We’ve written a lot about the Biglaw partner compensation gold rush, and for good reason, because the numbers keep getting more absurd. The top of the market has climbed from between $25 and $30 million to up to $40 million for the most coveted rainmakers. The hot lateral market has firms dangling multi-year guaranteed compensation packages to lure high-value partners, and even the most devout lockstep loyalists are cracking. But none of that money rains down evenly, and mid-year is when some partners find out which side of the ledger they’re on.
As Law.com reports, the same forces remaking partner compensation at the top are squeezing partners in the middle and at the bottom. Some partners see a pay cut because of a drop: in originations, business, hours, or overall performance. But the headline grabbing changes to firms’ compensation systems (to better attract and retain star partners) is also to blame.
This isn’t a new phenomenon, but it’s an accelerating one. Pure lockstep is now nearly extinct in Biglaw, and in its place, firms have adopted more discretionary systems specifically designed to concentrate rewards at the top. Cravath’s creation of a salaried partner tier in 2023 opened the floodgates, with Paul Weiss, WilmerHale, Cleary, Skadden, Debevoise, Sullivan & Cromwell, and most recently Freshfields all adding nonequity tiers. The structural logic of that shift, creating flexibility to pay stars more without inflating the equity base, also creates flexibility for partners on the way down.
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So how many partners are looking at a pay cut in any given year? Great question! Consultants estimate 10% to 30% of partners within a firm could be moved down the pay ladder. Blane Prescott, managing shareholder at MesaFive, told Law.com that it “wouldn’t be the least bit surprising” for a firm to move 20% of its partners down in pay in a given year. He added that the firms that handle it best are the ones that communicate early and often, and don’t let the year-end conversation be a partner’s first inkling that something is wrong.
“One of the most effective tools: firms will do a midyear check-in with partners, who they’re concerned have all the early signs of someone who might need to go down,” Prescott said. “You go to them and say, ‘I’m worried about you. We want to get your economics up, get your work up to where it should be. But hey, if this gets to the end of the year, you might be flat or might go down.'”
Prescott said around 20% to 30% of partners will respond by upping their game… and if they don’t, at least the proper expectations are set, which is, frankly, the real point.
“So when you do cut their compensation at the end of the year, they’re not shocked. They’re not walking around the firm complaining about it. And that’s probably the best thing. You don’t want them whining around the halls about it,” he said.
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For his part, Jeffrey Lowe, partner and market president for Washington, D.C. at recruiting firm CenterPeak, noted, “It rarely comes as a surprise to partners who are getting cut. Or, it shouldn’t be a huge surprise for a big number of them.”
So… how much do underperforming partner see their pay cut? Like any true lawyer question, it depends! “The practices can be so variable from year to year, so you can see people seeing huge percentage swings,” Lowe said. “And it may also be a function of ‘You know what? We didn’t do it last year when we really should have. Or the year before, and you kind of got a couple years free on us. But we can’t sustain it any longer.”
“A lot of firms will tell you: ‘We’re slow to go up, or slow to go down.’ Others are just the opposite,” Lowe said. And these choices build a Biglaw firm’s culture, “Everybody loves living by the sword, but they really hate dying by the sword.”
Which is, in fairness, a pretty apt summary of the whole Biglaw partner compensation era we’re living through. The partner pay gap keeps stretching, and someone has to be on the wrong end of it.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Bluesky @Kathryn1