Biglaw

Biglaw Partner Isn't The Constant Money Party You Think It Is

Even partners can have their salary slashed.

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Poor and rich businessmenMaking partner at a Biglaw firm seems like the brass ring of the legal world. And while the work itself doesn’t get easier, most people probably assume at least their financial well-being is secured. After all, the well-publicized profits per partner at the top firms are impressive. But new reporting suggests it’s not that straightforward.

As reported by American Lawyer, anywhere between 10% to 30% of partners get a compensation haircut from year to year.

In his view, consultant Blane Prescott said it’s “not at all unusual” for 20% to 30% of partners at a firm to make less from year to year. He also said he’s “seeing faster movements down” in compensation, which “definitely helps” to provide more compensation for the highest-performing partners.

Which doesn’t necessarily mean the partners should be taking a hint to leave the firm. But, as Prescott continued, “you want to make sure their compensation is consistent with their performance.”

While that does sound like a harsh reality (and other consultants put the range of partners taking a cut at the lower end of the 10-30% range), and one that did not happen pre-2008 financial crisis, Fairfax Associates consultant Kristin Stark said it does make some sense. Financial performance at the firms has increased, and that’s maybe been a boon to folks who aren’t helping bring in the business.

Now, even the middle and lower performers in a partnership have benefited materially from the ramp-up in law firm financial performance over the last three to four years, Stark said. Significant financial gains across the industry lately have been more like a rising tide lifting all (or many) boats.

“With the uptick of law firm performance in recent years, there’s been some of what we’d call a peanut buttering of compensation,” said Stark. “So a lot of people whose performance hasn’t gone up materially have benefitted from the firm increasing its overall level of profitability.”

Matthew Bersani, a founding partner of Cliff Group, said, “If you don’t reduce their points, the payout on those points is not justified by the revenue they’re bringing.” The new partner comp tactic is increasingly popular in the industry:

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“In the white-shoe days, it was unheard of to move somebody down” in number of points or shares, said Bersani. “Getting moved down was the equivalent of telling someone to [leave] the firm.” Now it’s common for partners to fall in shares or points, without necessarily implying those partners should leave, he added.

Well, it’s good to hear not all the remnants of collegiality have been removed from the profession.

Kathryn Rubino HeadshotKathryn 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 Mastodon @[email protected].

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