills we send them, and they are saying, 'why on earth are we paying a partner rate for this?'" He notes the non-equity trend is more fully According to Wesemann, the lack of genuine " he says. developed in the U.S., where firms are now tak- ing an axe to their non-equity partner ranks, as well as the equity partnership. A May 2012 report by Altman Weil Inc., "Law Firms in Transition," found that with the exception of support staff, non-equity partners were the most likely position American firms will cut in the next year. Equity partners followed closely behind in third place. STAR POWER A nership inequity, advises Harper. Just before the firm imploded, some partners reportedly earned at least 20 times what the lowest-paid partners were drawing from the firm. The problem was exacerbated by guaranteed incomes promised to some lateral stars as part of the big-money deals that brought them to the firm over the last two years. Existing equity partners found their earn- ings squeezed in order to subsidize guaranteed incomes the firm could not afford, of which there were about 100 such agreements according to bankruptcy filings in Manhattan. "What does partnership actually mean if you have a ratio of 20:1? It's incredibly de-stabilizing, s Dewey & LeBoeuf stumbles through bankruptcy, Canadian law firms should see the firm — created less than five years ago — as a beacon to the dangers of part- that overvalued rainmaking lawyers, and that compensation packages spiralled out of control. "The notion a top lawyer is worth 10 times more than another partner makes no sense at all. You get into a vicious circle, where you panic about losing somebody and get into a truly irrational bidding war. He says the firm bought into a star culture " says Harper. " www.CANADIAN Lawyermag.com JULY 2012 31 " " NO NATURAL PREDATOR. ED WESEMANN WE'VE CREATED THIS MONSTER. THEY'RE NOT REAL PARTNERS, BUT THEY BILL LIKE PARTNERS, AND THEY HAVE

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