How does V10 Partnership work? Forum

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satorugojou

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How does V10 Partnership work?

Post by satorugojou » Thu Jan 13, 2022 1:15 am

I've been doing some research on this, but can't really find much. Senior associates kind of mention things in passing, but I don't think it's really the right subject to inquire too much into. How does partnership work at firms like Skadden/STB/Latham/Gibson?

I've heard talk of "originating partner" and also "eat what you kill". I assume this has to do with which partner gets credit for the work/revenue that's coming in, and that is at least in part what determines their distributive share of partnership profits for the year? Are there other factors?

More of a general question, there seems to be a divide in opinion on making equity partner: (1) "you must be a rainmaker and bring in business, no firm will make you equity partner unless there is a business need!" and (2) "if you do good work and are well liked you can eventually make partner if you stick around long enough and bill enough hours". I don't know who to believe. I also hear that how the market is doing at the time you're up for partnership matters, or just the specific situation within your firm/practice group at the time. I'd like to hear more thoughts and reasoning on this if possible.

As you can tell I clearly don't know much. Information is hard to come by, if you have anything to share please help me out. Thank you!

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 1:41 pm

satorugojou wrote:
Thu Jan 13, 2022 1:15 am
I've been doing some research on this, but can't really find much. Senior associates kind of mention things in passing, but I don't think it's really the right subject to inquire too much into. How does partnership work at firms like Skadden/STB/Latham/Gibson?

I've heard talk of "originating partner" and also "eat what you kill". I assume this has to do with which partner gets credit for the work/revenue that's coming in, and that is at least in part what determines their distributive share of partnership profits for the year? Are there other factors?

More of a general question, there seems to be a divide in opinion on making equity partner: (1) "you must be a rainmaker and bring in business, no firm will make you equity partner unless there is a business need!" and (2) "if you do good work and are well liked you can eventually make partner if you stick around long enough and bill enough hours". I don't know who to believe. I also hear that how the market is doing at the time you're up for partnership matters, or just the specific situation within your firm/practice group at the time. I'd like to hear more thoughts and reasoning on this if possible.

As you can tell I clearly don't know much. Information is hard to come by, if you have anything to share please help me out. Thank you!

I think the divide between the two camps of opinion you listed does in fact exist, depending on which type of firm/office you’re in. I highly doubt any newly minted partner at Cravath/Wachtell/S&C/STB/DPW (especially in the NYC office) is “bringing in” a new client as part of their value proposition to the partnership - even if they’re a superstar senior associate. Those firms [still] have more than enough institutional clients (huge banks, PE houses, tech giants, insurance companies, big pharma, etc.) to purely “service” - in other words, the new partners “merely” have done superb work for existing clients on consequential cases or deals and are then entrusted to serve as a bigger point of contact going forward. I suspect this is how partnership works for this echelon of firms in NYC, and it fits with your "if you do good work and are well liked you can eventually make partner if you stick around long enough and bill enough hours" route.

However, this might not be as applicable at (1) less “elite” firms that don’t have as strong a stable of institutional clients and/or (2) firms that are aggressively expanding and trying to gain market share (think: Kirkland), and/or (3) satellite offices of any firm, especially satellites that are still relatively young and growing. In these situations, senior associates might have more pressure - and opportunities - to network, hustle, and maybe bring in, e.g., a local, mid-market PE firm as a new client on a $100 million dollar deal.

But, again, the idea that a senior associate at Cravath or Simpson in NYC is expected to haul in another Blackstone or Anheuser-Busch when she comes up for partnership election is pretty unrealistic, imo.

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Re: How does V10 Partnership work?

