I'm in the middle of testing 10.2.1c, soI just tried connecting my 10.2.1c client to my 10.2.1 license manager. Didn't have any problems getting licenses for ArcFM and Responder.
You don't have to upgrade the license manager, because the license file for 10.2.1 and 10.2.1c are the same. But it's usually a good idea to keep all the ArcFM stuff at the same version level.
I would check your license file on that server.
My license file shows version 10.11
Is that correct?
That should work. My license files for the 10.2.1 and 10.2.1c license managers both say 10.11 for the version number.
You might have to get ahold of Esri Canada to figure that one out.
The ArcFM License Manager version does not have to match or be as current as your ArcFM Desktop/Responder/etc product versions. One change we did make was to the name of the Windows service that runs with ArcFM License Manager.
"Telvent License Manager" for ArcFM 10.1 or older
"ArcFM Solution License Manager" for ArcFM 10.1.1 or higher
With your license server as 10.2.1 there is no reason to upgrade unless you do want the versions to match. In this case matching versions is a personal preference and not a requirement as it is between other ArcFM Products.
ArcFM License file version
The most current ArcFM license file version is actually 10.1.1. Even if you have the latest ArcFM version 10.2.1c/10.2.1c Sp1 the latest license file is still going to be 10.1.1. Schneider does recommend having the most current license file version since its fully backwards compatible with older ArcFM license versions. This means you can upgrade ArcFM without having to also upgrade your license file(s). Note older license files are not compatible with newer ArcFM versions. For instance if you have license file version 10.1 this is not compatible with ArcFM 10.1.1 or higher.
I hope this helps.