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Law Firms

BigLaw firms set earnings expectations for partners, create ‘super tiers’ to reward top performers

By Debra Cassens Weiss

October 31, 2024, 11:56 am CDT

As BigLaw firms focus more on metrics, many are setting earnings expectations for partners, according to legal recruiters who spoke with Law.com.

The amounts vary, but some examples are equity-partner expectations of at least $5 million to $7 million in business per year, Mike Parrillo, a recruiter in New York and founder of the Parrillo Search Group, told Law.com.

“Law firms are getting more serious about setting clear expectations on business and even specific benchmarks for certain partners,” Parrillo said. “This comes as firms are thinking more critically about how profitability should be shared.”

Kristin Stark, a firm consultant and a principal at Fairfax Associates, said some firms are using “super points” or creating “super tiers” to reward the highest performers.

“By virtue of a super tier existing, it is raising the bar for everyone,” Stark told Law.com.

Firms are getting strict about expectations in a quest to increase profits per equity partner, said Susan Mendelsohn, a Chicago-based legal recruiter, in an interview with Law.com.

“They want to be Am Law 10 or 15 or 20, so perhaps being more strict in increasing or enforcing those levels,” she said.

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3. Law firms cut compensation for some partners,…

Law Firms

Law firms cut compensation for some partners, freeing up cash for high performers

By Debra Cassens Weiss

October 15, 2024, 3:28 pm CDT

Law firms are cutting compensation for some partners because of reduced productivity or impending retirements, a contrast from more collegial days, according to consultants who spoke with Law.com.

“In the white-shoe days, it was unheard of to move somebody down” the compensation ladder, said Matthew Bersani, a founding partner of the Cliff Group, a legal consulting company, in an interview with Law.com.

Now, he estimates, about 10% to 20% of partners in a firm in any given year are seeing a reduction in shares or “points” reflecting ownership amounts.

Other consultants differed on the percentage of partners at firms seeing less compensation. Consultant Blane Prescott told Law.com that it is not unusual for 20% to 30% of partners to see compensation cuts.

But partners making less money are sometimes transitioning out of law practice because of retirements, said Kristin Stark, a Fairfax Associates consultant.

“Are firms still making difficult performance management decisions? Yes, they are. In some firms, you’ll still see 20% or so go down. But some of that will be driven by retirements,” she told Law.com.

Stark said downgrading partner compensation was more common during the financial crisis in the late 2000s and at the outset of the COVID-19 pandemic. Now, good economic times are helping lower performing partners.

“With the uptick of law firm performance in recent years, there’s been some of what we’d call a peanut buttering of compensation,” involving spreading the money, Stark told Law.com.