How much do first year equity partners make? Forum

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 12:13 pm

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

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 1:10 pm

Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 1:28 pm

Of course most partners are probably billing more than 2000 hrs. But to make partner, many are billing 2500-3000 hrs. Despite that being a sort of rite of passage, that's not the expectation or desire if you are a partner. Partners, at least at my firm, are encouraged to push more work down to associates and their sharing ratio benefits from that. Maybe you're only going down to 2000-2300 hours, but it's still a big difference from what you have to go through as a senior associate or NEP to make it. So you're going to double your income while working less.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 5:26 pm

Anonymous User wrote:
Sat Sep 17, 2022 1:28 pm
Of course most partners are probably billing more than 2000 hrs. But to make partner, many are billing 2500-3000 hrs. Despite that being a sort of rite of passage, that's not the expectation or desire if you are a partner. Partners, at least at my firm, are encouraged to push more work down to associates and their sharing ratio benefits from that. Maybe you're only going down to 2000-2300 hours, but it's still a big difference from what you have to go through as a senior associate or NEP to make it. So you're going to double your income while working less.
2000 is a lot of billable hours as a partner (speaking as a partner). It happens, but, outside of really bad years, mainly for the workaholics or those whose position is otherwise tenuous. Of course, you spend a lot of time working on nonbillable stuff - way more than associates. At least 150 hrs/year on billing matters, another 150 hrs/year on committees/firm governance, etc.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 6:42 pm

Anonymous User wrote:
Fri Sep 16, 2022 4:52 pm
Anonymous User wrote:
Fri Sep 16, 2022 4:46 pm
Anonymous User wrote:
Fri Sep 16, 2022 3:15 pm
Obligatory Kirkland & Ellis: $1.5m in a "transitional" year (that the Firm Committee just created last year) and then ~$2.5m minimum shares your first real full year. (Qualifiers: This is probably one of the highest figures in the entire legal industry and also almost no one makes shares at Kirkland anymore.)
Can you clarify the bolded? Are they keeping on NSPs indefinitely? I thought the structure was 4 years as NSP then up or out, is that no longer true?
Their point is that very few people go "up" in the "up or out" model at KE. KE brings in a shit ton of lateral partners. Even in a massive group like Executive Comp, which is 60+ attorneys at this point, they'll make 1 internal SP every few years. Most SPs at KE seem to lateral over after getting equity elsewhere. I'm sure if you're a corporate superstar who dedicates his or her life to the firm for 9 years you'll have a shot, but otherwise you're "out."
Well I also don’t think the “or out” really exists anymore unless you’re underperforming. As others have pointed out, it’s in the firm’s interest to keep NSPs around as long as possible, billing clients for their time at obscene rates yet not paying them as much as SP.

Throwing away a profitable asset (the NSP) simply because they have been with the firm an arbitrary number of years is the polar opposite of K&E’s mindset. Bring more money than you cost and you can stay forever, even if you never make shares.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sat Sep 17, 2022 11:00 pm

Anonymous User wrote:
Sat Sep 17, 2022 1:10 pm
Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.
KE and DPW are not “roughly in line” if DPW entry-level is 1.5. The 1.5m at KE is a transition year and then it goes, automatically, to 2.5m the following year. 2.5 (or whatever value min shares becomes over time) is then the floor for your comp. as long as you have equity. Big difference (to the tune of $1m per year) from a place starting at 1.5.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 1:35 am

Anonymous User wrote:
Sat Sep 17, 2022 11:00 pm
Anonymous User wrote:
Sat Sep 17, 2022 1:10 pm
Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.
KE and DPW are not “roughly in line” if DPW entry-level is 1.5. The 1.5m at KE is a transition year and then it goes, automatically, to 2.5m the following year. 2.5 (or whatever value min shares becomes over time) is then the floor for your comp. as long as you have equity. Big difference (to the tune of $1m per year) from a place starting at 1.5.
Definitely not the case - know multiple ppl (fairly close personal / business relationships) who have been sp for more than 3 years at KE and the equity partners on the low end of the spectrum are getting sub 2MM.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 6:33 am

