Number of partnership squabbles hitting courts doubles in last year

The number of partnership disputes reaching the High Court Chancery division rocketed by 96 per cent in 2009, statistics published by the Ministry of Justice (MoJ) have revealed.

The MoJ report, Judicial and Court Statistics 2009, shows that the High Court heard 106 partnership dispute cases in 2009 compared with 54 a year earlier.

Serle Court barrister John Machell warned that the figure was “only the tip of the iceberg”.  Machell said: “Most partnerships and LLPs value their privacy and many disputes are either settled by confidential mediation or determined by arbitration.”

Employment lawyers said the sudden rise was a direct consequence of the economic downturn.

Russell Jones & Walker employment partner John Marshall commented: “This is not evidence of redundancy programmes taking hold but rather the knock-on effect of PEP [average profit per equity partner] figures being squeezed in a tough economic climate and individuals being given the proverbial ‘tap on the shoulder’ to leave.”

Forced retirement programmes have also become a problem, he added.  In July, the Court of Appeal held that firms can legitimately retire partners at 65 as long as the action is justified.

The ruling was given after  lawyer Leslie Seldon brought a discrimination claim against his firm Clarkson Wright  & Jakes (CWJ) after it forced him to retire when he turned 65.

In handing down his judgment in the case Lord Justice Laws said: “My experience would tell me that it’s a justification for having a cut-off age that people will be allowed to retire with dignity” (29 July 2010).

The number of professional negligence claims against lawyers reaching the High Court has also escalated significantly, with 210 claims brought in 2009 compared with 80 in 2008.