“… Most UK professional practices operate a system of inherently discriminatory compulsory retirement of partners at a fixed age, regardless of ability or performance, on the assumption that this is legally justified …”

The case of Seldon v Clarkson Wright & Jakes is due to be heard by the Supreme Court on 17 January 2012 in a hearing estimated to last three days.

In summary the Justices (Lord Hope of Craighead, Lady Hale of Richmond, Lord Brown of Eaton-under-Heywood, Lord Mance of Frognal and Lord Kerr of Tonaghmore) will consider the correct approach to justification of prima facie direct age discrimination contrary to Regulation 3(1)(a) of the Employment Equality (Age) Regulations 2006.

The professional practices sector in particular has been awaiting the outcome of this long-running case with interest and perhaps some trepidation. Most UK professional practices operate a system of inherently discriminatory compulsory retirement of partners at a fixed age, regardless of ability or performance, on the assumption that this is legally justified by the need to encourage younger members of the firm by making room for them at the top, and to avoid arguments as to whether or not older partners are still pulling their weight (the “collegiality” argument).

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“… The classic example that is often given is where a firm has contracted to build a bridge, and dissolution occurs when only half of the bridge has been built …”

The recent case of Boghani v Nathoo [2011] EWHC 2101 (Ch) (judgment 2 August 2011) is a useful modern authority relating to the obligation and entitlement of partners to carry on the firm’s business following partnership dissolution.

At the date of dissolution the assets of the firm included two substantial but incomplete hotel developments. The partners were unable to agree how those developments should be disposed of in the winding up of the affairs of the firm, with one partner contending that following a three month marketing campaign the uncompleted hotels should be sold to the highest bidder, and the other partner maintaining that the hotels should be completed before being sold.

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LLP + no LLP members’ agreement = litigation

9 March 2011

“… considerable profits have been made, and essentially it is worth fighting over …” The recent case of Eaton v Caulfield & others (an unfair prejudice petition brought under section 994 of the Companies Act 2006, coupled with a just and equitable winding up petition under section 122(1)(g) of the Insolvency Act 1986) highlights the difficulties faced [...]

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PLAWBites – Partnership Dissolution FAQs

15 February 2011

The first in a new series of bite-sized FAQs on aspects of partnership and LLP law Partnership dissolution FAQs:  What is dissolution? In the partnership context, “dissolution” describes both an event and a process :

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Breach of duty of confidentiality via SAR audit

13 February 2011

“… while nobody sympathises with a money-launderer or other criminal, not only is there the possibility of a damages claim from a client, but also regulatory sanctions in addition …” Solicitors could inadvertently breach their obligations to certain clients by allowing their Solicitors Accounts Rules (SAR) auditors to view those clients’ files. Solicitors and other [...]

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Pursuing harassment rather than discrimination

25 November 2010

“… most conduct that would have been sufficient to justify a discrimination or sexual harassment claim may well be oppressive and unacceptable and cause anxiety, alarm or distress …” It is quite a common occurrence these days to find at the first meeting with a client that he or she has a perfectly good discrimination [...]

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Insurance renewal-induced cessation

24 September 2010

“… If someone is completing on Friday it does not help them if their solicitor ceases to practise on Thursday …” Some legal practices are only now, with one week to go, receiving premium quotes for their 1 October 2010 professional indemnity insurance renewal. It is nail-biting for them as they may have only one quote – it is [...]

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Escaping liability in professional partnership insolvencies

1 July 2010

“… It is possible inadvertently to throw away these defences in the course of the process leading up to administration, a PVA and/or IVAs …” This article describes the run-up to a professional partnership insolvency, and the choices faced by the partners who control the partnership. It then goes on to identify particular issues faced [...]

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Settling partnership disputes through mediation

7 May 2010

“… after a few hours of tight-lipped civility, one or other of the parties … cannot stop himself telling the other party what he really thinks …” There are a number of factors which distinguish partnership disputes from other types of commercial dispute.  In consequence, different methods are sometimes required to achieve settlement. In this [...]

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What happens after a dissolution notice is served?

23 April 2010

“… the income of the firm may well diminish and/or partners may not account fully or at all for accrued WIP …” Unless there is an express agreement between partners permitting retirement, no partner can retire from a partnership at will.  The only way to bring about termination of the relationship is for one or [...]

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