Starting their career at law firms and investment banks, many young employees aim for that milestone where they can make partner. “Making partner” refers to the changeover from being an employee of the firm to becoming a part-owner; a prestige nearly everyone strives for. The person then shares in the annual profits and the liabilities of the business.
As a law student, it is often difficult to imagine how one would be complete their partner track. The criteria can seem like a big mystery and many employees spend years stumbling around in the dark before jumping ship to other law firms.
It’s a tough market out there, and there is a reduced demand for legal services. Law firms are not keen on promoting many to partner, and some have even taken to demoting partners who are not contributing enough by cutting them out of the profits. The practice of de-equitizing lawyers has picked up steam recently. Over the years, the partner track has lengthened considerably; it takes almost ten years now to make partner unless you can distinguish yourself in some way.
Law firms scout the top law schools in the country and hire the best and the brightest. These students are mentored and offered regular salaries which is a hefty investment in training them for the future. These associates of the firm are evaluated for partnership potential, and many don’t make it.
Nowadays, it’s getting harder to become an equity partner and the criteria is becoming stringent.
The benefits of making partner have recently come into question as many feel that it doesn’t hold the same appeal that it once did. Many partners are now departing because they have become disillusioned with the pros.
Let us look at equity partnership in detail. The basic requirements include putting in a decade of work; which means billable hours of course. It also means you have brought them a few big clients.
Being a partner means that instead of getting a salary, you will receive a portion of the firm’s collective profits because you’re now the owner of a small part of the establishment. You’re now the employer and hence it is your job to increase profitability by bringing in new clients since you’re now dependent on the firm’s success. The percentage of profits will increase based on your performance which previously resulted in an increase in salary.
However, this comes with the obvious flaw. Suppose the firm goes belly up, you would also be responsible for paying off the company’s debts.
Now there is also the possibility of being a non-equity partner; also known as a two-tier partnership in which, to all intents and purposes, you’re a partner at the firm, but you don’t share the profit. Instead, you receive a brilliant salary. It’s sort of an intermediary step before making full partner.
Firms expect you to make your hours and billable hours are what will lead you to your goal. The assignments that you receive will slow increase before you have a study work supply. A good relationship with the partner with whom you work is essential.