Are Non-Equity Partnerships Really that Bad?
The Cat’s Out of the BagA couple of weeks ago, The Wall Street Journal brought the issue of non-equity partnerships to a wide and non-lawyer audience. It highlighted, among many other things, how the pay spread between equity partners and associates has increased. It also spoke of the death of the traditional path to partner status. While the prevalence of non-equity partners isn’t news to lawyers, the amount of press it’s getting has jumped the last several weeks. It is being written about as the end of an era.
Not All BadIn an industry where tradition and prestige matter a great deal, it isn’t surprising that such a sea change has generated angst. Still, this is by no means the only adjustment law firms are undergoing. At the risk of sounding pollyannish, the end of the traditional partnership model may not be that apocalyptic. After all, if given the choice many senior lawyers would prefer to be a non-equity partner than of counsel. And with the economic forces in play after the Great Recession, a shift to more performance-based compensation, including non-equity partner pay, was perhaps inevitable. The criticisms of this reliance on non-equity partners are certainly legitimate. Can you even call a non-equity partner a partner? It must just be a coincidence that equity partner profits are growing strongly while non-equity partner pay is stable, right? Still, at its best non-equity partner positions can provide a way for associates to advance both their careers and their book of business while better serving clients and (of course) generating profit for equity partners. For senior lawyers, the benefits include:
- The same prestige. This affects more than pride. Most senior lawyers say they have an easier time generating business under the title of partner.
- Decent pay. While having equity is, of course, nicer than not having it, a non-equity partnership should still come with a comfortable salary.
- Less time rainmaking. Partners are forced to spend an increasing amount of time generating business, rather than practicing law. This is increasingly a main factor for gaining equity partnership. With non-equity partners, that pressure is lessened somewhat.
- Is Equity Partnership the Right Choice for Every Associate? (FindLaw's Greedy Associates)
- Tips for Drafting Equity Partner Agreements (FindLaw's Strategist)
- Percentage of Equity Partners Down at BigLaw (FindLaw's Strategist)
- Learn About Our DIY Business Formation Services (FindLaw Forms & Services)
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