Until 6 April, law firms could safely give notice to ‘retire’ employed staff at 65 under the default retirement age (DRA) exemption.

Provided they followed the correct statutory retirement process, the retirement would be ‘fair’ with no age-discrimination risk.

Indeed, if firms have issued retirement notices, in accordance with the statutory process, before 6 April this year, they should still be alright, provided the employee is 65 before 1 October 2011.

Firms may even, depending exactly when notice has been given, safely agree to extend notice for up to six months.

However, the transitional provisions are complex.

Firms would be wise to review all current retirement notices and check out the detail of the transitional arrangements because there are potential pitfalls for the unwary – the devil is in the detail.

For other employees approaching retirement, where such DRA notice has not been given, or for any member of staff who will not be 65 until after 1 October 2011, firms will be exposed to large potential unfair dismissal and age-discrimination claims unless retirements are carefully handled.

With the risk of uncapped compensation for a successful age-discrimination claim, firms could be looking at extremely large potential claims, as well as the less tangible reputational risks around such – currently high-profile – claims.

It is also worth bearing in mind that an ex-employee may, particularly if they do not expect to find other employment, feel that they have nothing to lose by litigating.

They may also feel particularly aggrieved to be forced out after years of loyal service.

The phasing out of the DRA has a number of unfortunate consequences, both for practice managers and for older workers.

While there is obviously nothing to stop staff retiring when they wish, often the lack of proper pension provision will mean staff are having to work longer.

However, because of the age-discrimination risk for the firm, older staff can no longer be allowed to ‘coast’ to retirement.

The reason is that the practice could then face age-discrimination claims from younger workers who, for example, might be facing disciplinary action for not reaching targets where greater leeway has been given to lawyers approaching retirement.

Obviously, it will not be palatable for law firms to have to tackle under-performance of staff who may have been with the firm for many years and given good service. However, concerns expressed during the consultation process – about the DRA removal and about loss of dignity for older workers having to face performance management procedures – have fallen on deaf ears.

The government has effectively been required to remove the DRA to bring it in line with the EU equality requirements, following the challenge brought by Heyday, the Age Concern subsidiary, to the European Court.

While the safest course for law firms would now be to remove retirement ages altogether, many are concerned that to do so would restrict the scope for necessary partner ‘churn’ to provide career progression opportunities for younger lawyers.

Law firms have therefore been particularly interested in the progress of the test case, brought by an equity partner, Mr Seldon, against law firm Clarkson Wright & Jakes.

In this case Seldon brought an age-discrimination claim when forced to retire from his partnership aged 65.

The firm concerned could not make use of the DRA, because of the statutory exemption that the DRA does not apply in any event to equity partners.

In Seldon, Clarkson Wright & Jakes produced various arguments to seek to justify the retirement age of 65, and there are some helpful lessons to be learned, particularly from the analysis of the Court of Appeal.

A word of caution though – the case is yet to be considered by the Supreme Court, and that is not likely to happen before January 2012.

In the meantime, a law firm can still decide to keep a compulsory retirement age (CRA), be it 65 or any other age.

As in Seldon, there is inevitably a high risk that the legitimacy of any CRA will be challenged.

If it is, then the onus will be firmly on the law firm to show that the CRA was chosen for a ‘legitimate aim’, and that it was ‘proportionate’ to meet that aim.

For example, in Seldon one of the alleged legitimate aims was to deal with the inter-generation tensions of waiting in ‘dead men’s shoes’.

While it was accepted that this may be a ‘legitimate aim’, the firm had not produced any evidence that an equity partner retirement age of 65 (and specifically 65) was necessary to encourage associates to stay, and it therefore failed on the basis that it was not a ‘proportionate’ means of achieving that aim.

It is clear from other cases that to run an age-discrimination ‘justification’ defence, employers will need to produce concrete evidence to support the chosen age.

For example, in Seldon there was no evidence produced to support the contention that a partner’s work performance dropped off around the age of 65.

Another important factor, in any justification defence, is consent – that is to say proper consultation and, ideally, being able to show that there has been informed agreement, between parties of equal bargaining power, to the CRA.

As to whether the age chosen is ‘proportionate’ to meet a legitimate aim, a firm would also need to show that it had considered any less discriminatory way of dealing with the issue.

Whatever the ultimate position in relation to the CRA, it is still not clear how tribunals would approach an unfair dismissal claim even if an employer could show a CRA was not discriminatory on the grounds of age.

The above is a simplification of an extremely complex area of the law.

Suffice it to say that any law firm deciding to keep a CRA needs to do some careful planning, and keep an appropriate paper trail to document the key factors driving that decision and steps taken to obtain informed consent.

It would also be wise to review any such decision in the light of the Supreme Court’s decision in Seldon.

In the meantime, the safest course for law firms is to ignore staff age and performance-manage all staff equally.

Similarly, where advancing years raise concerns about ill-health and/or reliability, such issues need to be managed through a normal ill-health capability process, rather than seeking to rely on generalised assumptions about the increased health issues of older workers.

Where performance is affected for age-related ill-health issues, the disability discrimination protections under the Equality Act 2010 may also be engaged.

One small concession to the DRA removal is that insured benefits (such as private medical cover or life assurance) are exempt from the DRA changes.

Therefore, firms will not necessarily need to continue such benefits for staff over 65.

However, there may be contractual issues around their removal, and therefore firms need to deal with this in the same way they would with any other variation of a contractual benefit, and be mindful that such benefits can be particularly important to the older worker.

These are very significant changes for all employers, and firms would be wise to review their retirement policies, but also look more broadly at inter-generational issues and develop an appropriate strategy for career progression and retirement.

At the same time, and on a more positive note, health and lifestyle improvements should enable many older workers to continue to make a valuable contribution, and for the law firm to benefit from their wisdom and years of experience.

Nikki Duncan is a partner at Bond Pearce in Plymouth and a member of the Law Society’s employment law committee