The most shocking result of the recent survey on partner compensation conducted by Major, Lindsey & Africa was how much better the average partner does in firms with open compensation systems — almost $350,000 better on average, year in and year out. To me, that is the difference between retiring at 55 or 65. A big deal.

Have some fun. Tell your average law student that the average compensation for Biglaw partners at closed compensation shops (irrespective of equity status and seniority) was only $465,000, and see the reaction. Or pop an associate’s bubble. And realize that with demand for Biglaw services trending down, there is only so much time left before partner compensation generally starts to take a hit. I always knew about the disparity between open and closed firms, and I had heard about it anecdotally (I think Lat mentioned in an article a few years ago a personal friend who saw his comp climb dramatically after lateraling away from a closed comp firm). But I never really appreciated the scale until this survey came out.

I would think that anyone (especially younger partners with growing books) who could get out of such a firm would at least be trying to (ergo the need for a growing book). Even if your numbers are stellar, and your book is growing along with your traditional working collections, it is too easy for a closed comp chieftain to declare that you need to repeat the performance to make sure its sustainable. Whereas in a open system, you have leverage right away, and can convincingly argue to the compensation committee that failing to reward you would risk discouraging other potential achievers. And that you will leave — but one needs to be subtle on that front. Threaten to leave a closed comp place, and if they really like you, they’ll offer to match whatever new offer you get (thereby confirming they have been skimping on you all along)….

Some other things. With the exception of New York, northeastern cities did pretty poorly in the survey. Bad weather, high taxes, and expensive living, combined with relatively lower pay, make for grumpy partners. I can see how brahmin Boston and patrician Philadelphia partners would be upset at how much better their Texas and Californian compatriots are doing. Thhe answer is more likely that California and Texas are just doing better economically, and that filters down to all service professions — including law.

I also found the litigator/corporate partner pay disparity — $634,000 versus $847,000 on average — interesting. Even though I litigate, I’m okay with it. Here is why. While I think litigation skills do have some subject-matter expertise component to them, a good litigator will beat a bad one most times — even if the bad litigator is the subject matter expert. And the best litigators, those who can command a premium for their services, are usually subject matter agnostic; they’ll take any kind of case. So litigation is frankly more competitive, and clients have more confidence that they will be able to get a good litigator at the price they want. And most Biglaw firms have strong litigation departments, or at least some top-class individual litigators. There is also a lot of competition from boutiques that can handle important cases well.

In contrast, not every firm has top corporate talent. And the talent that exists seems to be Biglaw-centric, with the really profitable firms leading the corporate deal charts. So let the corporate guys make more money. I don’t know what they do, and I don’t want to do it anyway. Give me a courtroom (or more likely a conference room for a deposition) any day.

On a different note, I am sure that people will advance many reasons for why male partners reported higher compensation than female partners. My bet is that the core reasons have nothing to do with gender bias, and everything to do with age (more younger partners are female, and younger partners make way less) or originations (the difficulties female partners have with generating business are well-documented, explaining why the really successful ones are either outlier mega-stars or at lockstep elite firms where the clients are institutional). I am sure the spread will narrow with time, as more work gets assigned by the increasing number of female in-house counsel to female partners (assuming women really do favor their own gender), and existing female partners get more senior. It will be interesting to watch.

I doubt that there are serious people who actually say that Suzy Partner should be paid less (because she is a woman) for equal performance, just like no one would say that I should make more money because I have young children so I need it more than a single colleague. Race falls in a similar category in my book. If I’m wrong, and Biglaw is still being run by misogynists and racists (which I doubt as well, considering even just the economic advantages to not being misogynist or racist), I don’t think we are far off from having more women and minorities in senior management of Biglaw firms. There are obvious marketing advantages for firms willing to go that route. So it will happen, as Biglaw firms look for any edge possible in a world of declining demand.

A final thought about the MLA survey….

At bottom, the comp game at the partner level has become, for most partners, a game of Chutes and Ladders. Get lucky and you get a bump from lateraling up (the ladder) to a more generous (and likely open-comp) firm. Slack off anywhere, no matter the reason, and watch your pay slide down a greased (by the short-term metric obsession gripping most Biglaw firms) chute. Hopefully you enjoy playing the game — or are really sure it’s a game you want to join. In Biglaw, there are plenty of late-night commutes home to give you time to think it over.

Feel free to email me regarding, or discuss in the comments below, your thoughts on the current partnership compensation situation, and what you thought of the MLA survey….

Anonymous Partner is a partner at a major law firm. You can reach him by email at [email protected].

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