Partners need a grievance procedure

Have partners in major firms become so disenfranchised that they need internal grievance procedures to resolve their gripes? And is senior management now so far removed from negative sentiment at the partner grass-roots level that it is only when the tribunal proceedings land on the mat that they realise they have a problem on their hands?

As the age discrimination case against Freshfields Bruckhaus Deringer indicates, partners are increasingly willing to sue their firms.

Partners in dispute with their firms have limited options. Unlike employees, partners do not have the obligation or obvious right to lodge an internal grievance before submitting a discrimination claim at the employment tribunal. Nor do they get the benefit of a consequent extension of time: they must get their claim in within three months of the discriminatory act. This results in proceedings being lodged prematurely, at cost to both the partner and the firm. An amicable resolution is made more difficult as the firm can feel betrayed and the partner ostracised.

It is arguable that the duty of good faith – the implied obligation between partners in a general partnership – imposes an obligation on firms to deal with partner grievances reasonably and promptly. The duty of good faith is, however, notably absent both from LLP legislation and from many LLP agreements.

Given the cultural shift in the workplace brought about by the introduction of statutory disciplinary and grievance procedures for employees, and the increased willingness of partners to sue their firms, is it now time for firms to provide formal grievance procedures for their partners?The advantages to a firm of having such a procedure are manifold. The implementation of a defined procedure may aid early resolution and prevent matters from escalating, providing some breathing space for both parties. If an independent panel is available to review a grievance, a partner may feel that their complaint is being taken seriously, which will result in better partner relations and partner retention rates. Following a grievance policy will also result in more transparent, consistent and properly documented decisions, thereby minimising the risk of inferences of discrimination being drawn in any subsequent litigation.

Partners themselves will benefit from the availability of a defined grievance procedure. There may be a simple explanation for their treatment that can be provided at an early stage, leading to a satisfactory outcome at low cost, no publicity and without litigation. Their grievance could at least slow down the implementation of unwelcome changes, allowing thorough consultation with affected partners to see if any less damaging alternatives might be available.

There are of course potential disadvantages to adopting of a formal grievance procedure for partners. Administratively, completing the grievance procedure will be time consuming and burdensome on management. It will be important to follow the procedure properly, as breaches of procedure will be looked on unfavourably in the tribunals.

A grievance procedure is commonly associated with an employee-employer relationship, and if there was some ambiguity as to a partner’s status the right to raise a grievance could tip the scales in favour of a partner being found to be an employee. However, if it applied to all partners – full equity or fixed-share – this is unlikely to be a significant risk.

For the grievance procedure to be a useful tool there would need to be an acceptance by both parties that the procedure was a genuine way of resolving disputes rather than a cynical partner relations exercise with no teeth.

Five years ago it would have been hard to imagine a partner bringing tribunal proceedings against their firm, never mind a grievance; but times change, and so must we.