Issues In Law Office Employment

I. Introduction

This outline will discuss broad employment law issues pertaining to law office employment. The outline does not provide an in-depth analysis of partnership law or ERISA law, each of which has significance in law firm employment.

As employers, lawyers face the same issues in managing a work force that other businesses face. Employment issues take on greater significance in law offices, however, because lawyers are expected to be knowledgeable about employment law. There is a perhaps misguided expectation that lawyers will handle their own employment relations with somewhat greater precision than other businesses. But see, Bandy v. Sprecher, 1993 WL 276974 (E.D. Pa.). Therefore, employment litigation with a law firm as a party will attract attention, both within the legal profession and within the broader community. Law firms are target defendants, as shown by the multi-million dollar jury verdict in the Baker & McKenzie sexual harassment case.

The presumption of at-will employment applies in law office employment, as it does in the workplace generally in Pennsylvania. See, e.g., Solodky v. Post & Schell, P.C., 1998 WL 461854 (E.D. Pa.). Absent a contract for a pre-determined period or a contract for employment that limits the grounds for discharge, an employee of a law office may be terminated at any time, for any reason, or for no reason. Charleston & Fenerty, P.C. v. DeLuca, 17 Phila. Co. Reptr. 590, 1988 WL 679814 (Phila. Co. 1988), vacated and aff'd, 390 Pa. Super. 649, 561 A.2d 816 (1989). Courts will enforce the durational and notice requirements of law firm employment contracts, however. Doe v. Kohn, Nast & Graf, P.C., 862 F. Supp. 1310, 1324-1325 (E.D. Pa. 1994).

The common exceptions and limitations to the employment-at-will rule (civil rights laws and public policy principles) apply to law office employment. Additionally, the employment-at-will rule is limited by factors that are unique to law firms. At the equity partnership level, partnership agreements and the attendant fiduciary duty of partners and the duty of good faith and fair dealing limit the at-will doctrine. The objective means of quantifying performance for professionals and para-professionals may lead to compensation and benefits disputes The Rules of Professional Conduct give rise to public policy claims.

II. Contractual Issues

1. Partners

   Fiduciary duty and duty of good faith and fair dealing - Continuing partners owe no fiduciary duty or duty of good faith to withdrawing partner after partner withdraws from firm. See, e.g., Poeta v. Jaffe, 51 Pa. D. & C.4th 78 (Phila. Co. 2001)

   Retirement benefits - A partnership may not retroactively modify retirement benefits to the detriment of retired partners who had fulfilled the requirements for benefits, e.g., completion of the requisite years of service and receipt of retirement compensation. Abbott v. Schnader, Harrison, Segal & Lewis, LLP, 50 Pa. D. & C.4th 225 (2001).

   B. Salaried Attorneys

   Upon leaving a law firm, salaried attorneys have no right to obtain client files or to receive distribution of assets of the firm. Murphy v. Burke, 454 Pa. 391, 311 A.2d 904 (1973).

   Salaried attorneys who accept compensation with no explicit agreement for payment of bonuses may not sue for additional compensation under a theory of quantum meruit. See Murphy v. Haws & Burke, 235 Pa. Super. 484, 344 A.2d 543 (1975).

   C. Fraud

   1. Partnership

   Non-equity partner of firm stated claim for breach of contract and for fraud after being terminated without cause, in violation of an agreement that plaintiff could only be terminated for cause and would be reviewed for position as a full-equity partner. The fraud count stemmed from the law firm's misrepresentations that the lawyer would be considered for a full-equity partner position and would share in a percentage of the gross fees of the firm. Gransante v. Allan Kanner & Associates, 1994 WL 517913, Motion to Certify Denied, 1994 WL 630209 (1994) (E.D. Pa.).

   In McBride v. Thorp, Reed & Armstrong, 139 Pittsburgh 229 (1991), a tax partner won $685,000 in damages for breach of contract and fraud arising from his discharge after being recruited by a law firm from a corporate position, with the representation that the lawyer would be a partner and head of the tax department. Plaintiff believed that he was assured of "lifetime" employment; he based his breach of contract claim on an averment that he was promised a partnership interest until he reached the age of 70. However, the partner was asked to resign after one year.

   2. Corporation Counsel

   Claim of fraud in the inducement connected...