Stop Yer Whining, Senior Associates. You Could Be Making More Than the Partners!
No, seriously. Despite the perception of Biglaw partners as fat cats, some of them, at least in their early years, take home less than the senior associates who toil under them. From an article in the Legal Times by Nathan Carlile (whose work we've always admired, even before he wrote this nice profile of us):
[T]he most recent round of associate pay hikes has edged senior associates ever closer to junior partner pay rates. In fact, in some cases, senior associates can come out ahead of partners -- particularly if the firm has a nonequity tier.Here's just one example: At Arent Fox, Chairman Marc Fleischaker says senior associates can earn as much as $280,000 in base salary and -- if they meet targets for generating business -- an additional $100,000 in bonuses. Total: $380,000. First-year nonequity partners start off with a pay rate of $310,000. But they subtract $20,000 to cover their own benefits. Their total: $290,000.
Additional excerpts and discussion, after the jump.
Arent Fox did make an effort to address the situation:
Last year, Arent Fox added $50,000 in stock and at least a $27,000 bonus to help shore up salaries for partners at the low end of the pay scale. New total: $367,000 -- still not as much as the highest-earning senior associate, but, certainly, a vast improvement.
Compression. It's not just a problem for associates in Atlanta:
Salary compression -- in other words, the narrowing of the gap between what senior associates and junior partners make -- has been an annoyance for junior partners and a problem for big firms for years, consultants and partners say. Ideally, consultants say, the difference between associate and partner compensation should be at least 20 percent. But the most recent pay hikes for associates aren't helping matters. Suddenly, a senior associate isn't gaining all that much -- at least financially -- by moving into a partner role.
It's an issue even at super-profitable firms like Wiley Rein, which last year topped the Am Law 100 rankings in profits per partner:
A few firms are putting together bonuses and new pay scales to help remedy matters. "I told my partners last year, the younger partners had to be moved up," says Richard Wiley, managing partner at Wiley Rein. "Partners have to feel like they're adequately compensated." Wiley declined to comment on exact numbers, but partners at the firm placed the new-partner salaries at around $320,000, with senior associates making around $270,000.
One difficulty is that partnership has its burdens as well as benefits:
It's the extras that partners pay for that can drastically reduce compensation. For equity partners, it's a capital contribution that can reach six figures. Nonequity partners often pay for their own health care, disability and Social Security expenses (that alone can take away roughly $6,000). The silver lining is that firms put more into a partner's retirement plan than they do for associates.
These are just excerpts. Nate Carlile's full article -- which is a fascinating read, and has the skinny on what new partners make at such places as WilmerHale and Hogan & Hartson -- can be accessed in its entirety by clicking here.
Are Senior Associates Making More Than New Partners? [Legal Times]
David Lat Takes on the Legal World One Post at a Time [Legal Times]
(43) Comments
what is the point of being a nonequity partner? is there even a reason to have this tier?
Well, with the compression in Associate salaries in Atlanta, I doubt senior associates are making more than junior partners. Though senior associates in other markets may be making more than junior partners in Atlanta.
I would imagine that there are many, many senior associates, or even mid-levels, in many market making more than young partners in Atlanta. There are dozens of use at my firm and many other firms in our city making more than $300k, and I would really doubt that new Atlanta partners make that much,
Shhhhhhhh!!!!!!!!!
Lat, I'm upset that you would run such an article - keep your mouth shut.
"what is the point of being a nonequity partner? is there even a reason to have this tier?"
The non-equity partner tier is intended to help young partners drum up business with the help of the "partner" status. Most clients don't know the difference between equity and non-equity and are more likely to send business to a partner than senior associate.
Perhaps the problem isn't non-equity. Perhaps it's Arent Fox.
There is zero doubt that senior associates in NY, DC and Cali make a lot more $ than junior partners in Atlanta. Base pay for most non-equity partners in Atlanta is generally in the 250k range, and, even with bonuses, most of them are barely cracking 300k.
Actually, it can even be less than $250K at some of the so-called big firms in the ATL and bonuses can be rare.
Who this arent fox guy? I have never heard of his firm.
Arent is so TTT in PPP.
"The silver lining is that firms put more into a partner's retirement plan than they do for associates."
Do lawfirms contribute to associates 401K's? We get 0.
I don't think this is a new thing. When I was a summer associate in 2003 one of the then mid-level partners remarked that he made less in his first couple of years as a partner than he had as an associate.
We don't have any contribution to our 401K. Staff gets a contribution, but not the associates.
A friend at Cravath just bet me $100 that associate salaries there are about to be raised. Well - he offered to. I didn't accept.
NYC to 175-180.
