Top Law Schools

It seems like there are no partners out there who graduated after 2000 or so at my SA firm. If there are hardly any new Partners being made, what are law firms going to look like in 20 years when the current crop of Partners gets too old?

They'll make new partners or run with less partners.

It's like professors. Most of them are old, because they can't be fired and you p much have to wait for them to retire or die.

In the last year alone, a total of 1600 new partners were minted in the NLJ 350 firms. Granted a fair chunk aren't equity partners right out of the gate, but the idea that there is a decreasing number of equity partners isn't borne out by data.

Overall equity partner ranks have grown in the AmLaw 200 firms by about 6% in the past 10 years. There was a very slight dip during the recession, then partnership numbers started climbing again.

Source: AmLaw 200 data from 2006 - 2015, NLJ New Partner Promotions data 2016

Anonymous User wrote:It seems like there are no partners out there who graduated after 2000 or so at my SA firm. If there are hardly any new Partners being made, what are law firms going to look like in 20 years when the current crop of Partners gets too old?

A lot of firms just poach lateral partners.

So p much botiques and midlaw make the partners and biglaw steals them.

Capitol_Idea wrote:In the last year alone, a total of 1600 new partners were minted in the NLJ 350 firms. Granted a fair chunk aren't equity partners right out of the gate, but the idea that there is a decreasing number of equity partners isn't borne out by data.

Since ~1251 were Kirkland NSPs, OPs point still stands.

anonnymouse wrote:

Capitol_Idea wrote:In the last year alone, a total of 1600 new partners were minted in the NLJ 350 firms. Granted a fair chunk aren't equity partners right out of the gate, but the idea that there is a decreasing number of equity partners isn't borne out by data.

Since ~1251 were Kirkland NSPs, OPs point still stands.

Ya, that number is skewed. First, different firms different levels of partners (as you mentioned). Second, and more importantly, some firms (massive vereins, Sidley, Morgan Lewis, Jones Day, Latham, etc.) are promoting 25+ to partner each year. Taking those numbers out of the 1600, means that many firms aren't promoting anyone.

RaceJudicata wrote:

anonnymouse wrote:

Capitol_Idea wrote:In the last year alone, a total of 1600 new partners were minted in the NLJ 350 firms. Granted a fair chunk aren't equity partners right out of the gate, but the idea that there is a decreasing number of equity partners isn't borne out by data.

Since ~1251 were Kirkland NSPs, OPs point still stands.

Ya, that number is skewed. First, different firms different levels of partners (as you mentioned). Second, and more importantly, some firms (massive vereins, Sidley, Morgan Lewis, Jones Day, Latham, etc.) are promoting 25+ to partner each year. Taking those numbers out of the 1600, means that many firms aren't promoting anyone.

Incorrect. A total of 1612 associates became partners in 2015. This was spread among 155 firms. Of those, the top 20 account for 557 (~1/3). The top 40 account for 860 of the promotions (slightly more than half). So there is some skewing of big firms promoting more, but not to an insane degree. The largest number of promotions came from K&L Gates at 50, and there is a steady decrease with more firms in the 10-20 range.

Kirkland & Ellis isn't even listed in this data set even though they promoted 90 people to 'partner' last October. I'm not sure why that is. It's possible that the data isn't accounting for service partner promotions, but I would be very skeptical that 1600 people were promoted to equity partner from associate positions in the past year.

eta: No it looks like the data includes Non-equity as well as equity partners - the most recent data runs from 10/2015 to 6/2016 so the Kirkland promotions were in the previous data set.

What are NSPs?

stego wrote:What are NSPs?

Non-share partners (Kirkland's term for non-equity partners). These are 'partners' in name only - they don't actually get a share of profits and a good number never will at some firms.

The real interesting questions (that this data set doesn't provide) are:

1. How many associate to partner promotions are equity v. non-equity

2. How many non-equity partners are getting promoted to equity partner

3. How many equity partners are retiring?

With this data we could make an intelligible guess as to where real partnership ranks are headed. I suspect there is some condensation of partnership numbers because A. firms are consolidating and dissolving at a faster rate which usually bleeds off some partner numbers and B. flatline industry revenue means firms are going to be more careful about how many new people are getting a slice of the profits.

What happens to an equity partner's stake in the firm when they retire?

Truth is, law firms don't need nearly as many partners as they have, both non-equity and equity partners. Seeing as how most of the revenue-generating relationships are in precious few hands, the "equilibrium" is probably toward a higher baseline leverage (to the extent that firms can withstand a financial hit). If there are only gonna be 25-30 firms that withstand the "new model" that's being implemented, well, pretty much all of them are gonna be highly-leveraged firms.

It's not a secret that long-tenured partners have, in general, been increasing the size of their books whereas newly-minted partners are struggling more and more to generate business. That's why you're seeing increasing spreads within firms--older rainmakers, and newly minted partners making, in a lot of cases, equal or even less than what they did as senior associates, capital contributions aside (especially now that seniors will probably crack $400k). If the standard is gonna be that you have $1M in portable business by the time you're 35, then yeah, it's gonna be tough. I would've thought that favored non-equity partnership tracks, but firms seem to be pretty dissatisfied with those, so my guess would be that up-or-out will mostly die and there will be more counsel and 12+ year associates.

stego wrote:What happens to an equity partner's stake in the firm when they retire?

Aren't they bought out? Or is there a severance/retirement-type deal?

Is their equity even worth anything? Firms have few assets and distribute all profits yearly.

if i've learned anything in this oversaturated cesspool of a profession, it's that the work really isn't that hard, and there are infinitely more qualified people who could easily pick up the ball and run with just about any legal position than there are legal positions.

Professor in academia actually seems like a pretty good analogy. As professors are retiring, they aren't being replaced by new tenure-track professors - they're being replaced by adjuncts and "research professors" that do the same or better job for cheaper.

See also service partners and of counsel.

stego wrote:What happens to an equity partner's stake in the firm when they retire?

It's given back whenever a partner leaves, supposedly over some medium-length period of time.

Desert Fox wrote:Is their equity even worth anything? Firms have few assets and distribute all profits yearly.

Well wouldn't they just continue to receive a share of the profits yearly? That's worth something. All profits are distributed yearly at my firm, and when you get equity you're bought out if/when you leave.

JenDarby wrote:

Desert Fox wrote:Is their equity even worth anything? Firms have few assets and distribute all profits yearly.

Well wouldn't they just continue to receive a share of the profits yearly? That's worth something. All profits are distributed yearly at my fund, and when you get equity you're bought out if/when you leave.

I know they have equity, but I wonder if its not really cheap.

Though some partnership are eat what you kill and you could still hold equity and get zero profits yearly.

This is slightly off topic but I wouldn't sleep on NSPs at Kirkland. A buddy of mine runs a law firm marketing intelligence company and has looked at exit options of NSPs specifically. Basically, even though they're non-equity they often exit to other Amlaw firms as equity partners, and at a higher rate than senior associates from other top firms.

Anonymous User wrote:It seems like there are no partners out there who graduated after 2000 or so at my SA firm. If there are hardly any new Partners being made, what are law firms going to look like in 20 years when the current crop of Partners gets too old?

There were a shitload of new lawyers produced in the 2000s, so I'm sure they'll find them somewhere out there.

bruinfan10 wrote:if i've learned anything in this oversaturated cesspool of a profession, it's that the work really isn't that hard, and there are infinitely more qualified people who could easily pick up the ball and run with just about any legal position than there are legal positions.

cr