Changing Views on Law Firm Partnership

CAREER COUNSELOR'S CORNER

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Changing Views on Law Firm Partnership [by Helen Kim] As more associates decide they no longer want to strive to reach the near-perfect standards required to make equity partnership, firms are responding by creating new tracks that still allow for career advancement to keep them interested.

Associates’ Views on Partnership Has

area, but also the associate’s potential to be a

Inevitably, there remains a plethora of senior

Shifted.

savvy business developer.

level associates who start to feel alienated

Today’s associates are not necessarily as in-

Road to Partnerships Is Getting Longer

and, unless the firm gives them effective feedback on the prospects of partnership, will most likely opt to quit the firm.

terested in making partner as they once were.

For some, it seems more unattainable and

The fast track at top law firms is slowing

less desirable than it has been for associates

down. Major law firms are sometimes pro-

One method firms have been using to deal

in the past. This is especially true coming out

longing the period leading up to partnership

with this situation has been the institution

of a recession, when firms are typically elect-

because of the desire for more experienced

of non-equity partnership tiers. In fact, over

ing fewer partners. As a result, there appears

associates, an active market for lateral part-

the years, many changes have occurred in

to be a definite shift in the goals of some of

ners and greater pressure to improve profit-

the traditional partner-associate structure.

today’s law firm associates.

ability. At firms where an associate’s first

Permanent associates, temporary attorneys,

shot at partnership once came around 7 years

staff or contract lawyers, of counsel and non-

Increasingly, lawyers are now more focused

after law school graduation, it can now come

equity partners (NEPs) have all been added to

on using their time at law firms to gain work

around 10 years after, or longer.

the mix.

to commit long-term. Associates often leave

Partners want associates to have more expe-

Non-equity partnerships have long been

law firms before they can even be considered

rience. However, at the same time, clients are

utilized by large law firms, but the use of this

for partner, either by moving in house or out

demanding leaner staffing on matters thereby

alternative is on the rise. In fact, most large

of the profession entirely. In fact, we’ve met

resulting in fewer opportunities for associates

law firms have created some form of NEPs.

some associates who go to law firms without

to gain experience. And in a down economy,

Even smaller firms are following the trend.

any intention of staying there long enough to

there are less deals where associates can

The popularity of this structure continues to

be a partner. Law firms do not always discour-

build their skills. Also, lateral hiring of part-

grow to the extent that the number of non-eq-

age such attitudes since economically they

ners with business results in a large pool of

uity partners in many firms is increasing more

can’t make everyone partner.

homegrown senior associates who have to

rapidly than the number of equity partners.

experience and earn money, without having

wait for partnership consideration. Further, NEPs - Reasons For The Rise.

There are many reasons why associates quit,

there is another pool of lateral senior associ-

including poor performance reviews, the pres-

ate hires who usually have to face a prolonged

sure of billable-hour requirements and family

wait for partnership as well, especially since

There are at least five reasons more firms

obligations. Another very common reason

firms often take their time to reach a high

are creating an NEP tier:

why associates leave their firms is the lack of

comfort level with associates who were

perceived opportunity for advancement. Espe-

trained elsewhere. Finally, because low part-

1. to lengthen the equity partnership track in

cially in extremely large law firms, associates

nership numbers drive up profits per partner,

order to give younger lawyers more time to

believe making partner is out of their grasp.

firms may be wary of making a large number

build their skills and their business;

And, for many, it is true. The bar is certainly

of even well-qualified associates partners.

2. to postpone on having to decide who deserves to make partner;

higher to become an equity partner. The say-

3. to avoid reducing profits per partner, par-

ing, “you work hard and pay your dues and you’ll make partner” no longer always applies.

What Is Left For Those Who Do Not Make

ticularly when profits are down;

Partnership is not just about a well-developed

Equity Partner?

4. to try to retain associates who may not, or

skill set or technical expertise in a practice

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will not, become equity partners and might

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Other Alternatives

5. to accommodate the many young lawyers today who don’t want to become equity part-

Non-equity partnership is not the only alter-

ners because they don’t want to assume the

native for a firm. Other options include creat-

responsibilities associated with partnership,

ing a permanent category of “senior associ-

and a non-equity partnership will provide this

ate,” “senior lawyer,” or “special counsel”;

middle ground.

or designating certain associates as “senior associates” and giving them substantial bo-

Types of NEPs.

nuses. This usually indicates the firm’s strong commitment to making these associates eq-

There are two types of NEPs: temporary and

uity partners once they complete the normal

permanent.

partnership track. Of course, there is always the option to just let go of senior associates

Temporary status. In firms where NEP status

without allowing them to achieve partnership.

is defined as “temporary,” or simply an additional step to full partnership, associates (or

Conclusion.

laterals) are elected NEPs for a designated

Just because the prospect of equity partner-

period, usually not more than two to three

ship is not as easy to come by or may take

years. The additional time before consider-

longer than in the past does not mean that

ation for equity status enables them to gain

you cannot have a long, stable career with a

more legal and client service experience,

law firm. At the very least, you should know

develop areas of expertise and develop more

that there are other options available for

business. It also gives the firm more time to

lawyers at law firms besides straight equity

evaluate the lawyers.

partnership. Perhaps a non-equity partner-

Permanent status. In firms where the cat-

for your career goals. If your current law firm

ship arrangement may even work out better egory is defined as “permanent,” NEPs will

is not in a position to offer you partnership, an

generally not then be considered for equity

attractive alternative to partnership or even

partnership--although there can be excep-

go into discussions about your prospects for

tions. In order to retain these lawyers, the

partnership, don’t be discouraged. There is no

firm designates them as “partners” to the

need to feel that there is no longer a place for

public without defining their NEP status.

you within the realm of a law firm. Perhaps it’s just time to go into discussions about join-

The Advantages of NEPs. NEP status has advantages for both lawyers and law firms. For one, while the lawyers are considered to be full partners to the public, they gain additional time to develop before facing the possibility of not being elected to full partnership. And lawyers who don’t wish to assume the financial obligations and time commitments required of equity partners can still become partners. From the firm’s perspective, the tier allows them to buy time and hold on to valuable lawyers without having to make them full equity partner.

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ing another law firm.