The rocky road to riches – partners' struggle to equity is bad news for juniors
You know the outlook is bleak when even the most genial of law firm managers privately suggests they probably wouldn't encourage today's university students to pursue a career in the law. Or at least a career as a partner in a City law firm. Ever-more demanding clients and growing pressure on firms to maintain profits despite stagnating or even falling revenues means that, for most, the path from junior lawyer to the heady heights of partnership is long, and getting longer. And for the exclusive few who do make it there, the view from the top is decidedly more precarious than it used to be, with annual pruning now the norm rather than the exception.
June 06, 2013 at 07:00 PM
3 minute read
You know the outlook is bleak when even the most genial of law firm managers privately suggests they probably wouldn't encourage today's university students to pursue a career in the law. Or at least a career as a partner in a City law firm.
Ever-more demanding clients and growing pressure on firms to maintain profits despite stagnating or even falling revenues means that, for most, the path from junior lawyer to the heady heights of partnership is long, and getting longer.
And for the exclusive few who do make it there, the view from the top is decidedly more precarious than it used to be, with annual pruning now the norm rather than the exception.
But sometimes numbers can more starkly illustrate reality than words, and that is certainly the case with our recent research into how long it has taken the partnership class of 2013 to secure their entrance to the senior ranks of the UK's top firms.
On average it took 10.6 years post-qualification for those working at the 10 largest firms in the UK by revenue to make partner. In an already declining pool of new partners, that is roughly 30% longer than it took those made up across the same firms in still boom-time 2006, when the equivalent figure stood at 8.2 years.
And for those wanting to secure the ultimate prize of a stake in the firm's equity, the reality is harsher still, as with a few exceptions – most notably Slaughter and May – this figure of 10.6 years represents how long it took the group to make partner of any kind. Clearly, given the dwindling number of all-equity partnerships, the average path to equity will take well in excess of a decade.
All of which is creating a self-perpetuating problem. If it takes more than 10 years to make partner and a good couple more to make equity, you're talking about many partners being in their mid to late 30s before getting a shot at taking home the real money.
Which in today's brutal marketplace, in which partners over the age of 50 (and certainly 55) are something of a rarity, means some will barely have time to make it to the top of the lockstep before being nudged in the direction of the exit. All of which adds incentive to keeping the equity tight so that earnings are as high as possible for this relatively brief window of time.
Given no amount of alternative career paths will change the fact there will always be more people wanting to be partner than there are spots available, this will no doubt be prompting a slightly tense dynamic at the band of firms expecting to see profits per equity partner fall this year.
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