How much do first year equity partners make? Forum

[Anonymous User]

Because if you do build a book of business you have the opportunity to make a lot more than counsel….? That’s the entire point. Not sure where you get the assumption PP has no desire to develop business.

Ability to “easily” lateral to a &1m+ service partner role is, at best, practice dependent…

What a weird take.

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

[RedNewJersey]

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Eh? Why is it weird to shoot for equity at a V50 if you think you can develop business? Are you just saying, "Why not V5 if you can develop business"?

I would not a priori expect the number of people who seek to develop business to be different at different V-level-firms--presumably, they all would like to have partners who try to develop business. If there were a consistent trend of partners who do not want to develop business going to certain firms, those firms would change their strategy (i.e., it would not be a stable equilibrium).

[Anonymous User]

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Eh? Why is it weird to shoot for equity at a V50 if you think you can develop business? Are you just saying, "Why not V5 if you can develop business"?

I would not a priori expect the number of people who seek to develop business to be different at different V-level-firms--presumably, they all would like to have partners who try to develop business. If there were a consistent trend of partners who do not want to develop business going to certain firms, those firms would change their strategy (i.e., it would not be a stable equilibrium).

Biglaw lends itself to highly risk-averse people, the types of people who want to protect themselves in the downside scenario of never generating a book. The type of people confident they will build a book are likely going to do far better in a boutique, or running their own shop. When I meet biglaw partners, the reaction is usually not "super-personable exciting guy I would love to hang out with".

[Anonymous User]

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Eh? Why is it weird to shoot for equity at a V50 if you think you can develop business? Are you just saying, "Why not V5 if you can develop business"?

I would not a priori expect the number of people who seek to develop business to be different at different V-level-firms--presumably, they all would like to have partners who try to develop business. If there were a consistent trend of partners who do not want to develop business going to certain firms, those firms would change their strategy (i.e., it would not be a stable equilibrium).

Biglaw lends itself to highly risk-averse people, the types of people who want to protect themselves in the downside scenario of never generating a book. The type of people confident they will build a book are likely going to do far better in a boutique, or running their own shop. When I meet biglaw partners, the reaction is usually not "super-personable exciting guy I would love to hang out with".

You've made a lot of generalizations which, even if true, don't support your point.

[Anonymous User]

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Eh? Why is it weird to shoot for equity at a V50 if you think you can develop business? Are you just saying, "Why not V5 if you can develop business"?

I would not a priori expect the number of people who seek to develop business to be different at different V-level-firms--presumably, they all would like to have partners who try to develop business. If there were a consistent trend of partners who do not want to develop business going to certain firms, those firms would change their strategy (i.e., it would not be a stable equilibrium).

Biglaw lends itself to highly risk-averse people, the types of people who want to protect themselves in the downside scenario of never generating a book. The type of people confident they will build a book are likely going to do far better in a boutique, or running their own shop. When I meet biglaw partners, the reaction is usually not "super-personable exciting guy I would love to hang out with".

You've made a lot of generalizations which, even if true, don't support your point.

Different poster. I think the previous poster is simply saying that risk-seeking folks have higher upside in boutiques than in biglaw. In other words, the point of comparison is boutique vs. v50, not v5 vs. v50. For the record, in biglaw the need for business development tends to run the other way. The ability to bring in new business is much more important at a lower ranking firm than it is at S&C, where virtually all of the associates/partners service longterm institutional clients.

[RedNewJersey]

Different poster. I think the previous poster is simply saying that risk-seeking folks have higher upside in boutiques than in biglaw. In other words, the point of comparison is boutique vs. v50, not v5 vs. v50. For the record, in biglaw the need for business development tends to run the other way. The ability to bring in new business is much more important at a lower ranking firm than it is at S&C, where virtually all of the associates/partners service longterm institutional clients.

Well, starting your own firm is quite risky, but developing business at a law firm is not that risky (at worst, you're still an equity partner). I agree that risk-seeking people may want to start their own firm, but that's not the same as generating business.

