Credit: David/Adobe StockWhat Happens When Lateral Partners’ Guaranteed Compensation Ends?
Partners’ disclosures about portable business and overall market conditions will influence upcoming transitions away from guaranteed compensation.
February 04, 2025 at 05:00 AM
6 minute read
What You Need to Know
- An increasing number of guaranteed compensation deals for lateral partners in recent years means more partners are transitioning to their new firms’ long-term compensation models.
- A successful transition depends on a number of factors, recruiters said, including the firm’s compensation model and performance as well as the partners’ prior assessment of the value of their practice.
- However, law firms and lateral partners more frequently find a middle ground in post-guarantee compensation negotiations rather than splitting up, even if both parties’ expectations aren’t immediately in alignment.
As a proportion of partner moves, laterals that involve guaranteed compensation aren’t necessarily getting more popular, according to leading Big Law partner recruiters.
But an unprecedented uptick in partner movement over the past few years means more partners have changed firms with the promise of two years of guaranteed compensation, which in turn means more negotiations on the horizon over how partners are compensated when guarantees expire.
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