Lawyers at all levels of practice can be valuable members of the profession and can find satisfaction in their work. That is a given, and the decision where you want to fall along the gamut is up to you. But, before you put that decision in motion, be sure that you understand the terms. For law firms, that includes being familiar with the ins and outs of non-equity partnership.
Non-equity partnership sounds good to many young lawyers who think they understand the demands of equity partnership and want something less. The thinking goes something like this: I will still have an interesting practice. I will have a great title. I will make a lot of money. And I won’t have to deal with as much client development, business promotion, and other firm management stuff that I really don’t like anyway. So, what’s the downside????
Exactly, what’s the downside? Although that line of reasoning may be good in theory, reality is a much better playing position when you are dealing with your career and your future.
So, it is a good idea to understand what non-equity partnership is, what it is not, how it came to be as popular as it is today, and who benefits most from it.
Those issues and others are covered in a recent article on Above The Law. And the truth about non-equity partnership may not be all that you thought it would be.
As explained in that piece, the currently-popular two-tiered partnerships are made up of a junior class of non-equity “partners,” who are paid set salaries, and the traditional inner circle of equity partners, who split the firm’s profits. The rationale behind the creation of the non-equity group is to reward ambitious lawyers before they tire of the entry-level title of “associate” or other equally unsatisfactory monikers and look elsewhere.
Sounds good, right? The firm is looking out for the junior talent.
Maybe. But, what is not so obvious is that the promotion to non-equity partner also allows the firm a justification to significantly raise hourly rates for this new class of “partners,” and the profits from that bump up goes to — you guessed it — the equity partners.
In fact, as further pointed out, the name change from “senior associate” or “of counsel” or “counsel” or “special counsel” to “equity partner” is really a misnomer. There is nothing in terms of traditional partnership about non-equity positions. Sharing profits has always defined partnership, and there is no trace of that in the non-equity experience. Clients don’t seem to notice and, as long as young lawyers do not care who profits off of a name change, it will continue.
But, there is more to think about. The title also may negatively affect the futures of young lawyers in terms of mobility. Titles can be misleading when it comes to market opportunities, and that can impact careers. Be sure not to miss that part of the discussion.
And to educate yourself even more on the issues surrounding non-equity partnership, do not miss this article in the American Lawyer, which helps to sharpen the focus on conversations that are becoming necessary to eliminate the confusion and address the important issues about talent, opportunities and the futures of young lawyers.
Check out these articles and do not get blindsided when it comes to the subject of non-equity partnership.