Firm doesn’t owe severance to non-retired partner

A St. Louis County circuit judge ruled Jan. 10 that Armstrong Teasdale doesn’t owe severance to a former equity partner who continued to practice law following his retirement.

The ruling could mark the end of the last piece of a long-running dispute between the law firm and Joseph von Kaenel, who had been with Armstrong since 1972 but was required under a firm policy to retire in 2014 after he turned 70.

Under Armstrong’s policy, retiring partners were to receive severance benefits for two years — but only if they ceased the private practice of law. Rather than retire fully, however, von Kaenel joined Evans & Dixon’s business law practice group. According to court records, the firm declined to pay him $214,840 in severance benefits, though he does get benefits under the firm’s pension 401(k) plans.

Under Missouri’s Rules of Professional Conduct, a lawyer cannot enter into an agreement “that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement.” von Kaenel argued that the firm’s policy was unenforceable under that rule because the severance benefit wasn’t a retirement plan.

Judge Stanley Wallach, however, said von Kaenel’s argument was “untenable.” If Armstrong’s rule really was an agreement that restricted the right of a lawyer to practice, then von Kaenel himself would be guilty of participating in making an unlawful agreement, as he was an equity partner in the firm.

“von Kaenel wants his cake and to eat it too, but the cake is half-baked — he contends the agreement is only half illegal, with the half benefitting him remaining enforceable,” Wallach wrote.

However, the judge added, von Kaenel “need not self-report” his conduct to disciplinary authorities. The law firm’s retirement rule wasn’t invalid, Wallach wrote, because the severance benefit wasn’t money the attorney already had earned. Instead, it would have been drawn from the firm’s future revenues.

Although the case is an issue of first impression in Missouri, Wallach pointed to precedents in Iowa, Kansas, New Jersey and Washington, D.C., which have similar professional conduct rules, holding that agreements not to compete in exchange for retirement benefits are permissible.

“von Kaenel, an attorney who spent forty-two years at Armstrong, decided to disregard the retirement requirement he had voted to approve and to which he agreed, and instead continue in the private practice of law at another firm,” the judge wrote. “The consequence of that decision is that von Kaenel forfeited his right to receive the Initial Retirement Benefit.”

Neal Perryman at Lewis Rice, who represented Armstrong Teasdale, said in an email that the firm was pleased with the ruling, “which follows the holdings of other courts in affirming that the retirement benefit provisions in the firm’s Partnership Agreement comply with the Missouri Rules of Professional Conduct.”

An attorney for von Kaenel, Jerome Dobson of Dobson, Goldberg, Berns & Rich, said he was studying the judge’s order and hadn’t decided with his client what to do next.

The ruling in St. Louis County came a month after the 8th U.S. Circuit Court of Appeals ended von Kaenel’s related federal age-discrimination suit against Armstrong. The former partner had argued that Armstrong’s mandatory retirement age was discriminatory.

The 8th Circuit held that, as an equity partner, von Kaenel wasn’t an “employee” protected by the federal Age Discrimination in Employment Act. Previously, Missouri’s courts similarly held that his claims didn’t fall under the state’s discrimination laws.

The case is von Kaenel v. Armstrong Teasdale, 18SL-CC01242.