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What is a Partner in a Law Firm?

What is a Partner in a Law FIrm?

Every few years, there seems to be a new television series centered around the judicial system. One of my old-time favorites, The Guardian, is about a hotshot lawyer who works for his dad’s law firm and dreams of becoming a partner. So with all the talk about making partner, what exactly does that mean?

A law firm partner is an attorney who started out as an associate but has advanced to have partial ownership in the firm. There are two types of partners in a law firm: equity partners, who are partners that not only earn a salary but also a share of the profits at the end of the year, and non-equity partners, who help manage the firm and have voting rights but they do not get a share of the profits.

How Long Does an Attorney Have to be With a Firm Before Becoming a Partner?

In general, it will depend upon the size of the firm as to how long it can take an associate to become a partner. It also will depend upon the work ethic of the associate and their performance on the job. If you really want to make partner one day, you need to strive to do your best and show that you are an asset to the firm. In general, it can take anywhere from seven to 11 years to make partner. However, for smaller firms, it can take even less time.

Related: What are the Different Types of Law Firms?

How Does an Attorney Become a Partner?

When attorneys start their careers, they are considered associates. An associate is generally new to the industry and has fewer years of experience than the other attorneys. For an attorney to become a partner, they are generally invited.

The traditional way law firm partnerships will invite an attorney is based on their years of experience and billable hours. They generally follow a single-tier approach where they will promote senior attorneys from within the firm after being with the firm for a specified number of years. They will still pay them a salary but will also offer a share of the profits. These are known as equity partners, and they usually are given more power with their position, such as voting rights and the ability to make decisions for the firm. They own a portion of the firm’s assets, and that includes real estate. However, they also share in the firm’s expenses and liabilities.

To become an equity partner, an attorney has to fund a buy-in to own a portion of the firm. This value usually depends upon the size of the firm. Some firms will offer a buy-in loan for the partner to finance.

Another way an associate can be invited is through a sweat equity, which is basically dependent upon how much business the partner generates through hard work. The value is determined by the attorney’s practice originations and leadership, and then shares or percentage points are awarded based on how much the lawyer has contributed to the firm’s business.

The other way a law firm will invite an associate to join the partnership is to become a non-equity partner. Non-equity partners receive a salary but do not share in the profits. This is a way for some lawyers to gain the prestige of being a partner of a firm, but they share no ownership. Generally, outside clients and other lawyers have no idea if the partner is equity or non-equity. It isn’t usually made known.

Related: Why Do Law Firms Have Partners?

Are There Any Drawbacks to Becoming an Equity Partner?

When an associate becomes a partner, the prestige gained is offset by the negative aspects of their newly held position. For instance, the sizeable investment they made to buy in to the firm can be a big financial hit. Their capital can range from 25 to 35 percent of their annual salary and can even be as high as 50 percent with some firms. In some cases, after becoming a partner, a lawyer can find themselves making less money their first year than they did the year before. This can make their first year as a partner quite stressful as they strive to make up the difference.

Another downside is that as an owner of the firm, you are also responsible for debts incurred and any other problems that may arise that affect the firm as a whole. You are no longer an employee, so when situations arise, you and the other partners in the firm are equally accountable.

Also, as an owner of the firm, you most likely will have to pay for your own benefits, which is another expense you never had as an associate. These are just some things to consider when accepting an invitation to become an equity partner.

Can a Partner Ever be Fired?

Can a Law Firm Partner Be Fired?

In the normal sense of the word, no, a partner cannot be fired because a partner is also a partial owner of the firm. If someone owns their own business, they cannot be terminated. Usually, there is a written partnership agreement that outlines the specific requirements of a partner and the consequence of not meeting them. They will also write in a forced retirement age that is usually around 65 or older. When the partner signs the partnership agreement, they state they are willing to abide by the guidelines.

However, there have been times when termination is necessary, such as if a partner commits a crime or malpractice or experiences a debilitating mental illness. But without a valid partnership agreement, the process to remove a partner will have to involve litigation in civil court, which can be quite an expense. Unless the other partners can prove the partner did something illegal, such as embezzlement, it is very difficult, if not impossible, to force a partner out of the firm.

What Does it Take for an Attorney to be Invited to Become a Partner?

If you are an attorney with a law firm desiring to be a partner one day, it is good for you to familiarize yourself with your firm’s partnership structure. You will want to know what they look for when seeking a partner and make sure you are on the right track. Then you can take specific steps to make yourself stand out among the other associates of the firm, such as:

  • Incorporate business development strategies. Establish new client relationships and find other ways to increase revenue.
  • Find your niche and develop it. Wherever your talents lie, do your best to develop those talents in such a way that makes you invaluable to the firm in that arena while also providing expertise in an area other associates may not be knowledgeable about.
  • Work towards building your personal brand. You want to find ways to make yourself stand out in the crowd. Your personal brand will spotlight your strengths, establish trust among your colleagues, and build your reputation.
  • Build connections and establish strong professional relationships. It is in your best interest to build relationships if you want to become a partner. If you struggle with ways to effectively network or feel that it just isn’t your thing try these tips below.
    • Be prepared. If you are at an event where you are supposed to network, learn as much as possible about the event, e.g., who is speaking, who will be attending, and the main topic of the event. Being prepared will enable you to engage more effectively with the other participants.
    • Have an opening line ready. Knowing beforehand how you will start conversations or answer questions when meeting other participants will help establish the flow of the interaction.
    • Keep the focus off of yourself. Your purpose is to engage with other participants and create mutually beneficial relationships. The best way to put a person at ease and enjoy a relaxing conversation is not to make the conversations about you. If you ask people about themselves, you may find you can offer help by referring them to someone familiar with their needs. When this happens, they are likely to remember you and send referrals your way in the future.
    • Make sure to follow up in some way after the event. This will help establish your name in the other person’s mind and keep them at the forefront of yours in case you need their assistance in the future. It can be something as simple as sending a quick email to solidify the conversation you shared.

How Much do Partners Make?

In 2019 equity partners in the nation’s top 200 law firms earned an average of $1.39 million, and non-equity partners earned an average of $432,000 according to a survey performed by legal search firm Major, Lindsey & Africa. However, the results also revealed that earnings were less for women and minorities.

Male partners earned $1.13 million on average and female partners earned $748,000. Likewise, partners who were white made an average of $1.046 million, and those identified as nonwhite averaged $869,000.

The results from this particular survey are based on base pay and bonuses only. One-time contingency payments and other unexpected payments were not factored into the totals.

All in all, making partner is a significant step in climbing the legal ladder. However, it has its drawbacks and risks as well. When deciding if a partnership is worth pursuing, it is good not to focus solely on the money and prestige you may gain but also on the demands the position requires and the risks you will need to take.

 

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