Post by Sackboy » Thu Jan 13, 2022 1:49 pm

Making Partner: Nobody (well, next to nobody) makes partner at a V10 from bringing in business. It's not a thing when the firm's revenue is primarily from giant institutional clients like Apple, Goldman Sachs, Blackstone, etc. You make partner based on the relationships you make with those clients, how good your work is, how hard you work, and also how the firm thinks you'll fit in with the growth of its platform. Showing signs of being a rainmaker is much more important at lower-ranked firms (some V50 but mostly sub-V50) that do not have as many institutional clients/return clients and who actually have to get out there and constantly compete to maintain/increase revenues with new clients. I was scooped by another poster, who I largely agree with, but Kirkland does not fall into the latter category. It's driven off PE platform growth, so most new revenue is coming from Vista, Thoma Bravo, etc. You are not expected to bring in new clients (this was communicated to me in lateral calls I had with Kirkland equity partners).

Also, yes, if the market is absolute dog shit, then there won't be a "business need" for your to make partner. This is generally most applicable to niche specialty groups or litigation. A firm is generally willing to still make some (though it might be fewer) M&A and Capital Markets partners even if business isn't on the up and up, because the partners in those groups are generally the most powerful in the firm and can get people equity and the firm knows those are the moneymaker areas that it doesn't want a gap in when it starts raining work again.

Getting Paid: Firms are either lockstep (seniority-only pay)(only WLRK, Debevoise, and Cleary), modified lockstep (seniority-based pay component and "eat what you kill" component)(e.g. Davis Polk), or purely eat what you kill with some sort of minimum (e.g. Kirkland)

But, none of this matters, because you won't make equity partner anyway.

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 2:59 pm

Depending on what you mean by "bringing in business", arguably relationships with existing giant clients counts. These clients use tons of firms, so expanding the slice of the pie is bringing in business.

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 3:20 pm

Sackboy wrote:
Thu Jan 13, 2022 1:49 pm
Getting Paid: Firms are either lockstep (seniority-only pay)(only WLRK, Debevoise, and Cleary), modified lockstep (seniority-based pay component and "eat what you kill" component)(e.g. Davis Polk), or purely eat what you kill with some sort of minimum (e.g. Kirkland)
Cleary is now modified too

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 3:25 pm

Sackboy wrote:
Thu Jan 13, 2022 1:49 pm
Making Partner: Nobody (well, next to nobody) makes partner at a V10 from bringing in business. It's not a thing when the firm's revenue is primarily from giant institutional clients like Apple, Goldman Sachs, Blackstone, etc. You make partner based on the relationships you make with those clients, how good your work is, how hard you work, and also how the firm thinks you'll fit in with the growth of its platform. Showing signs of being a rainmaker is much more important at lower-ranked firms (some V50 but mostly sub-V50) that do not have as many institutional clients/return clients and who actually have to get out there and constantly compete to maintain/increase revenues with new clients. I was scooped by another poster, who I largely agree with, but Kirkland does not fall into the latter category. It's driven off PE platform growth, so most new revenue is coming from Vista, Thoma Bravo, etc. You are not expected to bring in new clients (this was communicated to me in lateral calls I had with Kirkland equity partners).

Also, yes, if the market is absolute dog shit, then there won't be a "business need" for your to make partner. This is generally most applicable to niche specialty groups or litigation. A firm is generally willing to still make some (though it might be fewer) M&A and Capital Markets partners even if business isn't on the up and up, because the partners in those groups are generally the most powerful in the firm and can get people equity and the firm knows those are the moneymaker areas that it doesn't want a gap in when it starts raining work again.

Getting Paid: Firms are either lockstep (seniority-only pay)(only WLRK, Debevoise, and Cleary), modified lockstep (seniority-based pay component and "eat what you kill" component)(e.g. Davis Polk), or purely eat what you kill with some sort of minimum (e.g. Kirkland)

But, none of this matters, because you won't make equity partner anyway.
KE isn't really EWYK. EWYK means compensation is based on origination credit. KE doesn't track originations and compensation (share count) is set by management based on a number of (often squishy) factors that don't necessarily track origination.

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 7:52 pm

There’s an old saying that every law partnership needs a balance of four “types”: finders, minders, grinders, and binders…

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 8:23 pm

Anyone know how it works at Skadden? I've heard it's EWYK but not sure.

