Are Jobs of Nonequity Partners at Risk?

Nonequity partners avoided mass layoffs last year, even as law firms laid off hundreds of associates.

Are nonequity partners safe? The National Law Journal raises the question.

Recruiters privately tell the legal publication that nonequity partners are facing increased pressure to “find new opportunities” elsewhere. And even if nonequity partners manage to hang on to their jobs, they are facing a trend of fewer lawyers attaining the cherished equity partnership.

According to the story, in 2000, equity partners made up about 27 percent of the overall head count at the nation’s top 100 firms. By 2009, they made up only 19.75 percent of total headcount. The trimming of equity partners coincides with firms’ embrace of nonequity partners. By 2008, 79 of the top 100 law firms had adopted two-tier partnerships of equity and nonequity partners.

“The thinking behind nonequity partnership was simple: Younger lawyers would benefit from more time to prove themselves ready to become partial owners of a multimillion-dollar business,” the story says. “But many firms just used the nonequity tier to put off making tough decisions about firing underperformers.”

That strategy might have worked during the go-go years, Hildebrandt consultant Joseph Altonji tells the NLJ. “In this economy, it doesn’t make sense.”

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