Recently, Ronald Shechtman, Managing Partner of Pryor Cashman and Chair of the firm’s Labor + Employment Group, was interviewed by The American Lawyer about a major challenge confronting some of the world’s biggest law firms. Following the highly-publicized lawsuits against Proskauer Rose and Chadbourne & Parke, both brought by former partners, BigLaw - and the courts - must answer the question: given the business realities of large law firms, should partners be treated as employees, even if they hold an ownership stake in their firms?

The two separate suits, in which the plaintiffs are seeking several million in damages, both allege that the firms unfairly paid female partners less than their male counterparts. Proskauer and Chadbourne - which was absorbed by Norton Rose Fulbright, now also a named defendant - have argued that because the plaintiffs were equity partners at the time of the alleged discrimination, they do not qualify for the employment protections laid out in the Equal Pay Act and Title VII of the Civil Rights Act of 1964, laws which the firms contend are meant to cover employees, not business owners. In response, attorneys for the Proskauer plaintiff assert that the firm’s executive committee controls the operations of the firm, while “rank and file” partners effectively serve as employees.

“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 told The American Lawyer, adding, “It’s a factually intensive analysis.”

This analysis - which considers, among other things, if a partner can hire or fire other staff members and whether they report to someone higher up the chain - depends upon the structure of the particular law firm and the nature of being a partner there. Courts may also examine a firm’s structure to determine if the majority of the day-to-day operations are dictated by an executive or management committee, or if all equity partners have a true say in business decisions of the firm.

Generally, Shechtman said, the nature of being a BigLaw partner has changed in recent years, as more firms have created and expanded nonequity partner roles. At the same time, firms are increasingly designating strategic decision-making authority to management committees that include just a fraction of the firm’s full equity partnership.

“In the last 10-15 years, we’ve seen the whole concept of law firm partnership evolve,” Shechtman explained. “That evolution has primarily been the move in many firms to a two-tier partner structure.”

To read the full interview, please click here.

More About Shechtman’s Practice

Renowned for his expertise in labor and employment law, Ronald Shechtman has been named to The Best Lawyers in America, Human Resources Executive/Lawdragon’s “Employment Lawyers Hall of Fame” and was recently honored by The New York Law Journal as a “Distinguished Leader.” In addition to serving as the managing partner of Pryor Cashman, he maintains an active practice representing a broad range of clients, including the original cast of the Broadway megahit Hamilton in securing an unprecedented profit-sharing agreement with the show’s producers.

To learn more about his work, please visit here.