Even on the "upside" point, it's not clear to me that partners who like developing business could do better at boutiques. I don't know of that many boutiques that are making more than top-level K&E, WLRK, etc. partners. And I don't see why V50 versus boutique is a better comparison, since there aren't many top-level boutiques founded by ex-V50 people. Usually boutique lawyers are true stars that could easily be in V5--they're more credentialed/qualified than V5, not less (Roberta Kaplan, David Boies, Jeffrey Lamken, Beth Wilkinson, Phil Beck, Steve Susman--who are the ex-V50 attorneys that made it big in a boutique?).

[Monochromatic Oeuvre]

Biglaw lends itself to highly risk-averse people, the types of people who want to protect themselves in the downside scenario of never generating a book. The type of people confident they will build a book are likely going to do far better in a boutique, or running their own shop. When I meet biglaw partners, the reaction is usually not "super-personable exciting guy I would love to hang out with".

“Risk aversion” is the wrong term for something without a comparable expected reward. If I offer you a choice between a guaranteed $1M and a 1% chance of $10M and a 99% chance of peanuts, and you choose the latter, you’re not being bold; you’re being stupid.

Most Biglaw business is institutional because they value…institutions. They love Relationship Partner, sure, but they also love that Relationship Partner has at her disposal tax and ERISA and specialists in 50 different things that might come up, and an army of associates if something needs to happen tomorrow, and all those people are seeing 100 different deals and thus collectively fully know the market. They might love a dozen partners there and thus no single one of them could pull the business away. Or maybe they even love Relationship Partner and are willing to follow her from Megafirm A to Megafirm B. Doesn’t mean they’ll sign on for New Boutique LLP.

Just like you rob banks because that’s where the money is, you go to Biglaw because that’s where the large majority of the highest-value work is. Yes I’m sure you can tell me about famous people whose shingle hit the big-time and made Even More Money!™; it doesn’t matter because there are many, many fewer diamonds to mine. There’s a reason the average partner in a 1000-person firm makes an order of magnitude more than the average partner in a 10-person firm. Maybe the very small percentage of people who strike it big on their own are lucky and maybe they’re all silver-tongued prom kings; either way it’s not relevant advice for the large majority of people otherwise considering Biglaw partnership.

[Monochromatic Oeuvre]

Doesn't the gig sound pretty terrible then? Working partner hours to make counsel money? Feels like a dead end job for anyone without a desire to build a book, and sounds like they should be aggressively shopping their resume around to find a gig where they can make their $1 million/year as a pure service partner, which shouldn't be all that difficult given the ridiculous partner billing rate and high realizations rates in the V30. Now obviously the assumption is that you are at least somehwat marketable, but not sure what the motiviation is to push for partner if you just end up with basically a counsel gig.

I would’ve guessed you could count the number of first-year partners with no portable book lateraling into immediate $1M+ positions, in any given year, on two hands. But perhaps someone with a better idea could correct me.

[Monochromatic Oeuvre]

Please forgive this stupid question from a 3L lurking here. How do equity partners *also* function as quasi income partners in the initial years, as referenced in the posts above?

Here is a base salary of $300,000 and a share of equity that "should" payout approximately $300,000, as opposed to here is a share of equity that "should" payout $600,000. Having more equity is always better if you (1) want more power in the firm and (2) think the firm is going to do well. Latham's nonequity partners famously make about $1M through a split of income and equity. It's basically a way to keep talent around, hedge for bad years, and further segment the equity class.

Yeah I feel like people always talk about equity vs. income as a binary rather than the spectrum it can actually be (and the weird hybrid mixes seem to be getting more common?)

I knew a counsel at a one-tier firm who unexpectedly brought in enough business that it became the majority of his comp and management was furious that he “broke the formula” even though he would’ve made ~3x that in equity. Never got promoted because everyone in his practice fucking hated him, so he was on as much of an island as you could be. Still took him quite a while to finally convince that business to follow him somewhere else.

[Anonymous User]

Doesn't the gig sound pretty terrible then? Working partner hours to make counsel money? Feels like a dead end job for anyone without a desire to build a book, and sounds like they should be aggressively shopping their resume around to find a gig where they can make their $1 million/year as a pure service partner, which shouldn't be all that difficult given the ridiculous partner billing rate and high realizations rates in the V30. Now obviously the assumption is that you are at least somehwat marketable, but not sure what the motiviation is to push for partner if you just end up with basically a counsel gig.

