Biglaw, Partner Profits

Non-Equity Partners, Trying to Hang On

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In today’s National Law Journal, Leigh Jones reports that non-equity partners at major law firms are also worried about the future. With all of the frightening career news floating around, it seems reasonable that either you are bringing in business, or you are terrified.

The upshot is that some law firms — especially those that have maintained armies of nonequity lawyers primarily to service accounts — are rethinking their business model, and some nonequity partners likely are reassessing their careers.

“Some firms are going to have to take a hard look,” said Brad Hildebrandt, chairman of Hildebrandt International, a law firm consultancy.

In good times, non-equity partners are a nice luxury for firms looking to use experienced people who generate great fees:

K&L Gates Chairman Peter Kalis said he is “very” comfortable with the equity-to-nonequity ratio at his law firm. He said the business model at K&L Gates is akin to a diamond, with the widest portion of the structure representing a group of nonequity partners who have created a more attractive service model for clients.

“Clients have little or no interest in paying for credit card-waving first- and second-year associates to fly around the country and run up bills,” he said. “What clients are interested in is paying for appropriately priced people who have both skills and substantive knowledge and who add value.”

The nonequity tier at K&L Gates, said Kalis, comprises attorneys with a wide variety of career goals — some with definite plans for full partnership and others who have less desire to develop business.

But these are not good times.

The bloated “inner tube” of non-equity partners, after the jump.


The problem with carrying around a large contingent of non-equity partners is that they are not nearly as useful when the work slows down:

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Many law firms are laboring with “a big inner tube around the middle,” said Ed Wesemann, a consultant with Kerma Partners who likens some firms’ operational structures to the Pillsbury Doughboy. He said they are bloated by lawyers making about $300,000 annually whose main charge has been to rack up billables from assigned matters.

During more prosperous times, law firms wanted to keep those attorneys on board to service accounts. But with fewer projects coming in, many firms don’t have enough work to pass around to nonequity partners and to associates.

If it comes down to a choice between firing non-equity partners, or firing senior and mid-level associates, which way should firms cut? Senior associates are the non-equity partners of the future (when the market turns). But who is going to be the most helpful in the present?

Either way, downsizing and restructuring is sure to continue.

Nonequity partners may be casualties [National Law Journal] (subscription).

Earlier: DLA Piper Changes Partnership Structure

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