Anonymous User wrote:
Sun Sep 18, 2022 1:35 am
Anonymous User wrote:
Sat Sep 17, 2022 11:00 pm
Anonymous User wrote:
Sat Sep 17, 2022 1:10 pm
Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.
KE and DPW are not “roughly in line” if DPW entry-level is 1.5. The 1.5m at KE is a transition year and then it goes, automatically, to 2.5m the following year. 2.5 (or whatever value min shares becomes over time) is then the floor for your comp. as long as you have equity. Big difference (to the tune of $1m per year) from a place starting at 1.5.
Definitely not the case - know multiple ppl (fairly close personal / business relationships) who have been sp for more than 3 years at KE and the equity partners on the low end of the spectrum are getting sub 2MM.
Is it possible your info is a bit out of date? Looking at KE's publicly reported PPP, the shares that got you 2.5MM in 2021 would have only gotten 1.8MM in 2019 (PPP went from 5.2MM to 7.3MM in that period). I also wonder if they're reporting their gross income or telling you what they get after they net some things out.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 8:25 am

Anonymous User wrote:
Sun Sep 18, 2022 1:35 am
Anonymous User wrote:
Sat Sep 17, 2022 11:00 pm
Anonymous User wrote:
Sat Sep 17, 2022 1:10 pm
Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.
KE and DPW are not “roughly in line” if DPW entry-level is 1.5. The 1.5m at KE is a transition year and then it goes, automatically, to 2.5m the following year. 2.5 (or whatever value min shares becomes over time) is then the floor for your comp. as long as you have equity. Big difference (to the tune of $1m per year) from a place starting at 1.5.
Definitely not the case - know multiple ppl (fairly close personal / business relationships) who have been sp for more than 3 years at KE and the equity partners on the low end of the spectrum are getting sub 2MM.
The value of min shares at KE as of last year is at about 2.5. It’s possible you’re hearing info from a few years ago—I think pre-COVID it was closer to 2. Or else they’re reporting net rather than gross after things like an aggressive payment toward buy-in.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 8:46 am

Anonymous User wrote:
Sun Sep 18, 2022 8:25 am
Anonymous User wrote:
Sun Sep 18, 2022 1:35 am
Anonymous User wrote:
Sat Sep 17, 2022 11:00 pm
Anonymous User wrote:
Sat Sep 17, 2022 1:10 pm
Normal - while Kirkland has a spread around 1:9 and DPW is 1:4, their starting share partner comps are roughly in line (~1.5mm normally) because it is more about distribution. Most firms with ppep around 3mm start equity partners at 1mm probably.
KE and DPW are not “roughly in line” if DPW entry-level is 1.5. The 1.5m at KE is a transition year and then it goes, automatically, to 2.5m the following year. 2.5 (or whatever value min shares becomes over time) is then the floor for your comp. as long as you have equity. Big difference (to the tune of $1m per year) from a place starting at 1.5.
Definitely not the case - know multiple ppl (fairly close personal / business relationships) who have been sp for more than 3 years at KE and the equity partners on the low end of the spectrum are getting sub 2MM.
The value of min shares at KE as of last year is at about 2.5. It’s possible you’re hearing info from a few years ago—I think pre-COVID it was closer to 2. Or else they’re reporting net rather than gross after things like an aggressive payment toward buy-in.
OP on the KE/DPW partner comp spread. Last year could be an outlier given record dealing making levels in most major corporate practices (cap mkt, m&a, pe etc.). Granted my info on base partner comps at DPW and KE are both pre-2021, but given how the market is going in 2022 things are unlikely to repeat - expect ppep to come down for most mega firms.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 2:10 pm

Shouldn't first year equity at DPW/CSM/STB/S&C all be above $2 million these days, with the relatively narrow bands and insane profits?

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 2:51 pm

Incredibly dumb question I admit, but how does payment formally work for equity partners and how does compensation increase. Are you just given like an on-paper percent ownership in the firm like 0.15% or something where you just get 0.15% of the profits paid quarterly and then as you get more senior they increase your percent ownership. And then, on top of that, is there like some structure for rainmakers where they say hey 10% of billable you bring in we give you.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 7:36 pm

Anonymous User wrote:
Sun Sep 18, 2022 2:51 pm
Incredibly dumb question I admit, but how does payment formally work for equity partners and how does compensation increase. Are you just given like an on-paper percent ownership in the firm like 0.15% or something where you just get 0.15% of the profits paid quarterly and then as you get more senior they increase your percent ownership. And then, on top of that, is there like some structure for rainmakers where they say hey 10% of billable you bring in we give you.
It's highly dependent on the firm, but generally a compensation committee sets partners "points" every year based on their contributions to the firm in the prior year.