I would’ve guessed you could count the number of first-year partners with no portable book lateraling into immediate $1M+ positions, in any given year, on two hands. But perhaps someone with a better idea could correct me.

I don't think this is right. The crazy hiring spree by Goodwin, Proskauer, etc... involved bringing in folks at near those levels. The economics are pretty simple - bring in a counsel from a V10 or junior partner from a V50, give them a (non-equity) partner title, set their billing rate to $1,500/hour, and have them bill 2,400 hours/year at 95% realization. That brings in 2,400 * 1,500 * .95 = $3,420,000/year to the firm. You pay them $1,000,000 and that leaves $2,420,000 of juice for the firm. Basically a no brainer if you have the work and can get folks competent enough to do it. If a V50 is really only paying service partners $650k, kind of nuts to not aim for something like that at a V30.

Now, is billing 2,400 hours a year at that stage in your life really worth it for a bare $1,000,000, including the enormous responsibility of being a partner? To me absolutely not, it is a terrible job (anything over 1,600 hours strikes me as painful). But if you are a partner already at a V50, you should at least get paid for your misery.

[Moneytrees]

Because if you do build a book of business you have the opportunity to make a lot more than counsel….? That’s the entire point. Not sure where you get the assumption PP has no desire to develop business.

Ability to “easily” lateral to a &1m+ service partner role is, at best, practice dependent…

What a weird take.

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Equity at most V50s is much higher than 650k. People slug is out for years making 650k as income partners, with the hope of making much more if they ultimately reach equity.

[Anonymous User]

Because if you do build a book of business you have the opportunity to make a lot more than counsel….? That’s the entire point. Not sure where you get the assumption PP has no desire to develop business.

Ability to “easily” lateral to a &1m+ service partner role is, at best, practice dependent…

What a weird take.

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Equity at most V50s is much higher than 650k. People slug is out for years making 650k as income partners, with the hope of making much more if they ultimately reach equity.

This discussion literally started with the following post - "Adding a data point for the thread topic: V50ish, first-year equity partner, $650k. A significant caveat is that we don't have a non-equity tier, so I'm more like an income partner (and will be so for 3-5 years), and I think the comp reflects that."

[Moneytrees]

Because if you do build a book of business you have the opportunity to make a lot more than counsel….? That’s the entire point. Not sure where you get the assumption PP has no desire to develop business.

Ability to “easily” lateral to a &1m+ service partner role is, at best, practice dependent…

What a weird take.

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Equity at most V50s is much higher than 650k. People slug is out for years making 650k as income partners, with the hope of making much more if they ultimately reach equity.

This discussion literally started with the following post - "Adding a data point for the thread topic: V50ish, first-year equity partner, $650k. A significant caveat is that we don't have a non-equity tier, so I'm more like an income partner (and will be so for 3-5 years), and I think the comp reflects that."

Understood, but that one anecdotal data point is not in line with what I've heard from equity partners at my V50, or with the publicly available data on partner profits at V50 firms.

[Anonymous User]

Adding a data point for the thread topic: V50ish, first-year equity partner, $650k. A significant caveat is that we don't have a non-equity tier, so I'm more like an income partner (and will be so for 3-5 years), and I think the comp reflects that.

Very helpful data point - seems more and more firms are moving to income partners - even if described as equity. What is PEP of the firm? Seems more helpful than vault.

Also are there any hurdles to getting materially higher pay in 3-5 years?

I think PEP would quickly reveal that its Morgan Lewis or A&P. Otherwise, I don't think any firm close to the V50 has a one-tier partnership. Though, I think Morgan Lewis moved to two-tier in the past year or so, so maybe it's just A&P lol. Or, maybe this is one of those one-tier partnerships that gives you a mixture of equity and base salary comp if you're a more "junior" "equity" partner, which might as well be fancy nonequity partnership.

ML has had a 2 tier partnership for at least 5 years now, probably longer.

[Anonymous User]

Some of the numbers reported are a little surprising to me. I just made partner at my V50 firm and while I don't know my sharing ratio yet, I was told that first year partner could expect around $1-1.2 million the first year. But our PPP was over $3 million last year, so maybe that's it. We only have one class of partners.

