Partner Told Me He's Only Been Paid $1800 This Yr--Normal? Forum

[Anonymous User]

I work at a small firm in a small market (about 100,000) people. I've only been at this firm for a little less than a year but I enjoy most of what I'm doing, the work-life balance, the people here, etc. It's the biggest firm in town (25 attorneys) and, for the most part, all of the partners here live in very nice homes and seem to have a pretty nice standard of living.

I don't think this is normal, but there are 23 partners and 2 associates. A lot of the partners are older and at least 7 to 8 are going to be retiring in the next five years. I've always viewed that as a great opportunity to inherit books of business and felt that there was a bright future for me here, assuming I stayed for a while.

But, I was in a wedding this weekend and one of the attendees was a partner who's been at my firm for 35 years. We struck up a conversation about work and he said he's only been paid $1,800 as of March. He's retiring in June of 2016 and only billing about 20-25 hours a week or so, but that struck me as insane. His billing rate is $200 and he represents some of our best clients (who always pay), so my amateur math tells me he's bringing in somewhere between $16,000 and $20,000 in receivables every month. How can he possibly have been paid so little?

Long story short, now I feel weird about this firm. I'm happy as an associate but now I'm really worried that the firm isn't doing so well and that might be bad news for me (one of only two associates) if the firm attempts to cut costs in the future.

So I guess my question is two-fold:

(1) Is it normal for partner's salaries in a small firm to be so volatile? Is it normal to not get paid much at the beginning of the year? Or is my partner's low pay reflective of his shorter hours?

(2) Is there any chance my job security is at risk? Just to be clear, I'm being paid about $50,000 and am on pace to bill about 1600 hours (yearly requirement is 1400). If my job security is at risk, what should I be doing (besides billing more hours)?

[emwallen]

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[Anonymous User]

I am a 0L but grew up in a family of lawyers and have involuntarily received many lessons about big law life. Among them is this: if a firm ever tells you/someone else that they can't pay what they told you they would, or docks an amount from the hours you billed without an explanation, or you hear about a partner making less than they should based on what they are billing, get out if you can. I am told this means the firm is in dire straits and may soon collapse. If you are ever a partner in such a situation, you will be on the hook for a lot of money. a family friend has been a partner at 3 law firms that have folded (terrible luck) and has been sued for so. much. money.

similarly, if you hear that a firm has stopped paying their vendors/starts paying them in a staggered way to space out the amount of money they have to spend at one time, RUN.

OP here. I'm not sure if my firm is spacing out payments to vendors. I do know the partners aren't making shit, though.

What I should add is that our firm recently merged with a 5-6 person firm in January of 2014 and things have (by all accounts) been financially terrible. Costs are enormous and both firms were better off before the merger.

I think things will eventually settle, but I don't know enough information to make any intelligent conclusion. I should probably just put my head down and do good work for as long as possible.

[Johann]

I wouldn't think too much about this. If the firm has work and clients are paying, things should be fine. Partnership agreements are complicated for lots of reasons. They become infintely more complicated when memberships are bought out. Him saying he's only made $1,800 this year is probably 2% of the info you'd need. You'd really just be guessing about their distribution scheme at this point. If the dude has a nice house and is retiring at a decent age, I'd imagine hes got a cool 5 million in the bank.

[CanadianWolf]

If the firm is in dire financial straits, it should be obvious. If so, look elsewhere for employment.

It's difficult for me to understand why the partner made such a comment to you.

[rpupkin]

I wouldn't think too much about this. If the firm has work and clients are paying, things should be fine. Partnership agreements are complicated for lots of reasons. They become infintely more complicated when memberships are bought out. Him saying he's only made $1,800 this year is probably 2% of the info you'd need. You'd really just be guessing about their distribution scheme at this point.

Yep. OP: There's really nothing to "read into" here. And as reflected by most of the comments so far ITT, you're going to get mostly instinctual reactions from people who don't generally understand how a partner's compensation can be structured.

[Anonymous User]

If the firm is in dire financial straits, it should be obvious. If so, look elsewhere for employment.

It's difficult for me to understand why the partner made such a comment to you.

OP here. Partner and I have been friends for a long time and I quipped about him having to pay two property taxes (he's moving and had to pay taxes on two houses). And he basically said that his property taxes for the house he was moving from were more than he's been paid all year.

I wouldn't think too much about this. If the firm has work and clients are paying, things should be fine. Partnership agreements are complicated for lots of reasons. They become infintely more complicated when memberships are bought out. Him saying he's only made $1,800 this year is probably 2% of the info you'd need. You'd really just be guessing about their distribution scheme at this point.

Yep. OP: There's really nothing to "read into" here. And as reflected by most of the comments so far ITT, you're going to get mostly instinctual reactions from people who don't generally understand how a partner's compensation can be structured.

The bolded is what I'm concerned about. There's at least 7-8 guys that are going to retire soon that I think might have been banking on a decent buyout as part of their retirement.


Anyway, what should I be doing to pull my weight? Just continue to do good work/bill hours?

[CanadianWolf]

In that context, the comment means nothing.

[Johann]

Yeah just keep pulling your weight. There's really nothing for you to do until you enter the time horizon where your firm makes people partner.

[Anonymous User]

Yeah just keep pulling your weight. There's really nothing for you to do until you enter the time horizon where your firm makes people partner.

Okay. I guess I just made the logical leap that: partner isn't making anything = business is bad = my job is at risk. Guess I should just pretend I never heard anything and move along.

[Anonymous User]

I am a partner at a small law firm. The info you've received means very little without additional information, including a copy of all your law firm's business documents. Partnership agreements vary tremendously from one small firm to another. Even within one firm, they status and compensation of partners can vary for each partner!

If he's that close to retirement, he might basically be "of counsel" at this point and only receive a small amount of pay, or only 1-2 "draws" per year.

In addition, your partners might only be paid in draws, and there might not have been any money to pay them yet this year with how bad everything has been. That being said, they likely still receive good benefits and probably some base pay as well. He might mean that in addition to his base pay, he's only received $1800 in partnership draws.

That might make sense. Let's say your firm does draws at $100k. With 25 partners, maybe some make more than others, maybe he's semi-retired, so his share could have been $1,800.

It would be concerning if 25 lawyers only managed one draw by May, but again, without knowing more, it's hard to tell what's going on. The other partners might all be getting a solid base and bigger draws. Or the old firm's partners might be buying certain capital assets from the new firm's partners as part of the merger. Or paying bonuses. Or everyone could be required to make additional capital investments into the new entity. Or a lot of things.