'Good disaster' leads to ousting of more BigLaw partners, often under revised procedures
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Large law firms are increasingly "counseling out" unproductive partners to free up more money to retain high performers, sources tell Law.com.
Although law firms regularly drop unproductive partners, the practice is picking up steam this year. “As they say, there’s nothing like a good disaster to get things in order,” said one leader of a top 100 grossing law firm in an interview with Law.com.
Many firms are relying on amended partnership agreements that allow partners to be ousted by a vote of the executive or management committee. Previously, removing a partner was a “messy process” that required a supermajority vote of all the partners, the article reports.
Another tack taken by some firms is to demote equity partners to nonequity status. Some fear, however, that an increase in the nonequity ranks will hamper profits.
Other firms reduce compensation for equity partners, an option that isn’t recommended by Altman Weil legal consultant Eric Seeger. Partners who are hit with a compensation cut may work less or stay because they have no place else to go, he said.