How old is too old?

That's an issue facing lawyers across the country as the American Bar Association and state organizations consider proposals to eliminate mandatory retirement ages at many of the biggest and most prestigious law firms.
 
Forced retirement at an arbitrary age -- as early as 60 in some cases -- creates openings for new partners and helps firms avoid tough decisions on whether an older partner is still performing up to standards.

"It's easier to have a bright-line test" -- a clearly defined rule -- said Drew Berry, chairman of the executive committee at McCarter & English, New Jersey's largest law firm.

That way you avoid the difficult problem of making distinctions between two partners, he said. "How do you tell one he can stay and one that he can't?"

But forced retirement can also cost firms some of its most skilled and productive members, including some who might take clients with them, Berry said.

Last month, the ABA endorsed a recommendation from the New York State Bar Association that calls upon law firms to discontinue the practice. Law firms should evaluate senior partners individually based upon the performance criteria used to evaluate other lawyers in the firm, the ABA said.

"Senior lawyers should not be forced to leave their firms solely on the basis of age when they have many productive years left and are still making valuable contributions to the firm," said Mark Alcott, a past president of the New York bar association.

"Forcing lawyers to retire solely because of age, regardless of performance, regardless of objective criteria, is not an acceptable practice and not in the interests of the legal profession," he said.

Because law firms are partnerships, the partners are owners, not employees. As a result, firms can have mandatory-retirement policies despite laws that make them illegal for some of their clients.

But change may be coming.

"While young lawyers represent our tomorrow, we also have a cadre of experienced lawyers who still have much to offer our association and our profession," Lynn Fontaine Newsome, president of the New Jersey State Bar Association, said in a statement on the association's Web site.

She has endorsed a program to explore ways to "reengage senior lawyers so that we can all benefit from their accumulated knowledge and expertise, and enable them to continue to be active bar members."

That's what has happened at Hackensack-based Cole Schotz Meisel, Forman & Leonard, Bergen County's largest law firm, which has no mandatory retirement age.

"What we have is a very flexible arrangement," partner Steven Leipzig said. "We recognize that partners and senior members of the firm continue to make valuable contributions to the firm well into their 60s and 70s."

Name partners Morrill Cole and Edward Schotz are both in their 70s "and continue to practice law vigorously and make a valuable contribution to the firm," Leipzig said.

Absent forced retirement, the firm can attract older partners from smaller firms that will give them and their clients continuity, he said. "That certainly benefits the firm."

Practical considerations prompt some firms to rewrite their rules, as happened at Newark-based McCarter & English this year.

"Like many law firms, we are in transition," Berry said. "We have had for many, many, many years -- try 35 years -- a mandatory retirement age for equity partners of 70. That meant after age 70, you would cease being an equity partner. You could be 'of counsel,' meaning you kept your desk and secretary. But it was all very informal, and you didn't get paid" by the firm.

That system "seemed to work for the firm for a long, long time," but when faced this year with the loss of a highly regarded litigator, simply because he turned 70, the firm decided to change its policy, Berry said.

Attorneys must still retire as equity partners at age 70, but if they are "still in the game, want to keep working, and the law firm wants them to keep working," they can remain on an annual contract basis, he said. They no longer share in earnings and don't vote on firm matters, but are expected to continue practicing at high levels.

"Without falling over into cliches, compared with 25 years ago, some people are active and healthy and 'in the game,' " Berry said. "That's the relevant phrase for me as chairman of the firm. If they're in the game and they're engaged and they're doing well, what are you going to do?"

The Supreme Court said murders triggered by family disputes should not always result in the death penalty. Crimes of passion should take into account the offender's payment of compensation, it said.

Similarly, those convicted of economic crimes should be treated more leniently if they help to recoup money that was defrauded. The court suggested greater use of two-year suspensions on death penalties - allowing them to be converted to imprisonment. However, it continued to back capital punishment as a deterrent.

"We must hand down and carry out immediate capital punishment in regard to heinous cases, with iron-clad evidence that result in serious social damage," its statement said.

The most high-profile execution this year was of the former head of the State Food and Drug Administration, Zheng Xiaoyu, for taking 6.5m yuan ($860,000; £430,000) in bribes and for dereliction of duty.

In 2005, an estimated 1,770 executions were carried out and nearly 4,000 people were sentenced to death, human rights group Amnesty International says.

But China says the number has fallen since an amendment came into force this January requiring the Supreme People's Court to approve all death sentences.

The main topics of interest are expected to be decisions relating to two issues raised by the Commission's March 2004 order against Microsoft, which included a $613 million fine and determinations that the company engaged in a number of anticompetitive practices.

One issue to be addressed by the court deals with whether Microsoft stifled competition by bundling its Media Player with Windows, the market's dominant operating system. The other issue focuses on whether Microsoft provided adequate interoperability protocol information to competitors.

If the court hands the Commission an overwhelming defeat on both the interoperability and Media Player issues, the Commission could find itself neutered, say legal experts.