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Re: How much do first year equity partners make?

Post by Anonymous User » Sun Sep 18, 2022 7:52 pm

Anonymous User wrote:
Sun Sep 18, 2022 7:36 pm
Anonymous User wrote:
Sun Sep 18, 2022 2:51 pm
Incredibly dumb question I admit, but how does payment formally work for equity partners and how does compensation increase. Are you just given like an on-paper percent ownership in the firm like 0.15% or something where you just get 0.15% of the profits paid quarterly and then as you get more senior they increase your percent ownership. And then, on top of that, is there like some structure for rainmakers where they say hey 10% of billable you bring in we give you.
It's highly dependent on the firm, but generally a compensation committee sets partners "points" every year based on their contributions to the firm in the prior year.
My firm calls them "shares," but same deal. Every year each partner puts together a big summary of their contributions to the firm for the compensation committee to review. All the partners then see who got what. Generally shares don't go away once you get them, so it takes a lot to get more. It sounds like a miserable process, but absolutely sign me up for seven figures.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 9:39 am

Anonymous User wrote:
Sun Sep 18, 2022 7:52 pm
Anonymous User wrote:
Sun Sep 18, 2022 7:36 pm
Anonymous User wrote:
Sun Sep 18, 2022 2:51 pm
Incredibly dumb question I admit, but how does payment formally work for equity partners and how does compensation increase. Are you just given like an on-paper percent ownership in the firm like 0.15% or something where you just get 0.15% of the profits paid quarterly and then as you get more senior they increase your percent ownership. And then, on top of that, is there like some structure for rainmakers where they say hey 10% of billable you bring in we give you.
It's highly dependent on the firm, but generally a compensation committee sets partners "points" every year based on their contributions to the firm in the prior year.
My firm calls them "shares," but same deal. Every year each partner puts together a big summary of their contributions to the firm for the compensation committee to review. All the partners then see who got what. Generally shares don't go away once you get them, so it takes a lot to get more. It sounds like a miserable process, but absolutely sign me up for seven figures.
Yup, and it even varies beyond that. For example, here at Kirkland it’s a two-year cycle instead of every year. At some firms they have a complex formula that they plug into (sometimes the formula is known to partners, other times only the committee). At others, the committee just subjectively decides amongst themselves based on factors that aren’t locked into a set formula. Although mostly dead now, “lockstep” firms pay all partners of equal seniority equal pay and increases come slowly over time automatically. At the (also increasingly rare) “eat what you kill” firms they just look at what business you brought in and the ratio of what you brought in is your ratio of profits.

The majority of firms these days either do a formula or black box allocation by committee. The old lockstep firms like Cravath have mostly abandoned it, while the previously “eat what you kill” firms like Kirkland have abandoned that too. Everyone is meeting in the mushy middle.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 10:58 am

Anonymous User wrote:
Mon Sep 19, 2022 9:39 am
Anonymous User wrote:
Sun Sep 18, 2022 7:52 pm
Anonymous User wrote:
Sun Sep 18, 2022 7:36 pm
Anonymous User wrote:
Sun Sep 18, 2022 2:51 pm
Incredibly dumb question I admit, but how does payment formally work for equity partners and how does compensation increase. Are you just given like an on-paper percent ownership in the firm like 0.15% or something where you just get 0.15% of the profits paid quarterly and then as you get more senior they increase your percent ownership. And then, on top of that, is there like some structure for rainmakers where they say hey 10% of billable you bring in we give you.
It's highly dependent on the firm, but generally a compensation committee sets partners "points" every year based on their contributions to the firm in the prior year.
My firm calls them "shares," but same deal. Every year each partner puts together a big summary of their contributions to the firm for the compensation committee to review. All the partners then see who got what. Generally shares don't go away once you get them, so it takes a lot to get more. It sounds like a miserable process, but absolutely sign me up for seven figures.
Yup, and it even varies beyond that. For example, here at Kirkland it’s a two-year cycle instead of every year. At some firms they have a complex formula that they plug into (sometimes the formula is known to partners, other times only the committee). At others, the committee just subjectively decides amongst themselves based on factors that aren’t locked into a set formula. Although mostly dead now, “lockstep” firms pay all partners of equal seniority equal pay and increases come slowly over time automatically. At the (also increasingly rare) “eat what you kill” firms they just look at what business you brought in and the ratio of what you brought in is your ratio of profits.