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Re: How does V10 Partnership work?

Post by Monochromatic Oeuvre » Thu Jan 13, 2022 8:38 pm

A couple excessive oversimplifications ITT. First, while it's true that next to nobody is actually being elected to partnership with a multimillion dollar book of business already under their belt, prospective partners are almost uniformly expected to still be relationship managers and to some extent "salesmen" with respect to the major clients they're coming in on. It's absolutely not enough, anywhere, to even just do a whole ton of high-quality work for a big client to the extent you're seen as a churnable servicer--your value lies only in the increased (or total) risk that the firm *actually loses the client* if you walk; i.e., you have to be liked back.

And on that point, second, these relationships are really more about the value to *individuals* than to the *firm*. The term "institutional client" is a misnomer 90% of the time it's used these days when people really mean "big client involved in lots of areas of the firm for a while"--the business in question is usually actually (A) beholden to a small number of people who would have a great chance of taking it somewhere else and that's why they make $10M a year and (B) highly fragmented and easy to move around in pieces (which is why megacorps normally engage 100+ different firms a year, including several who could do the exact same thing on any given transaction/case). If you doubt it, you could ask a whole pile of different firms who lost business they thought was "institutional" over the past decade when some enormous guaranteed package from somewhere else came through.

The distinction is actually important. For the large majority nowadays, partnership is not just climbing a mountain anymore. You're still basically being seen as the heir apparent to something, but everything is significantly more portable, so maybe it's more like a rope you have to hold onto as you continue to prove (for often a decade or more) why you're so responsible for keeping the bills coming in before, most likely, the actual rainmaker retires and leaves it all to you. Multiply winning that beauty contest with the appropriate politics *and* being in the exact right economic cycle and you start realizing why it's so much harder than "Just bill 2500 forever brah they'll surely reward you".

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Re: How does V10 Partnership work?

Post by Anonymous User » Thu Jan 13, 2022 11:06 pm

Sackboy wrote:
Thu Jan 13, 2022 1:49 pm
Getting Paid: Firms are either lockstep (seniority-only pay)(only WLRK, Debevoise, and Cleary), modified lockstep (seniority-based pay component and "eat what you kill" component)(e.g. Davis Polk), or purely eat what you kill with some sort of minimum (e.g. Kirkland)

But, none of this matters, because you won't make equity partner anyway.
Cleary tweaked in response to the Freshfields exodus: https://www.abajournal.com/magazine/art ... racttalent. It’s gone the same way as Cravath and DPW (and, earlier, STB).

Also, WLRK’s frequently mentioned in the pure lockstep discussions, but I think they don’t identify themselves as such (or AmLaw takes a different view) because of the way the founders were/are compensated.

So if we’re being technical, I think Debevoise is the last one standing (at least based on public pronouncements).

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Re: How does V10 Partnership work?

Post by Anonymous User » Fri Jan 14, 2022 10:23 am

Already had been mentioned but Kirkland is basically black box and not EYWK. Partners have shares of the firm and each share gets X distribution; newly minted partners get the minimum share distribution and every year from that the firm committee determines how many shares each partner should get. It is based on basically whatever the committee feels like doing that year, but the firms success has kept people generally happy since the X per share figure keeps going up up up.

I don’t know this for certain but I suspect that when you hear Y lateral partner jumped to Kirkland and will make (dollar amount), it’s an estimate based on the amount of initial shares that the firm is giving to the lateral and not an actual hard line guarantee. But again, based on firm performance that has never been an issue anyway if someone has gotten a true minimum to protect against poor firm performance.

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Re: How does V10 Partnership work?

Post by Anonymous User » Fri Jan 14, 2022 1:13 pm

Don’t be weird.
Work harder than your classmates (and not 2500 hours brah hard).
Don’t be weird.
Remember partners can never be trusted.

The rest comes naturally.

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Re: How does V10 Partnership work?

