The average partner at a law firm makes over $1 million in total compensation, according to the 2020 survey by Major Lindsey & Africa. This is a reflection of the eat what you kill compensation model, which firms use to lure big book of business and laterals.
Some equity partners can earn even more than this figure if they bring in significant revenue for their firm. These are called “senior equity partners.”
Equity Partners
Equity partners at law firms own a stake in the firm and are paid through profit distributions. Depending on the size of the stake they can make quite a bit of money. Because they own a portion of the firm they also have greater job security than non-equity partners. However, if they do not generate enough business and/or meet other performance criteria the firm may demote them to non-equity status.
It’s hard to say how much equity partners at a firm make because they typically keep their salary figures private. That’s because they want to be able to attract high-quality candidates for partnership who will be happy with their compensation packages. However, we do know that they tend to make a lot more than their non-partner counterparts.
Generally speaking, the highest earning equity partners at the most profitable law firms in major cities will make millions. For example, Wachtell Lipton Rosen & Katz in New York has profits per partner (PPP) that average around $6.5 million. Kirkland & Ellis, the largest law firm in Chicago, reported PPP of around $5 million last year.
But even at those firms, not every equity partner is making millions. It all depends on how many clients they service, the size of their book of business, and their back-office contributions to the firm. And of course, taxes and other deductions.
In addition to those things, equity partners may receive incentive pay based on their ability to hit certain goals or perform well. For instance, if they bring in a large amount of business or generate a certain number of billable hours, the firm may give them an extra bonus. This is because the firm wants to reward its equity partners for their efforts and to encourage them to continue to work hard.
Those that are not equity partners are called income or non-equity partners. They are paid a set salary by the firm that is negotiated with pattern attorneys and/or the compensation committee. However, this is not as lucrative as becoming an equity partner.
While a non-equity partner may be offered some benefits and have a vote in firm resolutions, they do not share in the profits of the firm. In addition, they are not guaranteed a certain amount of billable hours each year or that they will be assigned particular clients.
The bottom line is that being a partner at a law firm is not an easy thing to do. It requires 7-9 years of hard work, building a book of business, and contributing to the firm in other ways. For that reason, it is not surprising that only a few people become equity partners each year.
For those that do make it, the compensation is excellent. It can be a great career choice for those that are interested in the practice of law and are willing to put in the time and effort needed. But those that do not want to risk the chance of not making it should consider alternatives to the Big Law world.
