Kirkland & Ellis chairman Jon Ballis said the firm’s decision to consider promoting its lawyers for share partner one year earlier was driven by “massive opportunities” for future growth and because leadership can tell sooner when lawyers are ready for the next step.
“It really is about providing more opportunities for our people because our business is growing at a scale that requires more senior lawyers in the right spots,” Ballis said in an interview with Bloomberg Law. The Chicago-based private equity lawyer took the reins of the largest law firm by revenue in early 2020.
Starting partnership decisions after nine years doesn’t make Kirkland an industry leader on that front. Other firms it competes with at the top of the Big Law market make lawyers eligible for equity status after seven or eight years.
Still, news that Kirkland shortened its partner track came as a surprise on Wednesday to an industry that has, in general, made it harder and harder for lawyers to achieve the rarefied status that comes with sharing in a Big Law profit pool. Kirkland’s average equity partner last year earned more than $6 million.
Kirkland’s move also came amid a surging market for legal services that has powered a raging battle for talent, and some viewed the firm’s decision through that lens. Doling out lucrative equity shares more quickly could be the latest effort to keep mid-level attorneys from leaving at a time where many firms are experiencing higher-than-normal attrition.
In the interview, Ballis focused the reasons for the change on the firm’s need for more top-quality lawyers as its business continues to grow. He also said lawyers are more productive now than ever before—handling more matters at a time, thanks in part to technology changes—building a broader resume to judge after nine years.
“As an industry we are working harder than before. And we feel that with the throughput we now have, our people are handling so many matters that by the end of nine years, we can make the judgment for many of our people as to whether they meet the standards we’re looking for regarding admission into our equity partnership,” Ballis said. He added a baseball analogy: “They’re getting 1,000 at-bats earlier in life.”
Last year, Kirkland’s top line grew nearly 17% to $4.8 billion. Its blistering growth over the past decade has echoed the surging private equity industry, where Kirkland represents the likes of The Carlyle Group, Apollo Global Management, and dozens of others.
Kirkland’s promotion system has traditionally been generous when handing out the title of so-called “non-share partners” after six years of practice. This year, that class set a record of 151 lawyers. The promotion carries a title but not a share of the firm’s profits. Many leave without ever making equity.
Those non-share partners will now be considered for share partner after three years—down from four previously. Lawyers who don’t make it on their first year of eligibility can still be up for consideration later.
A source close to the firm said the change was in play for this year’s class and “many” ninth year lawyers made equity partner. The source said Kirkland’s share partner class this year was also the largest in firm history, but could not provide a specific figure.
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Industry-wide, law firms have generally lengthened the partner track and made fewer equity partners in recent years. That has resulted in a ballooning group of non-equity partners, which across the industry reached a record of 46% of all partners last year, up from 22% about 20 years ago, according to AmLaw data.
Kirkland’s partnership is even more heavily weighted toward its non-equity group, who account for nearly 59% of its more than 1,150 partners, according to AmLaw data.
Still, the firm’s equity partner ranks have grown steadily in recent years—something that hasn’t happened across the industry. More than 40 of the top 100 firms decreased the size of their equity tier last year, according to AmLaw figures.
Kirkland last year had 476 equity partners and its nearly 6% growth rate in that group from 2019 to 2020 was good for the 16th highest among the top 100 firms by revenue. Its net addition of 26 partners was the second most by headcount.
Ballis said the partner track change fit into a “growth mindset” at the firm. That doesn’t mean growing in size but “getting better” and not being afraid to try new things that could help the firm, he said.
“We still think there are massive opportunities for growth in our business because the practice areas we focus on are growing and we’re continuing to gain market share,” he said. “We need to have senior people in the right spots in order to continue to deliver what we view as the highest level of legal service in the industry. Otherwise you can’t grow, or at least can’t grow in the right way.”