Speaking with The American Lawyer, Ronald Shechtman, managing partner of Pryor Cashman and chair of the firm's Labor + Employment Group, discussed the two closely-watched discrimination lawsuits pending against Proskauer Rose and Chadbourne & Parke, and how the nature of BigLaw partnerships could impact the outcome of both cases.
The two lawsuits, brought by former female partners of each firm, allege that women partners were unfairly paid less than their male colleagues. Proskauer and Chadbourne have taken the position that the suits are improper because the lead plaintiffs in both actions were equity partners - not employees of the firms - at the time of the alleged discrimination, and therefore are not entitled to the federal employment protections contained in the Equal Pay Act and Title VII of the Civil Rights Act of 1964. In total, the suits seek more than $100 million in damages.
The courts in both cases will be faced with the question, should partners be treated as employees, even if they hold an ownership stake in their firms?
"The law is settled to the extent that courts will not accept the mere designation of equity partnership or a nominal interest...in profits as a bar to an inquiry of whether those partners are employees or not," Shechtman explained. "It's a factually intensive analysis."
That analysis - which includes whether a partner can hire or fire other staff members or reports to someone higher up the chain, among other factors - depends on the structure of a given law firm, and the nature of being a "partner" there, Shechtman said. A court may also look at the firm's structure to determine if most of the day-to-day operations are dictated by a management or executive committee, or if all equity partners truly have a say in the firm's business decisions.
When the judges in the Proskauer and Chadbourne suits undertake that analysis, they'll be doing it in the context of a changing legal industry, and what it means to be a partner at one of the nation's largest firms.
In a general sense, Shechtman said, the nature of being a partner in BigLaw has shifted in recent years, as more firms have created and expanded nonequity partner roles. Meanwhile, more firms have concentrated the authority to make strategic decisions in an executive or management committee that includes only a subset of the firm's full equity partnership. "In the last 10-15 years, we've seen the whole concept of law firm partnership evolve," he explained. "That evolution has primarily been the move in many firms to a two-tier partner structure."
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