What is a Law Firm Partner?
If you’ve ever read any John Grisham novels, especially his book, The Firm, you’ll know that in big law offices, being a law firm partner is the goal of most incoming associates. Before a lawyer makes partner, they generally must spend several years as an associate, working long and difficult hours, many of them billable, to be considered for the position of partner. Grisham somewhat simplifies the types of partners in law firms, and there are some important distinctions between the types of partners that bear some scrutiny. Law firm partners are essentially split into equity and non-equity partners, which confer different benefits, salary and power.
The trend in large law firms is to award associates who have put in the time for several years and shown great promise as lawyers by offering them a promotion. Often this promotion is to a non-equity law firm partner. A non-equity partner is not a part owner in the business, and does not have a voting interest in the company. They may eventually make equity partner, but studies show that many lawyers retain partnership with non-equity status instead of ever becoming a part owner of the firm. If they do their jobs well they’ll get hefty bonuses and very good salaries; but they won’t be entitled to an equity partner’s share of the profits.
The equity partner becomes a part owner in the business, and gets to share in the profits. Law firms may also make the distinction between senior and junior partners. The partners more senior may have claim to a higher percentage of yearly profits. An equity law firm partner also gets to vote on decisions made by the firm, which can include voting on matters of financial direction, creating another partner, or determining which clients to represent.
Another method for becoming a law firm partner is to buy your way in, or be able to enhance a firm by bringing in all of your clients. This assures that the revenue of the firm will significantly increase and any existing partner won’t make less money. An exceptionally talented lawyer who has a proven trial record might be offered either a non-equity or equity partnership if hiring the person would raise the profile of the firm and create more profits. Alternately, several lawyers may begin to start their own firm and create an immediate partnership. Usually, in each of these cases, the lawyers hired or starting a firm have several years of experience, a reliable client base, and an ability to attract new clients because of their skill and business acumen.
Good explanation. I read in a recent article that in 2000, 78 percent of partners in the US were equity partners, but this number had actually gone down in 2010 to about 60 percent. It does seem that a lot of young professional lawyers are reluctant to take that plunge and are probably happy being on a salary.
LOL. $800k at a top firm isn't just possible, it's low. Equity partners often make $1M or more per year, and the top partners may make multiple millions per year.
I heard of an equity partner at a top firm earning $800,000 in a year. Is this at all possible?
Law firm compensation depends on your position with the firm. A staff attorney receives a law firm salary along with traditional benefits.
However, a legal firm offers the law firm partners a percentage of the profits in addition to their regular compensation.
The law firm profits per partner vary and are usually based on seniority and billable hours. A criminal defense law firm or a business law firm will usually work in this format.
However, an injury law firm in which cases regarding personal injuries are argued, the law firm compensation is usually a percentage of the judgment.
These types of attorneys work on a contingency basis and they do not get paid if they do not win the case. This is why legal firms will not accept all cases and will only pursue cases that they can win.
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