The majority of firms these days either do a formula or black box allocation by committee. The old lockstep firms like Cravath have mostly abandoned it, while the previously “eat what you kill” firms like Kirkland have abandoned that too. Everyone is meeting in the mushy middle.
To the extent that firms are lockstep or have some lockstep built in are there like these yearly salaries for Partners based on Partner class year that model how associate salaries are or are the lockstep/lockstep-lite minimum salaries still variable based on the year?

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Re: How much do first year equity partners make?

Post by Sackboy » Mon Sep 19, 2022 1:07 pm

Anonymous User wrote:
Mon Sep 19, 2022 10:58 am
To the extent that firms are lockstep or have some lockstep built in are there like these yearly salaries for Partners based on Partner class year that model how associate salaries are or are the lockstep/lockstep-lite minimum salaries still variable based on the year?
Partners don't have salaries. Their income isn't fixed like an associate. Partners get draws. Each draw can vary dramatically and be quite infrequent in some cases, unlike getting $8,000 deposited into your bank account every two weeks. A lockstep model would increase the shares allocated to individuals with seniority. If the firm made $100M in profit in year X and $100M in profit in year X+1 with the same number of partners, the partners who had been there another year would take a higher percentage of that $100M. Lockstep systems frequently have mandatory retirement ages and good planned attrition models re partner poaching, which allows for the model to work in perpetuity. Someone with a large stake in the firm is always retiring and passing down their shares to the rest of the more junior equity partners to give everyone the adjustments that they need.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 1:46 pm

It's kinda weird when you think about it that while you're a "partner" with a "share", you can't actually transfer it and when you retire it just evaporates. And new "partners" become partners by virtue of promotion not by actually partnering.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 3:12 pm

Anonymous User wrote:
Mon Sep 19, 2022 1:46 pm
It's kinda weird when you think about it that while you're a "partner" with a "share", you can't actually transfer it and when you retire it just evaporates. And new "partners" become partners by virtue of promotion not by actually partnering.
I don't see how this is so strange. There are plenty of non-transferable "shares" in the world (especially for closely held entities or startups). And partners do have to buy in - you just need to be elected to have that opportunity. Typically, that buy-in is around a half mil, but often firms give you an interest free loan. Just like in regular old businesses with stock incentives, you earn more equity (shares) by doing work for the firm. This is normal.

Anyway, you should already be aware that firms literally cannot make their shares transferable - at least to non-lawyers - by virtue of our rules of professional conduct.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 3:42 pm

Anonymous User wrote:
Mon Sep 19, 2022 3:12 pm
Anonymous User wrote:
Mon Sep 19, 2022 1:46 pm
It's kinda weird when you think about it that while you're a "partner" with a "share", you can't actually transfer it and when you retire it just evaporates. And new "partners" become partners by virtue of promotion not by actually partnering.
I don't see how this is so strange. There are plenty of non-transferable "shares" in the world (especially for closely held entities or startups). And partners do have to buy in - you just need to be elected to have that opportunity. Typically, that buy-in is around a half mil, but often firms give you an interest free loan. Just like in regular old businesses with stock incentives, you earn more equity (shares) by doing work for the firm. This is normal.

Anyway, you should already be aware that firms literally cannot make their shares transferable - at least to non-lawyers - by virtue of our rules of professional conduct.
Is the buy in some tax formality or something? I always figured it was to give a Partner a stake and put his/her skin in the game but if there just getting around with an interest free loan that feels more like some sort of formality and less a functional thing.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 4:03 pm

I'm up for partner at a lower vault firm this year. It would be an equity position, but bottom of the barrel. I'm told first year partners make $600,000.

I haven't asked about the buy in amount. Man. I probably should have asked, because in full candor I plan to use the partner title to help me lateral to something that's fewer hours. Maybe not immediately. But I really don't think I can sustain my current workload for much longer. I'm basically tired all the time and I've lost the drive to pursue any interests outside of work.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 4:12 pm

Anonymous User wrote:
Mon Sep 19, 2022 3:42 pm
Anonymous User wrote:
Mon Sep 19, 2022 3:12 pm
Anonymous User wrote:
Mon Sep 19, 2022 1:46 pm
It's kinda weird when you think about it that while you're a "partner" with a "share", you can't actually transfer it and when you retire it just evaporates. And new "partners" become partners by virtue of promotion not by actually partnering.
I don't see how this is so strange. There are plenty of non-transferable "shares" in the world (especially for closely held entities or startups). And partners do have to buy in - you just need to be elected to have that opportunity. Typically, that buy-in is around a half mil, but often firms give you an interest free loan. Just like in regular old businesses with stock incentives, you earn more equity (shares) by doing work for the firm. This is normal.