This is no way affects my deep hatred of all partners.
This in no way affects my deep hatred of all partners.
Or my ability to type.
11:32 - Are rumors of these raises in any substantiated or just a hunch.
guys in my high school used to make more than low level partners, it was no big deal.
Firms are finally getting reamed for creating "non-equity" partnership. They use it as a selling tool to tell associates that if you don't have a book, it's not up and out. Rather, you get non-equity status with a chance to build the book, unlike other firms with single tier partnership, where if you don't have a book to "buy in" to ownership, you are out. Unfortunately, because they have screwed non-equity partners over for years in compensation, while paying associates more, the numbers are getting close, and non-equity partners are understandibly getting pissed.
Lat, what's this we hear about a new decision in the XOXO.com case?!
I'll take that Cravath kid's benjamin.
My plumber makes more in a year than a non-equity partner.
L.A. plumbers to 190!
Your plumber probably actually DOES make more than a Sidley associate. Seriously.
160k doesn't buy you much copper pipe, that shit's exprawnsive
This just re-enforces the point that partners are so damn greedy....they even screw over the new partners by paying them 300k while they make millions.
1247: They're "partners" in name only. They don't buy into the business, so they don't share in the profits. What's unreasonable about that?
If you believe the Hildebrandt/Citi report this week, non-equity partners don't work as much as senior associates. Shouldn't be too much of a leap...
1247: They're "partners" in name only. They don't buy into the business, so they don't share in the profits. What's unreasonable about that?
====================
Yes and no. If a firm wants non-equity partners, then their pay should have nothing to do with firm performance. Yet at many firms, it does. NEs are given bonuses if the firm makes budget, and if it doesn't, they get nothing, thus making a substantial portion of their pay directly tied to profitability. So in other words, at some firms you have equity partners passing the risks they should bear as business owners onto the non-equity partners, while at the same time denying them any ownership interest, giving them no vote and, to a large degree, no say whatsoever over firm management and direction.
Does anybody know what new partners at top-tier, equity-only, places like Cravath, Sullivan, Simpson, etc. make?
When discussing the compensation of new partners at the elite NYC firms, we often speak in terms of their "salary equivalent" compensation. This is done because while new partners may "make" in the range of $800,000 to $1,100,000 (based on the number of points awarded to new partners), they are not actually paid nearly that amount because the firm demands front-loaded capital contributions and other holdbacks during the first 4-6 years of partnership. Net it all out, and most new partners make a "salary equivalent" compensation of about $600,000 - $750,000. That's a nice living, but it is not that much more than the firm is paying its "counsels," "senior atty's," "senior counsels" etc.
salary increases? seriously?
238 - the counsels are making low 300s and praying their no book having asses are not shit canned in this recession
Yeah, who cares if they're compressed? So they give up some pay for not being shit-canned. Dress it up however you will, it's still up or out. Last I checked, "out" had a guaranteed salary of $0 (and who wants to hire a guy 10 years out of law school who obviously got rejected by his firm?).
2:38 wrote: "the counsels are making low 300s . . . " You are grossly misinformed if you think the "counsels" at the V5 firms are making low 300's. (That, by the way, would be nearly $100,000 less than the seniors). I can tell you with certainty that is not the case. Those with no book are getting $400K to $600K, with a median of around $500K. Those with a book often have specially negotiated deals that, depending on collections, can net far more.
510 is titcr
4:54 wrote: "the counsels are making low 300s . . . " You are grossly misinformed if you think the "counsels" at the V10 firms are making low 300's. (That, by the way, would be nearly $100,000 less than the seniors). I can tell you with certainty that is not the case. Those with no book are getting $400K to $600K, with a median of around $500K. Those with a book often have specially negotiated deals that, depending on collections, can net far more.
5:42, what is titcr?
Non equity partners at top firms usually make $400K-$600K. Equity starts at around $1M (give or take $100K), as 2:38 mentioned.
This will get lovely if/when another NYC pay hike spiral erupts. It's already hilarious to see $160 for buck associates in major non-NYC markets and not much less in the secondary markets around them.
Add in an economic downturn and stir to riot.
So when people say that it's hilarious that a new associate gets $160K base plus $45K bonus, do they also think that it's hilarious that a crappy new player in the NFL gets at least $500K? They are even younger than a new lawyer.
Perhaps the whole country should get to vote on how much everyone in every profession should get paid. We can have a big salary table that everyone can vote on every few years. Yay.
even crappy NFL players are college rock stars. Not so for new associates - even average or below at top school but pretender biglaw gets the 160. Not that I'm complaining, but I am aware.
First year non-equity 290
First year equity 500