Biglaw

Making Partner Is Not As Awesome As You'd Think

Not all partners in Biglaw are created equal.

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For many attorneys, becoming a partner at a well-regarded law firm is a major career milestone.  Numerous lawyers strive to become partners, since they want to be part of the management of a law firm rather than merely employees.  In addition, many attorneys think that becoming a partner will ensure that they earn more money and live a more comfortable life.  However, from my own personal experiences, becoming a partner at many law firms is not as awesome as you’d think.

For one, partners at many well-regarded regional law firms do not make as much money as you might believe. Indeed, I recently had a conversation with a friend of mine who is in his mid-40s, and is a partner at a solid regional firm in the Northeast.  I was surprised to discover that this partner, who has been practicing law for almost 20 years, earned less money than some first-year Biglaw associates!

Another one of my friends recently told me that about a decade ago, he went from being a partner at a well-regarded law firm to joining a personal injury firm as an associate.  This attorney related that he now earned several times more money than he made when he was a partner at a solid regional shop.  My friend conveyed that he would much rather be making more money as an associate than simply having the title of being a partner.

These stories demonstrate how becoming a partner for many attorneys does not mean that these lawyers earn the amount of money you might think some partners make.  And without making additional cash, being named a partner is merely a formality that does not have a tangible impact on the lives of numerous attorneys.

Now, I know what you are thinking.  My friends were partners at smaller regional shops, and becoming a partner at a Biglaw firm is the “gold ring” that can bring status and riches to any attorney who reached this milestone.  However, not all partners in Biglaw are created equal.  As many readers of this column are likely aware, most Biglaw firms bifurcate their partnership ranks into equity partners and non-equity partners.

Non-equity partners are usually not entitled to share in the profits of their firms.  These profits can be substantial, and if you peruse the profits per partner of most Am Law 100 firms, you can easily see the amount of cash non-equity partners are not entitled to even though they are called partners.  Rather, non-equity partners typically receive a set salary, which is sometimes not that much higher than the salaries of senior associates or counsel.

Of course, non-equity partners might sometimes earn origination bonuses for work they bring into a shop.  However, if non-equity partners do not have a book of business, they might just be paid a set salary like any other attorney at a firm.  In addition, some firms do not allow non-equity partners to participate in many management decisions.  For all of these reasons, I have heard many non-equity partners describe themselves as “glorified associates” or “partners in name only,” since they do not enjoy many of the trappings of partnership.

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Still, many might think that becoming an equity partner at a top firm is a worthy career objective.  However, becoming an equity partner has some serious drawbacks.  Most firms require equity partners to earn sufficient equity credits before they can be promoted to this position.  Then, equity partners must typically make capital contributions to their firms.  The cash that equity partners must contribute is usually hundreds of thousands of dollars, and many equity partners must borrow money to pony up this cash.  If an equity partner leaves their firm, they are usually only paid back this capital over a long period of time, limiting their departure options.

Furthermore, becoming an equity partner sometimes makes you liable for the debts of a law firm.  If a law firm goes under, equity partners could be forced to shell out significant sums of money in order to pay creditors of your old shop.  This happened to many of the equity partners who were associated with Dewey LeBoeuf, as this website covered at length.  In addition, if a law firm goes under, equity partners must usually kiss their capital contributions goodbye.  There are also a number of other hassles associated with being an equity partner, including less predictability about how much you earn, paying for your own health insurance, and other issues.

In the end, I am not sure why so many people are fixated on the title of “partner” in the legal profession.   When evaluating if partnership is something you want to pursue, you should not focus merely on the status of becoming a partner.  Rather, you should carefully consider how much money you will earn as a partner, and what the terms of a partnership agreement will be, since making partner is oftentimes not as awesome as you’d think.

Jordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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