BakerHostetler officially announces move to single-tier partnership
The rumors were true. BakerHostetler will officially move to a single-tier partnership starting early next year.
The firm announced Monday that it would eliminate its current two-tiered system consisting of equity and nonequity partners to move to a single-tier. According to a press release from the firm, the partners voted Sept. 10 to move to a single-tier partnership that would take effect in 2016.
“A single, unified partnership structure further strengthens our culture and our business by having all partners invested in the success of the firm, more fully participating in the benefits and responsibilities of being an owner and stakeholder,” said Steven Kestner, chairman of BakerHostetler, in the press release.
The move was first reported in August by Above the Law, which obtained a leaked internal memo discussing the proposal. With the elimination of its nonequity partnership ranks, BakerHostetler joins a growing list of Am Law firms that have made the move away from multitiered partnership structures. DLA Piper made the move away from having “income partners” in 2008, while Akin Gump Strauss Hauer & Feld did the same thing in 2013.
“We view our partnership change to be consistent with our development into one of the nation’s leading law firms with offices in the largest markets in the country,” Kestner said in the press release. “The legal profession has become increasingly competitive, and this new structure will help us advance our business by continuing to attract and retain top talent, foster a stronger collegiality among the partners, and align performance with ownership for all of us.”
Kestner noted that the multitier structure began in 1992, when the firm had 480 lawyers in eight offices. According to him, those figures have nearly doubled since then—today the firm boasts 930 lawyers in 14 offices.
According to the press release, the firm does not expect to raise additional partner capital as a result of the switch. Additionally, the firm announced that partners will receive a mix of firm profits and fixed income as part of their total compensation package, and that voting rights and capital contributions would be determined by the partner’s percentage interest in the firm.
See also:
ABA Journal: “Have we reached the end of the partnership model?”
