Biglaw

Repeat After Me, 'Partnership Without Equity Is Not A Partnership'

Non-equity partnerships can be great jobs. But they are not partnerships.

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Before we get much further, let’s be clear that senior attorneys are still valuable even if they aren’t equity partners. They bring expertise and seasoned judgment to the firm’s matters and a healthy paycheck is nothing to sneeze at. But a few years ago, some firms pulled a dirty trick on their clients and senior lawyers alike. The “Special Counsel” or “Counsel” or “Of Counsel” received a rebranding as “Partner,” complete with a footnote indicating — solely for internal bookkeeping — that this “partnership” was just a paycheck by another name.

In a stellar article charting the death of the collegial partnership in an era of hired gun profit engines, Sara Randazzo covers a lot of ground from the widening spread between earnings going to highest- and lowest-paid partners to the concentration of leadership in a smaller and smaller professional management group. But it’s the increasing deequitization that hovers behind everything in modern Biglaw.

Over the past decade, Kirkland has become known for making high-price offers to rising stars at competitors, for $10 million a year or more in some cases. It has embraced the two-tiered partner system, made up of a junior class paid a set salary and an inner circle of equity partners, who split the firm’s profits.

The system is meant to reward ambitious young lawyers faster, before they weary of the entry-level title of associate. Left unsaid: The promotion often justifies a bump in their hourly rate to around $1,000, which enriches senior partners who share in the firm’s profits.

Except there was already a mechanism to reward young lawyers “weary of the entry-level title of associate” and it was a counsel role. Changing the name to partner is just a gimmick designed, as Randazzo points out, to allow the partners who are sharing in the equity to bill out their juniors at a higher rate. Pulling a little wool over the eyes of the clients for fun and profit.

But it’s a raw deal for the young lawyers too. While Randazzo’s piece correctly notes that the law firm landscape is an increasingly fluid job market with partners moving their practices between firms, the whole non-equity partnership position just locks up young attorneys with titles that mislead the market about where a lawyer is in their career. An entrepreneurial firm might have reached out to the Kirkland Special Counsel to see if the lawyer may be ready to take the next step — but a Kirkland “Partner” may not be the sort of person they’re looking for. The term “golden handcuffs” would be appropriate if the stumbling block involved money instead of an ultimately empty title.

Willkie Farr & Gallagher LLP, a 131-year old firm that was home to a future U.S. Supreme Court Justice and two New York governors, made a similar announcement this spring when it rolled out a two-tiered partnership. Its leaders said the move is intended to reward promising young lawyers earlier and make the firm more competitive in recruiting.

“It was getting harder to tell associates, ‘stick around for 10 years and see what happens then,’ ” said Willkie’s chairman, Steven Gartner. “They wanted more certainty and wanted it sooner.”

But there is no certainty, just a new title. A title that implies a terminal position when in reality it’s just a raise, often without the same perks — and by that, we mean bonuses — afforded to senior associates.

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Can’t we all just go back to a reality-based vernacular? If the attorney is not a partner in the enterprise, they are not a “partner.” If attorneys want more recognition for career advancement, then do a better job of branding the importance of the firm’s counsel. This whole thing has gotten out of hand.

If the firms aren’t going to reverse course on this deequitization madness, then the only thing lawyers can do is market themselves. The market is flattening as barriers to relocating practices decline — non-equity partners need to be upfront about their status and avail themselves of firms willing to invest in their long-term career. Let the world know that you’re not an equity partner but that you want to be and seek out firms looking for go-getters tired of languishing in a limbo state.

Being a Law Firm Partner Was Once a Job for Life. That Culture Is All but Dead. [Wall Street Journal]

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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