Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. In my first column of 2020, I look at the changing meaning of the word “partner” in Big Law, a subject I investigated as part of a Bloomberg Law feature story on Kirkland & Ellis.
Happy New Year. In the legal press that means one thing: new partner announcements. Lots of them. Most of these lists of names don’t make it past reporters’ inboxes because, well, pretty much every major law firm makes new partners at the start of a new year.
Besides the lack of newsworthiness, there would be something else confusing about coverage of these freshly minted partners. That is, the term “partner” means so many different things these days.
Mostly, it means a lot less than it used to. Last year, a staggering 43.5% of all “partners” in the AmLaw 200 did not have a real equity stake in their firm. That was the highest-ever portion of so-called “income partners,” and a striking increase from 22% in 2000. It is clearly getting harder and harder to get a real equity stake in Big Law.
So, it is worth remembering at this time of the year that while some lawyers are celebrating partner promotions, there are plenty getting bad news. They are being told they won’t make it to the next level of law firm life. And that is hard news for a group of super-motivated and highly talented people who—for the most part—have succeeded at what they put effort into.
This week, I wrote a story about how that dynamic plays out at Kirkland & Ellis. It’s the world’s largest firm by revenue and it has utilized the income partner tier perhaps more skillfully—or at least more profitably—than any other firm.
Like many Big Law firms, Kirkland is full of high achievers who expect to reach the pinnacle of success.
Nearly 60% of Kirkland’s associates come from just 10 of the country’s best law schools, according to a Bloomberg Law analysis. On average, those schools accept just one out of five students who apply. And then Kirkland typically hires students only near the top of their law school class.
I tracked down the current jobs of 821 of the 840 income partners the firm made from 2009 through last year, and I tried to speak with as many of them as I could about what it was like to confront the upper bounds of their career at a prestigious firm.
Some of those conversations were difficult for the former partners. They talked about real family struggles getting in the way of their pursuit of a career-long goal. They talked about feeling rejection.
Others had emotions that took their shape from the math of the place. They recalled thinking: Not that many people make equity partner, and it’s pretty likely it won’t be me.
Some law firms have taken steps to offer more options that fit the range of individual career ambitions for partners.
Consider Detroit-based AmLaw 200 firm Honigman, which happens to recruit fairly heavily from Kirkland’s non-equity tier. The firm’s CEO, David Foltyn, said that last year the firm created a third tier of partners called “member partners.”
They are permanent non-equity partners. Typically, they are highly skilled “technical” lawyers in practice areas the firm highly values.
Member partners don’t get a vote on firm decisions and they are not paid through firm profits. They’re not expected to develop business, Foltyn said.
Law firms continue to seek higher profits that can attract lawyers with large books of business. And that, right or wrong, means fewer partners will make it to equity. On a human level, that will require a lot of people to adjust their expectations of law firm life, if they haven’t already.
“People still come out of law school and they’re competitive. They want to make equity partner,” Foltyn said. “They ask about it. They talk about it. It’s just something firms, economically, I don’t think can do anymore. You really need to have a partnership that is as profitable as possible for the partners.”
Worth Your Time
On Litigation Finance: Burford Capital said it is planning to list its shares on a major U.S. stock exchange, a move that follows criticism from Muddy Waters last year. And, also on litigation finance, I answered questions about the industry this week on Reddit.
On Law Firm Criticism: Carlos Ghosn, the fugitive auto titan who escaped the Japanese legal system, called out Latham & Watkins for the role the legal giant played in his arrest and prosecution.
On Law Firm Offices: Another law firm’s New York office is moving to Hudson Yards. This time, it’s Debevoise & Plimpton. As my colleague Meghan Tribe reports, its new office space in “The Spiral” will have a higher cost per square foot than its current building, but the firm says the new building’s amenities mean it will pay less per lawyer.
On Law Firms Facing Litigation: Before the New Year, I wrote a roundup of law firms that were embroiled in disputes last year. One of those cases picked up this week when a group of six women lawyers suing Jones Day for systemic discrimination said they should not pay sanctions the firm is seeking.
That’s it for this week. Thanks for reading and please send me your thoughts, critiques, and tips.