Posted Feb 08, 2011 12:36 pm CST
Many law firms are reducing partner compensation so they can free up more money for superstars who in some cases earn as much as $10 million a year.
Often the top earners are making eight to 10 times more than other partners, and it’s creating morale issues, the Wall Street Journal reports.
The pay gap is about double the spread of a decade ago, according to Blane Prescott, a former pay consultant who is now chief executive of the law firm Brownstein Hyatt Farber Schreck. He told the Wall Street Journal that most big law firms are cutting partner pay by 10 percent to 30 percent each year, partly so they can pay more money to the top performers.
The article has some examples of the high pay and the widening gaps:
• Washington litigator Jamie Wareham left Paul, Hastings, Janofsky & Walker for DLA Piper, where he will make about $5 million a year.
• Kirkland & Ellis paid top partners last year more than $8 million, about eight times the amount earned by other partners.
• DLA Piper paid its top partners $6 million last year, about nine times more than the amount earned by other partners.
• At K&L Gates, top partners earn about nine times the pay of other partners, while at Hogan Lovells top lawyers earn about 10 times more than other partners.
• Skadden, Arps, Slate, Meagher & Flom pays its top partners about five times that of the lowest-earning partners. Firms where the pay gap is even narrower—in the range of 3-to-1 or 4-to-1—include Simpson Thacher & Bartlett and Cravath, Swaine & Moore.
ABAJournal.com: “Has Downturn Provided ‘Protective Cover’ to Top Equity Partners?”
ABAJournal.com: “Widening Partner Pay Spread Spurs Tensions and Law Firm Instability, Consultant Says”
Typographical error in headline corrected at 7:30 a.m.