There are lots of flaws with Biglaw, but, one of the virtues is the transparency on compensation. When it comes to the associate ranks, the majority of top firms have a very clear salary and bonus schedule and, for the most part, firms are up front about the conditions needed to take home the cash on the grid. But all that changes when you make partner.
Obviously, the ranks of equity partnership are paid with often byzantine formulas that are queued off of profits. But what about the growing nonequity partner ranks? Figuring out compensation for those more than an associate, not yet an equity partner is a lot more opaque.
According to reporting by Law.com, nonequity partners are averaging less than $350,000 in base compensation and $106,000 in bonuses.
According to a recent ALM flash survey of Am Law 200 firms and midsize firms, nonequity partners averaged about $345,679 per year, with an average annual bonus of a little more than $106,000.
The survey, which took in responses from 286 lawyers total and about 56 nonequity partners specifically, also pegged the median salary for the non-equity tier right at $300,000, and the bonus at $50,000. The respondents in both groups ranged from the smallest firms (1-99 lawyers) to the largest (1,500+) scale.
Yeah… compare that to senior associate compensation at top firms (which, admittedly, not all of the ALM respondents work at). Associates can take home $435,000 in salary, with a $115,000 bonus. Even at the biggest of Biglaw firms (more than 600 attorneys), the average nonequity payday isn’t much more than senior associates. Now it’s clear why there’s “friction” between these classes of attorneys. As Blane Prescott, managing shareholder at MesaFive, noted, “It definitely produces some friction. Especially among middle market firms who are getting pulled up into the ranks of those firms paying set class bonuses and special bonuses. Many of these firms are now saying that they can no longer guarantee that [nonequity partners] will earn more than associates.”
Walking the compensation line between senior associates and nonequity partners is also a challenge at top Biglaw firms. With a number of firms adding nonequity partners to their ranks, keeping everyone paid and happy is an art.
“I think it is getting more complicated because you also have a different class of firm now wrestling with, ‘How do we compensate our nonequity partners?’ that never had to think about it before,” said Jeff Lowe, senior managing partner and market president for Washington, D.C. at consulting firm CenterPeak. “You’ve seen over the last five years, in particular formerly single-tier firms moving to a two-tier system, so they have to continue to find that line to keep the partners happy. But they went to two tiers specifically to divert more compensation to the equity partners. So, it can be very tricky.”
Not every firm balances this issues in the same way. Betty Temple, chair emeritus at Womble Bond Dickinson, told Law.com nonequity partner compensation is “bespoke,” and a nonequity partners can make “generally, significantly more than associates, and sometimes, as much or more than equity partners.” But Dan Binstock, a recruiter for Garrison, noted that is far from the case at every big firm.
“There can often be a big gap, a sizable gap between the highest-paid nonequity partners and the lowest-paid equity partners,” Binstock said. “And that can provide a lot of extra profit for a firm, where partners are reaching for the brass ring of equity because they will get a seven-figure jump, and they’re willing to tolerate multiple years at a lower level in order to have a seat at that table.”
So a word of caution for those getting a “promotion” to nonequity partner — the compensation may not be the brass ring you assume it is.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].