Post by Anonymous User » Fri Jan 14, 2022 2:27 pm

Anonymous User wrote:
Fri Jan 14, 2022 10:23 am
I don’t know this for certain but I suspect that when you hear Y lateral partner jumped to Kirkland and will make (dollar amount), it’s an estimate based on the amount of initial shares that the firm is giving to the lateral and not an actual hard line guarantee. But again, based on firm performance that has never been an issue anyway if someone has gotten a true minimum to protect against poor firm performance.
I’m at Kirkland and asked the head partner in my office about this. You’re right, nobody is given an actual fixed guarantee amount in cash that the firm can’t get out of. The firm is smart enough to avoid a Dewey & LeBouf situation. Instead, the incoming partners are given what essentially amounts to a guarantee for certain performance. Like, “we expect you to come here and do XYZ based on what you were doing at the last firm, and if you do, you will make $XXXXXXX.” So the “guarantee” is contingent on results.

This is how they can bring in rock stars from other firms (with a history of strong performance and a confidence in continued future performance) without risking the firm getting in a bind if it doesn’t pan out.

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Re: How does V10 Partnership work?

Post by Anonymous User » Fri Jan 14, 2022 3:27 pm

Monochromatic Oeuvre wrote:
Thu Jan 13, 2022 8:38 pm
A couple excessive oversimplifications ITT. First, while it's true that next to nobody is actually being elected to partnership with a multimillion dollar book of business already under their belt, prospective partners are almost uniformly expected to still be relationship managers and to some extent "salesmen" with respect to the major clients they're coming in on. It's absolutely not enough, anywhere, to even just do a whole ton of high-quality work for a big client to the extent you're seen as a churnable servicer--your value lies only in the increased (or total) risk that the firm *actually loses the client* if you walk; i.e., you have to be liked back.

And on that point, second, these relationships are really more about the value to *individuals* than to the *firm*. The term "institutional client" is a misnomer 90% of the time it's used these days when people really mean "big client involved in lots of areas of the firm for a while"--the business in question is usually actually (A) beholden to a small number of people who would have a great chance of taking it somewhere else and that's why they make $10M a year and (B) highly fragmented and easy to move around in pieces (which is why megacorps normally engage 100+ different firms a year, including several who could do the exact same thing on any given transaction/case). If you doubt it, you could ask a whole pile of different firms who lost business they thought was "institutional" over the past decade when some enormous guaranteed package from somewhere else came through.

The distinction is actually important. For the large majority nowadays, partnership is not just climbing a mountain anymore. You're still basically being seen as the heir apparent to something, but everything is significantly more portable, so maybe it's more like a rope you have to hold onto as you continue to prove (for often a decade or more) why you're so responsible for keeping the bills coming in before, most likely, the actual rainmaker retires and leaves it all to you. Multiply winning that beauty contest with the appropriate politics *and* being in the exact right economic cycle and you start realizing why it's so much harder than "Just bill 2500 forever brah they'll surely reward you".
This depends. I was at one of KE/LW and we had multiple clients paying us $50-70mm+ a year in legal fees. Their were typically several originating partners for any of these clients. The way you made partner was essentially to become invaluable to one of these partners and be loved by one of these clients. If one or a couple of those partners left, that work wouldn’t really leave (though some of it would). They need 70+ lawyers to service all of the work they are doing and the clients know that and wouldn’t swap out an entire roster of 70 lawyers because 1 or 2 people left. If all 8 or 9 originating partners left, maybe. Hard to see how that would happen. More likely scenario is a couple leave or some younger people with good relationships leave and slowly leach off work. Thus, what went from a rock solid relationship with just one firm, slowly spreads itself out over 5-15 years.

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Re: How does V10 Partnership work?

Post by Monochromatic Oeuvre » Fri Jan 14, 2022 11:20 pm

I don't disagree with the above, but I would say that, unsurprisingly, the handful of originating partners on high-eight/nine-figure clients matter more than the 100 other lawyers who serve that business put together. Someone at LW or KE could replace that "roster" with the other in a week.

