What happens to lawyers who don't partners after 8 years?

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ResolutePear
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Re: What happens to lawyers who don't partners after 8 years?

Postby ResolutePear » Mon Nov 08, 2010 10:52 pm

Kohinoor wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.

That... doesn't sound right.

(b) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person's admission as a partner.
(c) An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such a partnership obligation solely by reason of being or so acting as a partner.


Isn't the whole point to incorporating a business to avoid being personally liable for a company? Obviously with exceptions.

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James Bond
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Re: What happens to lawyers who don't partners after 8 years?

Postby James Bond » Mon Nov 08, 2010 10:54 pm

ResolutePear wrote:
Kohinoor wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.

That... doesn't sound right.

(b) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person's admission as a partner.
(c) An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such a partnership obligation solely by reason of being or so acting as a partner.


Isn't the whole point to incorporating a business to avoid being personally liable for a company? Obviously with exceptions.


Yes. Well and other things but yes.

bigben
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Re: What happens to lawyers who don't partners after 8 years?

Postby bigben » Mon Nov 08, 2010 10:58 pm

boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.

At any large or midsize firm there is basically no risk of the firm becoming insolvent resulting in personal liability for debts. That's just crazy. However, your income is dependent upon profits. So there is some risk involved with being a partner.

But if you're going to bring attention to the "disadvantages" of being a law firm partner there is really just one: you're going to work your ass off and there is a lot of pressure to perform. This goes for large firm and even most small firm practices in general, whether you're an associate or a partner. It's the nature of the game.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Anonymous User » Mon Nov 08, 2010 11:36 pm

But if you're going to bring attention to the "disadvantages" of being a law firm partner there is really just one: you're going to work your ass off and there is a lot of pressure to perform. This goes for large firm and even most small firm practices in general, whether you're an associate or a partner. It's the nature of the game.


Arguably, the pressure to perform for partners is higher at eat-what-you-kill firms than at lockstep ones.

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Re: What happens to lawyers who don't partners after 8 years?

Postby concurrent fork » Tue Nov 09, 2010 12:43 am

boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.


What are you talking about? They are LLPs with very few exceptions.

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Re: What happens to lawyers who don't partners after 8 years?

Postby vanwinkle » Tue Nov 09, 2010 1:24 am

concurrent fork wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.

What are you talking about? They are LLPs with very few exceptions.

Boalt 2L? More like Boalt 0L, lol.

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ResolutePear
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Re: What happens to lawyers who don't partners after 8 years?

Postby ResolutePear » Tue Nov 09, 2010 1:34 am

vanwinkle wrote:
concurrent fork wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.

What are you talking about? They are LLPs with very few exceptions.

Boalt 2L? More like Boalt 0L, lol.


Holy burn, Batman!
Image

boalt2l
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Re: What happens to lawyers who don't partners after 8 years?

Postby boalt2l » Tue Nov 09, 2010 2:32 am

Go ask an actual partner if they have to sign onto all the lines of credit, the fact that people are ignorant of this is hilarious.

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Re: What happens to lawyers who don't partners after 8 years?

Postby birdlaw117 » Tue Nov 09, 2010 2:46 am

boalt2l wrote:Go ask an actual partner if they have to sign onto all the lines of credit, the fact that people are ignorant of this is hilarious.

If the entity is set up as a normal partnership instead of an LLC or some type of corporation, you are correct. However, nobody, particularly legal minds, would ever do something that stupid.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Anonymous User » Tue Nov 09, 2010 9:35 am

birdlaw117 wrote:
boalt2l wrote:Go ask an actual partner if they have to sign onto all the lines of credit, the fact that people are ignorant of this is hilarious.

If the entity is set up as a normal partnership instead of an LLC or some type of corporation, you are correct. However, nobody, particularly legal minds, would ever do something that stupid.


Wachtell and Jones Day do this. It gives partners more credibility with clients to say that their own money is on the line if they don't do a good job.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Kochel » Tue Nov 09, 2010 11:16 am

Anonymous User wrote:
birdlaw117 wrote:
boalt2l wrote:Go ask an actual partner if they have to sign onto all the lines of credit, the fact that people are ignorant of this is hilarious.

If the entity is set up as a normal partnership instead of an LLC or some type of corporation, you are correct. However, nobody, particularly legal minds, would ever do something that stupid.


Wachtell and Jones Day do this. It gives partners more credibility with clients to say that their own money is on the line if they don't do a good job.


Correct. While most firms are now LLPs, this was not the case until quite recently. The general partnership structure was a matter of pride for many partners, particularly the Old Guard--you knew your partners and trusted them with your personal wealth every day. But that culture has vanished for all but a few firms: firms are too big, too dispersed, too complex.

My former Biglaw firm became an LLP while I was there. And I'm not *that* old.

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Re: What happens to lawyers who don't partners after 8 years?

