Biglaw, Partner Profits

Washington Partners are Worried About Profits

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Partners at top D.C. firms are worried that they might not be getting bonuses this year, just like associates. The Washingtonian reports that management might not be able to reward their partners as they have in years past:

Usually firm managers try to lowball revenue estimates and then surprise partners with a bigger-than-expected bonus. That final paycheck will come after the first of the year, after all bills and accounts for 2008 are tallied. Many law firms are worried that adjustments will be small or that revenues will not make the estimates. So end-of-the year cost cutting has been rampant.

If associates could get squeezed out of a bonus for simply doing all the work that came across their desk, then we hope partners aren’t expecting huge payouts for bringing in barely enough rain to fill a shot glass.

It’s fashionable to call associates greedy, entitled, warm buckets of spit whenever the markets tank. But now some partners are complaining about not being able to retire to their golden encrusted nursing homes as they had planned.

Firm leaders say that some partners scheduled to retire late this year have postponed their plans because of drops in the value of their IRAs and other retirement vehicles.

Are we living in a bizzaro-world where the pain will be spread evenly between partners and associates? Read more after the jump.


In addition to cutting back, partnership is expecting to do one thing that can really keep costs down, make fewer partners:

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Seventh-year associates at top Washington firms make around $300,000 a year. Typically their draw as partners increases by some 25 percent, but their billing rate usually rises by only 10 to 15 percent in their first year as a partner. Until the new partner can bring the billing rate up, that causes further trouble for a firm’s bottom line.

In good times, a firm is happy to take the loss for a year–but this is not a good time. Associates are on notice that the number of partnerships may drop.

So, that sounds fair. Be a superstar, bill 3,000 hours a year, alienate your friends, family, and mistresses, and get a big red stop sign right outside the inner sanctum because some other guy needs a new pony. Perfect.

But what else is to be done? Not every D.C. firm is doing well:

Sixty-three-year-old Akin Gump is actively seeking a merger partner. Arnold & Porter’s ground may be shaky–its average partner profits were already behind its competitors’, and in recent years it has tilted its emphasis to representing banks, a sector that is now cutting back.

Welcome to Biglaw: the land where everybody is totally screwed.

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From Big Bonus to Unemployment Line? [The Washingtonian]

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