This article was written for and first featured in Accounting & Business magazine.
Recent research shows that stress is the single biggest issue facing accountants. That is not a surprising result, given that the pressure to perform successfully is a constant characteristic of a professional firm. That pressure is exerted on partners and flows down through a firm. In this environment, perhaps we should not be surprised when the behavior of some high calibre individuals falls short of the mark. Bullying behaviour is a well known cause of workplace stress. The bullying of employees is a live issue for most firms, particularly following the case of Deutsche Bank v Helen Green (2006). Damages of £828,000 were awarded to Ms Green who suffered a nervous breakdown as a result of her being bullied by a group of fellow employees. However, firms may not approach bullying between partners in the same way.
Initially many partners who are bullied find it difficult to report the offending behaviour to their firm. A partner may not feel that he can approach human resources with his grievance, as this is seen as a conduit for employees and not partners and, in any event, human resources may not have the authority or will to challenge partners. In these circumstances, the alternative open to the partner who is being bullied is to report the matter to management. However, bullied partners are often reluctant to make a complaint about the behaviour of a fellow partner, particularly where the offending partner is a high performer in whom management have faith and confidence.
The outcome is often that the bullying of a partner can go unreported for a long period and then may only surface once the situation has become extremely serious. Firms can in the first instance seek to minimise risk by having the right policies in place and formal, as well as informal, routes for partners to raise grievances. The value of an open culture should not be underestimated.
The typical set of circumstances is that the bullying makes the victim partner ill. This affects his performance and the underperformance in turn leads to the victim partner having to leave the firm. The victim partner will then be in great difficulty (certainly so in the current economic climate) finding an alternative position. In such circumstances, a bullied partner may look for legal redress for the loss he claims to have suffered as a result of the actions of the bullying partner or partners (and the inaction of the firm).
Types of behaviour
What kind of behaviour should alert firms? Behaviour designed to humiliate or embarrass a fellow partner or to intimidate or demoralise him will fall within the scope of bullying. Clearly foul language or abusive behaviour will fall foul of the requirements. Less obvious examples include persistently dismissing or belittling the input of a partner, particularly where this kind of behaviour occurs in the presence of junior staff. Is this a concern for the firm or, as the bully would have it, part and parcel of being a partner in a high pressured environment?
Each partner in a general partnership owes a duty of good faith to each of the other partners. In Mullins v Laughton (2003), a group of partners teamed up to pressure a partner to accept an arrangement to his detriment and the Court ruled that such behaviour amounted to a breach of the duty of good faith. Although in this case the Court’s decision was that the bullied partner’s share be bought out by his fellow partners, it is also open to a Court to award damages or even to dissolve the partnership.
Limited liability partnerships
If the firm is a limited liability partnership (LLP), a member in a LLP owes a duty of good faith to the LLP. There may also be an express provision in the LLP’s members’ agreement imposing an obligation of good faith between the members. Even where there is no express term in the members’ agreement, commentators have suggested that there may be a duty of mutual trust and confidence between the members, particularly in the context of a professional practice. Bullying would be a clear breach of this kind of duty. In addition to the express or implied terms of the agreement between the partners or members, the common law duty of care to maintain a safe workplace is a duty which should apply equally to a partnership and a LLP.
Protection from Harassment Act 1997
The firm or bully may also be liable to the victim partner under the Protection from Harassment Act 1997. The Act provides that a person must not pursue a “course of conduct” which he knows or ought to know amounts to harassment, and is both actionable in the civil courts as well as being a criminal offence. A “course of conduct” is any two or more incidents.
The House of Lords decision in Majrowski v Guy’s and St Thomas’s NHS Trust (2006) decided that an employer could be held vicariously liable for the actions of its employees where these actions amount to harassment under the Act. Although this case related to employees, partners in a partnership act as the agent of each other and members in a LLP act as the agent of the LLP and there appears on the face of the decision no reason why a general partnership or a LLP would not be liable on an agency basis for the actions of a partner which amounted to harassment under the Act.
Even though a full definition of harassment is not provided in the Act, and therefore each case will be assessed on its facts, the Act does provide that alarming or distressing a person will fall within the meaning of harassment. Further, a bullying partner will not be able to defend a claim on the basis, for example, that the victim was overreacting, if a reasonable person would have judged the behaviour as harassment. Once liability has been established, both the bullying partner and the firm (whether a general partnership or LLP) could be liable for damages.
Where the partner can establish that the bulling suffered was on the basis of a ‘protected characteristic’ (the most commonly used being age, disability, pregnancy or maternity, race, religion or belief, sex, sexual orientation or any combination of these), the firm may also be liable for discrimination under the Equality Act 2010, which now encompasses the majority of the UK’s previously fragmented discrimination laws. Furthermore, the Equality Act 2010 also provides a remedy for a bullied partner who has suffered harassment.
While many firms may be holding up in the current climate this is often a matter of partners running faster to stand still, with the attendant pressure that creates. Firms should be aware of the potential risk posed by a successful but acerbic and dominating partner. Where a bullied partner can show that he will be prevented from working for a prolonged period (or even until his retirement), the level of damages awarded can, even for a large firm, prove to be tough medicine. Where bullying behaviour comes to the attention of the firm, prompt and decisive action should be taken.