Postby vanwinkle » Tue Nov 09, 2010 2:22 pm

Kochel wrote:Correct. While most firms are now LLPs, this was not the case until quite recently. The general partnership structure was a matter of pride for many partners, particularly the Old Guard--you knew your partners and trusted them with your personal wealth every day. But that culture has vanished for all but a few firms: firms are too big, too dispersed, too complex.

My former Biglaw firm became an LLP while I was there. And I'm not *that* old.

This may have been true before but is definitely almost erased from the industry now. 21 of the Vault top 25 firms have "LLP" in their name, and that trend continues through the rest of the V100 (all 25 in the 76-100 range are LLPs).

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Re: What happens to lawyers who don't partners after 8 years?

Postby birdlaw117 » Tue Nov 09, 2010 2:34 pm

I would say that companies weren't LLPs before because LLP wasn't an option. I think that is probably a more reasonable viewpoint, as opposed to the "showing their clients they are personally responsible and increasing their street cred" idea.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Kochel » Tue Nov 09, 2010 4:50 pm

birdlaw117 wrote:I would say that companies weren't LLPs before because LLP wasn't an option. I think that is probably a more reasonable viewpoint, as opposed to the "showing their clients they are personally responsible and increasing their street cred" idea.


For firms with a dozen offices worldwide and a zillion partners, it's crazy risky not to use a liability-limiting structure. But the few firms that remain general partnerships most likely do use the "sink or swim together" rationale. (I was privy to some of the debates at my firm before it became an LLP, years after the structure was created.) Whether that has any resonance with clients is harder to tell. As a client, I think mainly about how good the partner and practice group are, not about what would happen to the firm as a whole if a catastrophic loss occurred.

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Re: What happens to lawyers who don't partners after 8 years?

Postby birdlaw117 » Tue Nov 09, 2010 4:54 pm

Kochel wrote:
birdlaw117 wrote:I would say that companies weren't LLPs before because LLP wasn't an option. I think that is probably a more reasonable viewpoint, as opposed to the "showing their clients they are personally responsible and increasing their street cred" idea.


For firms with a dozen offices worldwide and a zillion partners, it's crazy risky not to use a liability-limiting structure. But the few firms that remain general partnerships most likely do use the "sink or swim together" rationale. (I was privy to some of the debates at my firm before it became an LLP, years after the structure was created.) Whether that has any resonance with clients is harder to tell. As a client, I think mainly about how good the partner and practice group are, not about what would happen to the firm as a whole if a catastrophic loss occurred.

As someone with an Accounting background, I would say it is crazy to to not use a liability-limiting structure. There is not a single benefit of any significance, while there is a huge amount of benefits that come with it.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Kochel » Tue Nov 09, 2010 5:09 pm

birdlaw117 wrote:
Kochel wrote:
birdlaw117 wrote:I would say that companies weren't LLPs before because LLP wasn't an option. I think that is probably a more reasonable viewpoint, as opposed to the "showing their clients they are personally responsible and increasing their street cred" idea.


For firms with a dozen offices worldwide and a zillion partners, it's crazy risky not to use a liability-limiting structure. But the few firms that remain general partnerships most likely do use the "sink or swim together" rationale. (I was privy to some of the debates at my firm before it became an LLP, years after the structure was created.) Whether that has any resonance with clients is harder to tell. As a client, I think mainly about how good the partner and practice group are, not about what would happen to the firm as a whole if a catastrophic loss occurred.

As someone with an Accounting background, I would say it is crazy to to not use a liability-limiting structure. There is not a single benefit of any significance, while there is a huge amount of benefits that come with it.


Any benefits would be wholly intangible and impossible to prove. Arguably, the partners in a general partnership would exercise more care in admitting new partners and in hiring new associates. They'd value more highly a collegial, interdisciplinary work environment. They'd have better risk controls for admitting new clients, making significant capital investments, issuing written opinions, etc. I think that's all baloney. But I think there are some (again, primarily the Old Guard) who still believe it.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Anonymous User » Tue Nov 09, 2010 5:44 pm

FYI: Wachtell isn't "old guard," at least relative to its peers. I don't know why you're making up phrases.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Kochel » Tue Nov 09, 2010 6:08 pm

By "Old Guard," I was referring to the older partners at a firm--you know, the ones who began practicing before law became a business--not to the age of the firm itself.

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Re: What happens to lawyers who don't partners after 8 years?

Postby vamedic03 » Tue Nov 09, 2010 8:14 pm

Um, guys... I just have to point out 1 thing in regards to this entire LLP versus General Partnership debate. Its a really, really dumb debate because the most important difference is in regards to tort liability. It really doesn't mean much from a contract liability standpoint. Here's why:

1) When a bank gives a loan to an LLP, if they think that the loan is risky, they can still require the partners to give a personal guarantee; likewise,

2) When a bank loans to a General Partnership, if the partnership doesn't want personal liability, they contract for a non-recourse loan.