In recent years, the Commission has aggressively pursued or investigated other technology industry titans, including chipmaker Intel, which faced allegations the company wooed customers with marketing dollars in exchange for their exclusive use of Intel chips. The Commission also took on mobile-phone chipmaker Qualcomm over antitrust issues surrounding its patents for its 3G chipsets, and recently began an antitrust review of Google's proposed $3.1 billion acquisition of online ad company DoubleClick.

Given the Commission's fearlessness in taking on major technology companies over competitive issues, a major defeat in court may leave it with the "wind taken out of its sails," noted Thomas Vinje, an antitrust attorney with Clifford Chance in Europe. The Commission, as a result, may temper the pace and energy with which it pursues cases, he noted.

But should the Commission soundly defeat Microsoft, legal observers say, it's doubtful European regulators will suddenly go on a rampage and pursue marginal antitrust cases.

"The effect of a really big loss would be greater than the effect of a really big win for the Commission," Vinje said.

The $613 million fine called for in the March 2004 order was increased by $357 million last year, after the Commission alleged the software giant had not complied with its original ruling. The Court of First Instance will also issue a decision on the multimillion-dollar fines.

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The court's decision is also expected to have some affect on the Commission's view toward other Microsoft products it is currently investigating, such as the Vista operating system, said Michael Reynolds, an antitrust attorney with Allan & Overy in Europe. The software giant announced in October that it made changes to Vista to accommodate concerns raised by antitrust regulators in Europe and South Korea.

"There already has been some intervention by the Commission," Reynolds said. "But everyone wants to see what the court says, before (finalizing) negotiations with the Commission."

While the court's ruling may have an affect on how antitrust cases are addressed by the EC, one legal expert said it is unlikely Google, Intel, Rambus or Qualcomm will be affected by the Microsoft decision next week.

Google's market share is far lower than that of Microsoft and no barriers exist to prevent users from migrating to another search engine, said Maurits Dolmans, an antitrust attorney with Cleary Gottlieb Steen & Hamilton in Europe.

And while Intel chips are in a majority of all computers, it has a rival, Advanced Micro Devices, and allegations that the chipmaker engaged in predatory pricing in Europe are far different from the issue Microsoft is facing over bundling its Media Player and the interoperability of its server protocols, said Dolmans.

Nonetheless, antitrust attorneys say the decision will be closely watched by a number of parties, from high tech companies to the legal community to other antitrust agencies around the world.

"As a practical matter, I think a lot of the smaller competition jurisdictions will put a lot of weight behind what the Court of First Instance does," said Chris Compton, an antitrust attorney with Wilson Sonsini Goodrich & Rosati. "Korea and Japan may either feel embolden to take action against companies like Microsoft or Intel, or it will constrain them."

As a result, Compton noted, the decision by the Court of First Instance is expected to the most closely watched antitrust decision on a global scale.

"This is a decision," said Compton, "that will have hundreds, if not thousands, of lawyers who'll want to take it apart."

In March, the SEC filed civil fraud charges against ex-CEO Frank Dunn and other executives — including former Chief Financial Officer Douglas Beatty and former controller Michael Gollogly — alleging they directed a so-called earnings management fraud to manipulate the company's financial reports.

In the latest charges, the commission alleges that from the second half of 2002 through January 2003, Hamilton, Johnson, Kinney and Taylor "all determined that their business units held tens of millions of dollars in excess reserves."

"The four finance vice presidents did not immediately release those excess reserves as required under U.S. Generally Accepted Accounting Principles, but instead maintained them for earnings management purposes," the SEC said in its complaint Wednesday.

The regulator said the former executives set aside $44 million in additional excess reserves to lower Nortel's consolidated earnings and bring them in line with internal and market expectations.

The changes helped erase Nortel's profit for the fourth quarter of 2002 and helped produce a loss instead.

The SEC alleges that Dunn, Beatty and Gollogly directed the improper companywide release of about $500 million of excess reserves in the first and second quarters of 2003 to inflate earnings and pay bonuses.

U.S. regulators allege the executives aimed to "create the false appearance" that the company had returned to profitability after three years of red ink so they could pay themselves and others bonuses, which were based on the company hitting certain financial targets.

The commission is seeking unspecified fines, a permanent injunction, repayment of money with interest and an order barring the executives from being officers and directors of any public company.

Nortel, which once accounted for one-third of the total valuation on the Toronto Stock Exchange, ran into financial headwinds around 2000 and lost billions of dollars of value.

Dunn was fired along with Beatty and Gollogly in 2004 after allegations of accounting irregularities at the company.

The Ontario Securities Commission also plans a hearing into allegations of financial misconduct and negligence against Dunn and others named in the SEC filing.

Samsung and LG are key Qualcomm customers and were seen as the most likely victims of the ban announced in June. But the companies said that their US business had so far not been affected by the ban, which was supposed to take effect from this month. Both groups had been making alternative supply arrangements.

LG, which has heavy exposure to the US CDMA market, said: ”The ban might have depressed the whole US handset market.”