Anyway, you should already be aware that firms literally cannot make their shares transferable - at least to non-lawyers - by virtue of our rules of professional conduct.
Is the buy in some tax formality or something? I always figured it was to give a Partner a stake and put his/her skin in the game but if there just getting around with an interest free loan that feels more like some sort of formality and less a functional thing.
I don't think the interest free loan goes indefinitely. It just helps smooth things out for the first couple years. I do think you get it back when you leave, but without interest.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 4:31 pm

Anonymous User wrote:
Mon Sep 19, 2022 4:03 pm
I'm up for partner at a lower vault firm this year. It would be an equity position, but bottom of the barrel. I'm told first year partners make $600,000.

I haven't asked about the buy in amount. Man. I probably should have asked, because in full candor I plan to use the partner title to help me lateral to something that's fewer hours. Maybe not immediately. But I really don't think I can sustain my current workload for much longer. I'm basically tired all the time and I've lost the drive to pursue any interests outside of work.
I'm also up for partner this year (V50 firm) and I didn't even think buy-in was a thing for V100 firms, so I didn't think to ask either. I assumed a buy-in still existed at non-biglaw shops or boutiques. I guess I should have asked too.

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Re: How much do first year equity partners make?

Post by Anonymous User » Mon Sep 19, 2022 11:50 pm

Anonymous User wrote:
Fri Sep 16, 2022 4:52 pm
Anonymous User wrote:
Fri Sep 16, 2022 4:46 pm
Anonymous User wrote:
Fri Sep 16, 2022 3:15 pm
Obligatory Kirkland & Ellis: $1.5m in a "transitional" year (that the Firm Committee just created last year) and then ~$2.5m minimum shares your first real full year. (Qualifiers: This is probably one of the highest figures in the entire legal industry and also almost no one makes shares at Kirkland anymore.)
Can you clarify the bolded? Are they keeping on NSPs indefinitely? I thought the structure was 4 years as NSP then up or out, is that no longer true?
Their point is that very few people go "up" in the "up or out" model at KE. KE brings in a shit ton of lateral partners. Even in a massive group like Executive Comp, which is 60+ attorneys at this point, they'll make 1 internal SP every few years. Most SPs at KE seem to lateral over after getting equity elsewhere. I'm sure if you're a corporate superstar who dedicates his or her life to the firm for 9 years you'll have a shot, but otherwise you're "out."
I’ve heard this is true. I’ve interviewed with the exec comp team there before. It’s a revolving door there for midlevels (aka seniors at Kirkland), and I think the NY/Boston exec comp partner was the last person in like 5+ years (maybe more?) to get shares. They had a few share partners lateral in, although some already left. My friend is a midlevel there and said that she’s looking to bolt soon because she thinks it’ll be easier to get equity (longer runway at another firm to “prove” herself) if she laterals before becoming an NEP.

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Re: How much do first year equity partners make?

Post by Anonymous User » Tue Sep 20, 2022 8:40 am

Anonymous User wrote:
Mon Sep 19, 2022 3:12 pm
Anonymous User wrote:
Mon Sep 19, 2022 1:46 pm
It's kinda weird when you think about it that while you're a "partner" with a "share", you can't actually transfer it and when you retire it just evaporates. And new "partners" become partners by virtue of promotion not by actually partnering.
I don't see how this is so strange. There are plenty of non-transferable "shares" in the world (especially for closely held entities or startups). And partners do have to buy in - you just need to be elected to have that opportunity. Typically, that buy-in is around a half mil, but often firms give you an interest free loan. Just like in regular old businesses with stock incentives, you earn more equity (shares) by doing work for the firm. This is normal.

Anyway, you should already be aware that firms literally cannot make their shares transferable - at least to non-lawyers - by virtue of our rules of professional conduct.
I'm aware of the why, and I'm not necessarily saying it should change, just saying that it's weird when you think about it. Because it is. Especially if you have to buy in as if it's an actual partnership.

The startup comparison is not relevant, because those shares are real in the event of an IPO etc.

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