Hunton Andrews Kurth Joins Rivals With Non-Equity Partner Tier

Hunton Andrews Kurth has added a tier of non-equity partners, joining a number of Big Law firms building the classification to attract and retain talent.

“We amended our partnership agreement in April to add an income partner category” and began adding lateral hires to it, the firm’s managing partner, Sam Danon, said in a statement. The move “was in response to, and is in line with, industry trends.”

The Richmond, Virginia-based law firm joins a shift by legal operations that accelerated during the pandemic. The top 100 firms by revenue will likely have more non-equity partners than equity partners by next year. Wilmer Cutler Pickering Hale and Dorr said Thursday it added a non-equity tier.

Lawyers in non-equity tiers gain the same title as colleagues in top ranks though earn a fixed income and don’t collect the profit distributions full partners get.

Roughly 48% of nearly 59,000 partners at the 200 largest law firms last year were in the non-equity tier, up from 40% in 2013, according to American Lawyer data. Eighty-five of the 100 largest law firms by revenue have non-equity tiers, and 70 of those have increased in size since 2021, according to the data.

Non-equity tiers are a mechanism for firms to recruit and retain lawyers eager to gain or maintain the partner title, while reserving shares of firm profits for the highest revenue contributors, said Nick Rumin, a New York-based legal recruiter.

“It makes great business sense from the point of view that the partner title makes it easier for the firms to attract business and to say, ‘We have a contingent of young lawyers who we consider to be partners and who we support,’” Rumin said.

Long-time single-tier firms including Cravath Swaine & Moore and Paul Weiss Rifkind Wharton & Garrison have adopted two-tier partnership structures in recent years. Davis Polk & Wardwell, Debevoise & Plimpton, Wachtell Lipton & Katz and Ballard Spahr are among the minority of firms that remain single tier.

Hunton Andrews Kurth said it has had a separate non-equity class for years. The firm declined to describe how that tier differs from the one it just created.

Higher Rates

Firms charge higher rates for the services of non-equity partners than they do for associates, providing an additional layer of leverage to support a firm’s profitability.

“There’s a lot of extra money there to pay your equity partners, particularly the senior equity partners who are bigger rainmakers,” said Jon Truster, a legal recruiter at Macrae. “If you don’t have that non-equity tier, you don’t have that army of income partners generating revenue for top rainmakers.”

The new tier follows trends “to increase flexibility in entry paths to partnership for laterals and non-partners and in compensation structures for existing partners,” Danon said. “None of our partners have been or will be `de-equitized’ as a result of this change.”

The firm, with roots dating back more than 120 years, formed out of a 2018 merger between Hunton & Williams and Andrews Kurth Kenyon. It has nearly 900 lawyers and offices in 19 cities in the US and abroad.

The firm’s associates as of this year must reach a non-equity tier before they will be considered for a full partnership, Kevin White, co-chair of Hunton Andrews Kurth’s labor and employment team, told lawyers this week, according to a person familiar with the matter.

White told associates to think of the business case they need to make to gain partner and to think of a promotion to a partnership as akin to a business deal rather than a standard promotion, since the firm adds partners with the goal of elevating the value of shares of the firm’s profitability, the person said. White did not immediately respond to a request for comment.

Rumin said he’s heard about the difficulty in making partner at firms for his entire career, as the threshold for revenue contributions of partners has grown. “The reason the threshold has grown is because profits per equity partner has grown,” he said.

However, partner titles for non-equity earners have left some lawyers feeling mislead about their rights and responsibilities as employees carrying the title of partner. This year, multiple non-equity partners filed lawsuits, claiming their firms mislabeled them as partners for the benefit of the firm.