Income Partners are on the Rise

Posted on August 13th, 2014 by Legal Fee Advisors

Dual partnership tiers are becoming entrenched in law firm culture as numbers of non-equity partners continues to climb. According to a current survey by The American Lawyer (a sibling publication of The New Jersey Law Journal), a mere 17 of the 100 top-grossing law firms are made up of only one tier of equity partners.[1]

New Jersey law firms are aligned with this growing national trend. According to a New Jersey Law Journal article published this past May, a mere 3 firms out of the 20 top-grossing firms currently have only one tier of (equity) partners. This upward movement does not appear to be recession based as this dual-tier partner system emerged before the recession.[2] Patrick Dunican Jr., the managing partner of Gibbons and a former non-equity partner, believes the trend is based on a lesser demand for legal services.[3] Generally, equity partners are expected to secure business and generate fees in order to earn their share of the distributable profits. However, two New Jersey firms claimed not everyone even wants to have an unpredictable income dependent upon acquiring capital gains.[4] Nonetheless, there are a lot of talented lawyers that deserve a chance to show what they can do as partners rather than associates, which may maintain an attorney’s motivation while also achieving client satisfaction because a partner is working on their legal matters. Although, not everyone likes this dual-tier system, it seems to give the opportunity to promote associates quicker than with the traditional, one-tier equity partner scheme. [5]

This is a prime example of a positive change in the conventional hierarchy of law firms’ bestowing partner title only to those attorneys who secure capital. Given the notoriously unflattering consumer opinions of attorneys, this rising movement is a chance for a more positive reputation to take shape because it demonstrates that attorneys are being rewarded for their actual hard work and not merely for achieving client acquisition and padding the firms’ pockets.

D. Guglielmo

Legal Fee Advisors © 2014

[1] David Gialanella, Nonequity Partner Ranks Swell at N.J. Firms, Per National Trend, New Jersey Law Journal, May 23, 2014.
[2]Id.

[3] Id.

[4]Id.

[5]Id.