Law Firms

DLA Piper Asks 275 Non-Equity Partners to Ante Up, Goes to 1-Tier Structure

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One of the biggest law firms in the world is making a “seismic shift” to a one-tier partnership structure, reports Crain’s Chicago Business.

To strengthen the firm’s financial position in a struggling economy, DLA Piper has invited 275 non-equity “income” partners to make capital contributions that haven’t yet been determined. In exchange, they will join the firm as full partners, according to a Crain’s article published today. This could nearly double the number of equity partners: DLA Piper presently has 300.

“By raising funds from a new crop of equity partners and compensating them with a share of the profits, DLA would eliminate income partner salaries and trim payroll costs and borrowing needs,” the business publication explains. It would also likely put more pressure on the new equity partners to bring in business, and put associates into an “up or out” model that requires them to generate clients or find another job as they become seasoned attorneys, legal recruiters say.

J. Terence O’Malley, a San Diego-based partner who manages U.S. operations for the approximately 3,800-attorney firm, says it hopes to operate independently of banks at some point in the future.

He says most income partners are “thrilled” by the opportunity to join the firm as full partners, and notes that DLA Piper is likely to offer them a payment plan for the capital contribution, Crain’s reports.

In theory, income partners who are doing well at DLA Piper should be better off as equity partners because they will have an opportunity to earn in proportion to the business they bring in rather than making only a specific salary.

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