This sounds like a Fried Frank or similar, and those numbers would not be surprising given PPP. Not many firms closer to v50 have PPP over $3m so naturally first year partners start much lower.

[Anonymous User]

I didn't realize this was even a debate - in my experience, partners work harder than most of the associates. they have more control over their schedule, but in terms of hours billed/stress/etc - it's not really 'better'

if you don't particularly like biglaw as an associate, I can't fathom trying to get to equity partner

Laziest partner I’ve ever met in big law is a structured finance guy at a NY magic circle. Seems to have entrenched himself there so he can get drunk regularly and fly first class to London on the company dime.

[Anonymous User]

Because if you do build a book of business you have the opportunity to make a lot more than counsel….? That’s the entire point. Not sure where you get the assumption PP has no desire to develop business.

Ability to “easily” lateral to a &1m+ service partner role is, at best, practice dependent…

What a weird take.

Pretty weird to shoot for equity in a random V50 if you think you have a real shot to develop business. Most people are shooting for equity in a V50 specifically because it is a lot of $$$ even if you never develop business.

To the extent you have V50s with these comp models, you would think people would be lateralling away as senior associates to firms where equity = $1mm (or even non-equity = $1mm) and not slugging out 2600 hours years just for the "privilege" of making $650k all in.

Equity at most V50s is much higher than 650k. People slug is out for years making 650k as income partners, with the hope of making much more if they ultimately reach equity.

This discussion literally started with the following post - "Adding a data point for the thread topic: V50ish, first-year equity partner, $650k. A significant caveat is that we don't have a non-equity tier, so I'm more like an income partner (and will be so for 3-5 years), and I think the comp reflects that."

Understood, but that one anecdotal data point is not in line with what I've heard from equity partners at my V50, or with the publicly available data on partner profits at V50 firms.

My understanding is, if a partner earns less than $1.Xmm per year (the X changes from year to year), then for the purpose of calculating PEP figures, that partner is deemed to be a non-equity partner. That is regardless of whether their salary has an equity component. That artificially inflates average PEP figures for many firms.

Someone will reply, well what about the firms with average PEP below $1mm? It’s a good question and I assume the formula is more complex, but what I have said is generally the case.

To get the real story, you have to consider the ratio of non-equity partners to equity partners of the given firm. At my V50, there is only an equity tier, yet most partners are classified as NEPs, meaning most partners earn less than $1.Xmm.

Not my firm, but decipher the data with the above in mind, and you’ll soon see the big pay packets only go to the rainmakers with big books of business: https://www.law.com/international-editi ... 78-190856/.

[Wanderingdrock]

My understanding is, if a partner earns less than $1.Xmm per year (the X changes from year to year), then for the purpose of calculating PEP figures, that partner is deemed to be a non-equity partner. That is regardless of whether their salary has an equity component. That artificially inflates average PEP figures for many firms.

Someone will reply, well what about the firms with average PEP below $1mm? It’s a good question and I assume the formula is more complex, but what I have said is generally the case.

To get the real story, you have to consider the ratio of non-equity partners to equity partners of the given firm. At my V50, there is only an equity tier, yet most partners are classified as NEPs, meaning most partners earn less than $1.Xmm.

Not my firm, but decipher the data with the above in mind, and you’ll soon see the big pay packets only go to the rainmakers with big books of business: https://www.law.com/international-editi ... 78-190856/.

I have heard similarly, but I'm left wondering: how the heck does one classify a partner as an NEP at a firm with "only an equity tier"? Like... NEP stands for "non-equity partner" and (without getting too political) words at least used to mean things...

[Anonymous User]

My understanding is, if a partner earns less than $1.Xmm per year (the X changes from year to year), then for the purpose of calculating PEP figures, that partner is deemed to be a non-equity partner. That is regardless of whether their salary has an equity component. That artificially inflates average PEP figures for many firms.

Someone will reply, well what about the firms with average PEP below $1mm? It’s a good question and I assume the formula is more complex, but what I have said is generally the case.

To get the real story, you have to consider the ratio of non-equity partners to equity partners of the given firm. At my V50, there is only an equity tier, yet most partners are classified as NEPs, meaning most partners earn less than $1.Xmm.

