By JEFF BLUMENTHAL
Philadelphia Business Journal

Louis Fryman was either managing partner or chairman of Fox Rothschild for roughly two decades, and still maintained a client base when he reached the law firm's mandatory retirement age of 72 in 2007. He stayed on as counsel to the firm for another year before being offered a chance to join the partnership at a 30-lawyer litigation boutique, Conrad O'Brien Gellman & Rohn.

"I just wasn't satisfied with being a retired partner," said Fryman, who said he still refers specialty legal work from his clients to Fox Rothschild.

Fox Rothschild has since become one of many large law firms around the country to loosen mandatory retirement age rules for partners, partly because the recession has placed a premium on those lawyers who bring in business - regardless of age.

"We agreed to take each case as it comes along, going forward," Fox Rothschild Administrative Partner Mark Silow said. "And I think the industry has liberalized its approach to retirement, because you don't want to lose good people, and lawyers are more vibrant later into their life cycles."

Both Fryman and Silow said dealing with retirement on a case-by-case basis is probably best, but no matter what is not without its perils - especially at a time when members of every profession are putting off retirement because of investment losses.

"The problem is that it becomes difficult on a personal level to weed out who is still vibrant with their practice," Silow said. "Interpersonal relations make it difficult for firms to police themselves. The mandatory retirement age let them off the hook."

Fryman said that could lead to claims of discrimination by some partners who are asked to retire even though their colleague down the hall, and of the same age, has been allowed to stay.

A $27.5 million settlement in 2007 of an age-discrimination lawsuit brought by 32 demoted partners at Chicago-based Sidley Austin, coupled with trade-association policies adopted in recent years, caused many law firms to re-evaluate their internal policies toward partners nearing or at retirement age. Sidley claimed that the demotions were based on performance, but other firms have since been cautious about enforcing mandatory retirement on some partners but not others.

David Marion, the longtime chairman of Montgomery McCracken Walker & Rhoads, retired from the firm's partnership in March when he reached the mandatory age of 70. But he still has a full practice and works a full schedule.

He said in this unprecedented down economy, firms cannot carry equity partners unless they are generating business.

"The trend has been against mandatory retirement, but when the recession hit and there were more economic pressures placed on firms, it accelerated," Marion said. "Before the recession hit, some partners slated to retire would have resisted, and firms would have been more lax in response."

Marion and Cozen O'Connor partner Neal Colton said productivity should be the sole judge of a lawyer's status within the partnership, regardless of age.

"It's not constructive to have an arbitrary status when performance is the best judge," Colton said. "If you set that standard, a 50-year-old might get the same message as a 65-year-old."

When lawyers retire from a firm's partnership, they lose their share of partner profits distributed at year-end, and cannot vote on key strategic decisions.

But many lawyers choose to continue with a full practice. That can present a problem; the reason mandatory retirement was implemented in the first place was to coerce the orderly transition of clients to the next generation.

Colton, 64, does not have to worry about the issue, because the Cozen firm does not have a mandatory retirement age. But he said the most powerful way of sending a message to an underperforming aging partner is to cut his or her compensation.

"Every firm is going to adjust compensation and profit distribution based on performance," Colton said. "The message will come to those lawyers that they are not valued at the firm if they are not receiving the money they think they should. And the only options are to accept it or leave."

Drinker Biddle & Reath Chairman Alfred Putnam, whose firm has a 65-year-old retirement age that it waives in certain circumstances, does not believe removing mandatory retirement ages will automatically benefit aging lawyers.

"The net effect of no mandatory retirement isn't always positive for aging lawyers, because law-firm managers have to look at their rosters like Major League Baseball managers (do)," Putnam said. "Some might get pushed out in their 50s rather than at 65 if there is a younger partner who is more productive."

Marion said it is tougher to retain business as you get older.

"General counsels of companies that you have been working with for years retire and are replaced by younger ones with their own friends at firms who want their business," Marion said.

Saul Ewing Chairman Stephen Aichele said mandatory retirement became a problem when firms replaced partner-funded pension plans with 401(k) programs.

"It wasn't looking so bad a few years ago when 401(k) plans were humming," Aichele said. "But without a defined-benefit retirement plan, firms have no leverage to make partners give up their clients. So they risk losing a lawyer's clients if they try to enforce it, because some firms will want a $2 million practice for five more years."

Silow said Fox Rothschild has talked to potential lateral candidates who are nearing retirement age.

"Everyone in every profession is putting off retirement because of investment losses," Silow said. "And there are some good lawyers out there that fit that description."