The nine-day hearing, which is due to come to a close today (19 July), has seen the magic circle law firm accused of offering favourable terms to influential partners as well as withholding a consultancy offer because the partner in question was making a claim, estimated to be worth £4.5m.
The dispute concerns the treatment of former restructuring head Peter Bloxham when the firm overhauled its pension scheme last year, phasing out an old scheme that guaranteed annuity payments for retired partners, up to a maximum of 10% of the firm’s profits.
Bloxham alleges that he suffered age discrimination as a result of the changes, as he was six months too young to qualify for a full pension entitlement under the scheme at the time a less generous replacement was introduced in October 2006.
The hearing was told how co-senior partner Guy Morton met with ex-corporate head Barry O’Brien, former finance chief Simon Hall and tax partner Richard Ballard, who had all raised issues regarding the changes at the firm.
Morton denied he offered the three partners favourable consultancy packages in return for not making trouble or actively campaigning, saying it was not his decision to make and that each practice group had to present a business case for consultant positions.
The trio were among a number of top partners — including former litigation chief Ian Taylor — to abstain or vote against the pension reforms when it held an open vote on the reforms. Morton believed that O’Brien, Hall and Ballard had abstained.
Morton denied accusations that the pensions scheme aimed to rid the firm of its older partners but admitted this was “forseeable and forseen”. He rejected claims that he admitted to Bloxham the firm had got it wrong when formulating the transitional arrangements.
The allegations highlight the tensions experienced by the firm during its efforts to overhaul its pension scheme last year — a process that saw 31 departures from its equity partnership.
In a key day for the hearing, chief executive Ted Burke on Monday (16 July) admitted the firm had paid out £24m in severance packages to around 25 partners who left the equity as part of the so-called ‘size and shape’ restructuring of its partnership. The firm insists that the initiative was separate from the pension reforms.
Freshfields prepared a heavy-weight line-up of witnesses, which included Burke, Morton, managing partner Peter Jeffcote, global finance head Perry Noble and
On the stand, Jeffcote played down Bloxham’s opposition to the new scheme. He said: “So far as I can recall, at no point in his correspondence with me did Bloxham put forward any positive alternative suggestions or propose any amendments to the scheme.
“He expressed himself in favour of reform but such support appears to have been on terms that it should cost him nothing.”
Freshfields is being represented by Lewis Silkin employment head Michael Burd and Blackstone Chambers’ Dinah Rose QC. Bloxham’s counsel is Tim Pitt-Payne of 11KBW, and he is being advised by Dawsons Solicitors.
For full daily reports and the results of the tribunal see legalweek.com. Additional reporting by Paul Hodkinson.