Samsung also welcomed the ruling.

The news drove LG’s shares up 4.25 per cent to Won76,100 and Samsung’s 0.36 per cent to Won562,000, while the broader market closed up 1.9 per cent yesterday.

On Wednesday, a judge in Washington agreed that the third parties had demonstrated ”a substantial case on the merits and the harm factors weigh[ed] in their favour”.

LG shipped 37 per cent of its total handset sales to the US last year. It sold 64m units of handsets last year and controls 15.2 per cent of the US market. Samsung sold 27 per cent of its total handset sales, which amounted to 37.4m units, in the US in the second quarter, according to Nomura International.

The International Trade Commission on June 7 imposed the ban after finding that Qualcomm had infringed a Broadcom power-saving patent. The two sides have been unable to reach agreement on compensation out of court.

Alex Rogers, legal counsel for Qualcomm, said: ”We are pleased that the court of appeals recognised the undeserved harm to parties who were not named in the lawsuit, and that our customers will continue to be able to introduce new products into the US marketplace during the appeals process.”

Qualcomm’s technology is included in all 3G handsets, meaning that a full ban on cellphones carrying its chips might potentially have hampered the take-up in the US of the next generation of wireless technology.

In February, LG, which has strength in the 3G business, won a contract from GSM Association to supply a low cost handset for 3G mobile phone networks under the banner ”3G for All”.

"This is getting serious," said Senator Amy Klobuchar, a Minnesota Democrat. "It is time for us to take action."

Senators also called for a revamping of the Consumer Product Safety Commission, including giving it the power to ban lead in all children's toys, funds to increase the number of inspectors at ports and compliance officers in the field, and providing better equipment and better staff for the testing laboratory.

Mattel, the nation's largest toy company, and other members of the Toy Industry Association, whose members are collectively responsible for 85 percent of toys sold in the United States, support a federal mandate that toys be tested by independent laboratories before they are sold.

Failure by all parties to properly do such testing has "left our companies, the industry and most importantly our children exposed," Carter Keithley, president of the Toy Industry Association, said in his testimony.

Gerald L. Storch, chairman of Toys "R" Us, said the government and toy manufacturers should find a way to hasten the recall of products after flaws are discovered.

"We are troubled by the possibility that we could be continuing to sell toys that someone knows may have a problem, while we remain unaware until we receive word that a recall is coming," Mr. Storch said.

The hearing took place in a crowded chamber framed by two illustrations propped up behind the senators: one with a photograph of the Consumer Product Safety Commission's sole full-time toy tester in a cramped, poorly equipped laboratory, and a second with a chart showing that most of the consumer products recalled in the United States since December came from China.

Nancy A. Nord, the acting chairwoman of the Consumer Product Safety Commission, said she agreed with many of the proposals to confront these two problems, acknowledging, for example, that the agency's laboratory in Gaithersburg, Md., is woefully inadequate.

"It is an incredibly inefficient facility," she said of the lab, which is in a 1950s-era former missile defense site outside Washington.

But Democrats and the one Republican senator at the hearing - held by a Senate Appropriations subcommittee - expressed frustration with progress enforcing safety rules, particularly concerning flawed goods from China.

"We need to start pulling the club out," said Senator Sam Brownback, a Kansas Republican who is a presidential candidate.

Ms. Nord said it would help if Customs and Border Protection, which has a much larger force of inspectors at ports, could do more to help enforce consumer safety laws. "We all understand that Customs' first responsibility is homeland security," she said, but added that her agency had so few employees at ports that it could do little on its own.

Mr. Eckert of Mattel was questioned about allegations that his company intentionally delayed notifying United States authorities about initial reports that some of its toys contained lead.

He acknowledged that one initial report about lead contamination of a toy destined for a retailer in France may not have been reported, as the company believed it had intercepted the product before it reached the market, and that this item was not being sold in the United States.

Mattel, he said, will now test every batch of its contractors' toys for lead, and require them to buy paint only from approved vendors. Auditors hired by the company will also spot-check contractors' factories in China, he said.

Senator Richard J. Durbin, Democrat of Illinois, praised the toy industry for acknowledging that hazardous toys are a real problem.

"There is no corporate denial here," he said. "There is no defensive crouch."

But Mr. Durbin said he was disappointed with Ms. Nord and the safety commission, which he said did not appear to be attacking the problem aggressively enough, including moving too slowly to institute and enforce a ban on lead in children's jewelry.

He also mocked a new agreement with Chinese officials to block lead in toys, saying that the Chinese government told his office the policy had long been in place.

What is clear, Mr. Durbin said, is that the consumer product regulatory system - which largely relies upon manufacturers, importers and retailers to police themselves and report hazardous products - has not worked well enough.

"Those who have argued for so many years that we have to get government out of our lives understand that there are moments when we need government, when we need someone to make certain that the products on the shelves are always going to be safe," he said at the close of the hearing. "We need to step up to that responsibility."