Munger Tolles to Scrap Employee Arbitration Agreements

March 26, 2018, 10:26 PM

Munger, Tolles & Olson will no longer require any of its employees to sign mandatory arbitration agreements.

The Los Angeles-based litigation firm announced the new policy in a Tweet on Sunday after facing criticism by Harvard Law School lecturer Ian Samuel, who tweeted pictures of the firm’s arbitration agreement with incoming summer associates.

“I think this is the grossest thing I’ve ever heard. Munger ought to be ashamed of themselves. And I will be making an extremely large fuss about this,” tweeted Samuels, who also co-hosts the podcast First Mondays, about the Supreme Court.

The leaked agreement required employees to arbitrate all employment claims, including those arising under Title VII of the Civil Rights Act of 1964, which includes workplace sexual harassment.

Less than 24 hours later, the firm responded with a tweet of its own, announcing the agreements would be scrapped.

“Munger, Tolles & Olson is committed to the highest standards of conduct. In this case, we were wrong, and we are fixing it. We will no longer require any employees, including summer associates, to sign any mandatory arbitration agreements,” the firm’s official account tweeted on Sunday.

It remains unclear if the new policy will also apply to partnership agreements.

The firm, founded in 1962, has approximately 200 lawyers across three offices. Its work has included representing drilling company Transocean in the BP oil spill, Yahoo’s board of directors in a proposed takeover by Microsoft, and serving as legal counsel in the construction of the Walt Disney Concert Hall in downtown Los Angeles.

Don Verrilli, a former U.S. solicitor general in the Obama administration, is a partner in Washington, D.C. Investor and longtime Warren Buffett partner Charlie Munger is one of the firm’s founders and it has long been known as a destination for promising junior litigators, including clerks from the nation’s top court.

Munger Tolles & Olson did not immediately respond to a series of questions sent by Big Law Business, but pointed to its public statement on Twitter.

Mandatory arbitration agreements have come under increased scrutiny in the #metoo movement, with critics arguing that they prevent workplace harassment and discrimination claims from entering the courts, where they can be publicly known.

In December, a group of senators led by Kirsten Gillibrand (D-N.Y.) introduced a bill that would prevent companies from requiring arbitration when employees bring claims of sex discrimination.

The Economic Policy Institute estimates that 60 million Americans are subject to mandatory arbitration with their employers. The EPI has found that employees are less likely to win and receive lower damages through arbitration than through claims brought in court.

Mandatory arbitration agreements can also apply to non-sex-related discrimination claims, wage and hour claims, or other workplace disputes.

On Monday, Orrick announced that it too would be eliminating arbitration clauses for employees at the law firm.

“It’s time to make a change. We will no longer require any employees, including associates, to sign any arbitration agreements,” the firm’s account tweeted.

A spokesperson for Orrick said the new policy will apply retroactively to any employee who has signed an arbitration agreement, but that it will not apply to partners.

Munger Tolles and Orrick were likely not the only BigLaw firms using these agreements.

One partner at a major law firm who declined to speak publicly because he was not authorized said that he has seen such provisions not only in legal employment contracts for associates, but partnership agreements, too.

Samuels and his podcast co-host Dan Epps, a law professor at Washington University in St Louis, have asked their Twitter followers to let them know of other law firms that require similar agreements.

To contact the reporter on this story: Stephanie Russell-Kraft in New York at srussellkraft@gmail.com

To contact the editor on this story: Casey Sullivan at csullivan@bloombeglaw.com

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