Not my firm, but decipher the data with the above in mind, and you’ll soon see the big pay packets only go to the rainmakers with big books of business: https://www.law.com/international-editi ... 78-190856/.

I have heard similarly, but I'm left wondering: how the heck does one classify a partner as an NEP at a firm with "only an equity tier"? Like... NEP stands for "non-equity partner" and (without getting too political) words at least used to mean things...

I think it’s to avoid firms disguising their non equity partners by chucking them some equity points, knowing full well that their salary will functionally end up the same as a Kirkland NSP. Im not sure if it’s the right approach. I mean, it would probably look worse for the firm in question if they had to provide the true average profits per equity partner figure.

Also at my V50, there’s a whole bunch of compulsory retirement saving schemes that partners need to sign up to. In my experience, if anything in law is shrouded in mystery, the reality is likely to be worse than what you expect.

[Monochromatic Oeuvre]

My understanding is, if a partner earns less than $1.Xmm per year (the X changes from year to year), then for the purpose of calculating PEP figures, that partner is deemed to be a non-equity partner. That is regardless of whether their salary has an equity component. That artificially inflates average PEP figures for many firms.

Firms can report whatever they want to AmLaw, but their definition of an equity partner is any partner whose comp is less than 50% fixed.

[Sackboy]

Pretty sure if you read the Law.com methodology it says "partners who received less than 1/2 of their compensation in equity were classified as nonequity partners" or something to that effect.

[Anonymous User]

Depends on firm and compensation methodology etc. My firm starts all new non-lateral share partners at the same level and it was more than 1.5M last year.

[Anonymous User]

I'm the original $650k new "equity" partner. Responding to no one in particular, I'm not really upset at the comp because, again, I recognize that I'm effectively an income partner by a different name. Based on other posts, it sounds like I theoretically could have gone to a similarly ranked firm that mints real equity partners after 8 years on the associate track and I could have been making > $1m right now. IDK. I definitely wasn't considering that factor when I was deciding on firms eight years ago. And I wonder whether I would really have made partner at one of those firms--seems like it would have to be harder.

Regardless, it's a fuck ton of money relative to my working class upbringing, so I'm really not losing sleep over what could have been. If it ever gets to the point where the cons outweigh the pros, I'll walk away with substantially more social and financial capital than I would have in almost any other scenario with my polisci degree from a state school.

[Anonymous User]

I didn't realize this was even a debate - in my experience, partners work harder than most of the associates. they have more control over their schedule, but in terms of hours billed/stress/etc - it's not really 'better'

if you don't particularly like biglaw as an associate, I can't fathom trying to get to equity partner

Laziest partner I’ve ever met in big law is a structured finance guy at a NY magic circle. Seems to have entrenched himself there so he can get drunk regularly and fly first class to London on the company dime.

The vast majority of partners I have worked with (excluding certain senior partners or major rain makers) work their ass of. Plus, as an associate, I have the luxury sometimes of getting to pull the "I don't know how to do this" card every once in a while, and the partner is always the person whose ass is really on the line when it comes to projects getting done right and on time.

If you can't hack it as an associate there is no way in this day and age you can hack it as a partner. Gone are the days of partnership being some guaranteed free ride. You work for your money.

9 times out of 10 when I'm getting emails at 2-3am it is from a partner, not another associate.

[gregfootball2001]

I'm the original $650k new "equity" partner. Responding to no one in particular, I'm not really upset at the comp because, again, I recognize that I'm effectively an income partner by a different name. Based on other posts, it sounds like I theoretically could have gone to a similarly ranked firm that mints real equity partners after 8 years on the associate track and I could have been making > $1m right now. IDK. I definitely wasn't considering that factor when I was deciding on firms eight years ago. And I wonder whether I would really have made partner at one of those firms--seems like it would have to be harder.

Regardless, it's a fuck ton of money relative to my working class upbringing, so I'm really not losing sleep over what could have been. If it ever gets to the point where the cons outweigh the pros, I'll walk away with substantially more social and financial capital than I would have in almost any other scenario with my polisci degree from a state school.

Does the bold happen at v50 firms? After 8 years at my v50, we get income partnership (or counsel), not equity.