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 12:04 am

Monochromatic Oeuvre wrote:
Fri Jan 14, 2022 11:20 pm
I don't disagree with the above, but I would say that, unsurprisingly, the handful of originating partners on high-eight/nine-figure clients matter more than the 100 other lawyers who serve that business put together. Someone at LW or KE could replace that "roster" with the other in a week.
The originating partners obviously matter more, but you can’t replace 100 highly trained lawyers in a week. I, for example, did levfin there for some of those clients, and there are only 5 or so other firms doing the sort of work we were being paid for at the level of sophistication and complexity being done there. Could they have moved the work to 1 of those 5 or so other firms, sure. But, that’s about it. They couldn’t take that work and move it Duane Morris or Morgan Lewis or whomever. They aren’t qualified to do the work and they couldn’t just hire all those lawyers, because they don’t exist. There’s a limited supply and it takes years to train them. That’s not to say they are as valuable as the equity partners, but people don’t hire Kirkland or LW because they are too dumb to find a different cheaper firm. There just aren’t that many places that are qualified to do that sort of work and you can’t just repurpose people in 1 week. It takes 7 years to make a good senior associate.

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 6:46 am

Can someone confirm if S&C has a non-equity partner track? It seems like new partners are class of 2013.

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 8:37 am

There is no salary partner track at S&C. Only equity partners there. They might put you in the counsel holding pen though, at least to my understanding

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 12:33 pm

Monochromatic Oeuvre wrote:
Fri Jan 14, 2022 11:20 pm
I don't disagree with the above, but I would say that, unsurprisingly, the handful of originating partners on high-eight/nine-figure clients matter more than the 100 other lawyers who serve that business put together. Someone at LW or KE could replace that "roster" with the other in a week.
This over simplifies the long term value in a roster having the long term institutional knowledge of how a client works and prefers things to be done. The originating partner might not know, but those that are part of the roster do and there’s the value. Maybe you aren’t familiar with working with some of these larger clients who will scream at you if you fuck up their internal process.

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 2:45 pm

Does Gibson Dunn have a two-tiered partnership? They seem to have more Of Counsel than a lot of firms, so I didn't think so, but I am not sure.

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Re: How does V10 Partnership work?

Post by Sackboy » Sat Jan 15, 2022 3:33 pm

Anonymous User wrote:
Sat Jan 15, 2022 2:45 pm
Does Gibson Dunn have a two-tiered partnership? They seem to have more Of Counsel than a lot of firms, so I didn't think so, but I am not sure.
If a firm has a counsel/of counsel tier that doesn't consist of retired equity partners, that's a de facto two-tier partnership.

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 4:05 pm

Anonymous User wrote:
Sat Jan 15, 2022 2:45 pm
Does Gibson Dunn have a two-tiered partnership? They seem to have more Of Counsel than a lot of firms, so I didn't think so, but I am not sure.
yes, look at NALP

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 6:47 pm

Anonymous User wrote:
Sat Jan 15, 2022 2:45 pm
Does Gibson Dunn have a two-tiered partnership? They seem to have more Of Counsel than a lot of firms, so I didn't think so, but I am not sure.
Gibson has nonequity partners (I don't know what %)

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 7:36 pm

Anonymous User wrote:
Sat Jan 15, 2022 6:47 pm
Anonymous User wrote:
Sat Jan 15, 2022 2:45 pm
Does Gibson Dunn have a two-tiered partnership? They seem to have more Of Counsel than a lot of firms, so I didn't think so, but I am not sure.
Gibson has nonequity partners (I don't know what %)

Gibson had 331 equity partners in 2020 and 81 nonequity partners (AmLaw).

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Re: How does V10 Partnership work?

Post by Anonymous User » Sat Jan 15, 2022 7:39 pm

Does anyone know what a first year nonequity partner at STB makes? How long before you're up for equity? Looks like STB is really adopting the Kirkland model and increasing the nonequity tier, with a relatively huge "partner" class in 2021 (31 partners).

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