Hence, the limited liability versus general liability aspect just operates as a default rule in regards to contract liability. Tort liability is a completely different matter, since, obviously, there is no way to determine liability ex ante.

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Re: What happens to lawyers who don't partners after 8 years?

Postby Noval » Tue Nov 09, 2010 10:10 pm

Na_Swatch wrote:Also aren't you in a Canadian Biglaw firm Noval? I don't think US firms and CA firms have exactly the same structure/ policies.


McCarthy & Tetrault only has two differences with U.S. BigLaw:

1)Salary scale is different, in most cities you start at around 80-100k to around 250k after 8-9 years, your chances to make Partner are better in Canadian Biglaw than in U.S. Partner salaries in most Canadian cities are comparable to U.S. salaries and are highly performance based.

2)Hours are slightly less brutal and Partners are more social and open minded, they do not tolerate failure but at least, they will do everything to make you succeed, they are great help.


To answer the other questions, yes, being a Partner has it's own downsides, just like MDs in Investment Banking or Principals in Management Consulting, if you fail to bring in clients then use the Associates and everything at your disposal to get deals rammed through, you may get kicked out really fast, the salary is greater, but demands are greater as well, this is why a lot of Partners end up leaving after a few years and eventually go In-House.It is challenging, if you find being a BigLaw Associate is a pain and is annoying, don't even think about making Partner, you simply don't have the stamina to do it.

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Re: What happens to lawyers who don't partners after 8 years?

Postby motiontodismiss » Wed Nov 10, 2010 1:34 am

Noval wrote:
vanwinkle wrote:If you're not on track to make partner you are shown the door, usually politely, at most firms. Many of these people will go and join smaller firms where they will make partner; others become in-house counsel; others go into public interest or government work; others leave the law profession.

Some law firms now have a second "non-equity-partner" track, which allows you to become a "non-equity partner" and stay on at a fixed salary and not receive any equity. This basically makes you a permanent employee of the firm, and you make more than associates, but less than the equity partners ever do.


Will i still be able to make Equity Partner if i do several years in Non-Equity Partnership ?
I'm only a few years away from making Partner in the Big firm i work at, they also have a Non-Partnership track but these informations are very classified for some reason so most Associates do not have access to them until the time comes for them to apply for these positions.

From your experience, did you see Non-equity partners going Equity after a few years ?
Personnally, it's not such a big problem for me as i can go In-House quite easily where i live, just wanted to know more about it.

Thanks in advance.


I think TCR is that it's different for every firm. For some firms, it's a temporary purgatory before you make equity partner, for others, it's a permanent thing (like "of counsel").

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Re: What happens to lawyers who don't partners after 8 years?

Postby motiontodismiss » Wed Nov 10, 2010 1:40 am

boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.


Isn't this the very thing the letters LLP are meant to prevent?

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Re: What happens to lawyers who don't partners after 8 years?

Postby vamedic03 » Wed Nov 10, 2010 1:41 am

motiontodismiss wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.


Isn't this the very thing the letters LLP are meant to prevent?


LLP - keeps your from being personally liable for torts. Limited liability in contract can be contracted around.

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Re: What happens to lawyers who don't partners after 8 years?

Postby motiontodismiss » Wed Nov 10, 2010 1:49 am

vamedic03 wrote:
motiontodismiss wrote:
boalt2l wrote:One thing not brought up on TLS is the disadvantages of being a partner. As partner you have to sign onto all the firms liabilities. Most of the large law firms are leveraged to the hills on huge lines of credit, which if they default on, you will be personally liable to pay for.


Isn't this the very thing the letters LLP are meant to prevent?


LLP - keeps your from being personally liable for torts. Limited liability in contract can be contracted around.


I meant outside of legal acrobatics. You could contract around pretty much anything short of criminal liability for murder...

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Re: What happens to lawyers who don't partners after 8 years?

Postby motiontodismiss » Wed Nov 10, 2010 1:52 am

birdlaw117 wrote:
Kochel wrote:
birdlaw117 wrote:I would say that companies weren't LLPs before because LLP wasn't an option. I think that is probably a more reasonable viewpoint, as opposed to the "showing their clients they are personally responsible and increasing their street cred" idea.


For firms with a dozen offices worldwide and a zillion partners, it's crazy risky not to use a liability-limiting structure. But the few firms that remain general partnerships most likely do use the "sink or swim together" rationale. (I was privy to some of the debates at my firm before it became an LLP, years after the structure was created.) Whether that has any resonance with clients is harder to tell. As a client, I think mainly about how good the partner and practice group are, not about what would happen to the firm as a whole if a catastrophic loss occurred.

As someone with an Accounting background, I would say it is crazy to to not use a liability-limiting structure. There is not a single benefit of any significance, while there is a huge amount of benefits that come with it.


Anyone with a modicum of common sense would be crazy not to use a liability-limiting structure.




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