Data Snapshot: The Path to Big Law Equity Partnership Is Narrowing
Twenty years ago, holding the partner title at an Am Law 100 firm usually meant sharing in the firm's profits. That's not the case any more.
May 06, 2019 at 05:00 AM
2 minute read
The top-grossing U.S. law firms reported their best financial year since the great recession in 2018. But they aren't exactly spreading the wealth around.
Data analyzed by ALM Intelligence, a division of Law.com parent company ALM, shows that among partners at firms ranking in the Am Law 100 index, the percentage of equity partners has been steadily contracting for almost two decades.
That decline comes even while many firms have seen positive financial performance. The Am Law 100's average revenue per lawyer was up 4.2 percent in 2018 to almost $1 million—the fastest year-on-year growth since 2010. The average Am Law 100 equity partner brought in $1.88 million in profits in 2018, up 6.5 percent from the previous year.
David Altuna, a client adviser at Citi Private Bank Law Firm Group, told The American Lawyer last month that maintaining or shrinking the equity partner tier has become a trend—and that some firms are seeing an “upward lift” in profits from cutting partnership ranks.
“I think this is just an arms race,” said Nicholas Bruch, a director and analyst at ALM Intelligence. “In the old days where most firms had collegial partnerships where all you had to do was work long enough and you got into the partnership, what that meant was that some people were being subsidized. ”
“ As soon as one or two firms decided that they weren't going to do that, then everyone basically had to go to that world,” Bruch added.
The American Lawyer categorizes “non-equity partners” as those who receive more than half of their compensation on a fixed-income basis.
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