How much do first year equity partners make? Forum

[temp69420]

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.

In terms of income earned, it's not enormously different from other jobs, especially those that pay similarly and have similar levels of responsibility. In lots of sectors you're paid in a way that depends on your employer's performance (this is trivially true everywhere in the sense that if the employer goes bankrupt, you lose your job). In some cases it's convenient to tie pay to performance via equity grants, but that's just accounting -- giving you equity that you can sell (or sell on a later date) is no different from giving you money.

The buy-in is purely a way of raising working capital. All companies need working capital, and it typically does not come in the form of equity but of debt, like here.

equity financing is just one form among many, and there's no fundamental reason why it has to exist or is even the obviously natural way of setting up a firm

[VentureMBA]

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.

Isn't it a an actual partnership in most cases?

The other thing associates often don't appreciate is the taxes. Much different, and often much more, than what associates pay.

[12YrsAnAssociate]

Dumb question. What happens if I buy in and then leave the firm? Am I on the hook for the partner buy in? Do I get to sell the shares back? This has me nervous.

[Anonymous User]

Dumb question. What happens if I buy in and then leave the firm? Am I on the hook for the partner buy in? Do I get to sell the shares back? This has me nervous.

I believe most firms give it back without interest when you leave.

[Anonymous User]

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.

Not in the group, but off the top of my head at least two EC NSPs have made shares the last two years. So that factual bit isn’t quite accurate.

[Anonymous User]

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.

Not in the group, but off the top of my head at least two EC NSPs have made shares the last two years. So that factual bit isn’t quite accurate.

"Off the top of your head," lol. You didn't stop there because that's all that was "off the top of your head." You stopped there, because those are the only two NSPs who have ever made SP from within the EC group, so that's not really the good look you think it is. I said every "few years" in my OP for the sake of being generous to the group. The reality is the group has existed for 16+ years and has only made 2 internal share partners (i.e., 2 of the 7 equity partners were internal promotions). The next internal promotion will likely be in '24 or '25 when the group's superstar NSP gets it. After that, there is no clear candidate for SP promotion who has both the skill and internal rep. Wouldn't surprise me if they don't do another SP promotion until '28 or '29 after that. The group also has also specific roles where you have 0 choice of getting shares in exchange for drafting equity plans and public company documents. KE EC is where you go if you want a nearly 0 chance of getting equity. The two people who have made it and the one identifiable superstar pretty much sold their souls to the firm. I like all of them, but I know at least 2 of the 3 have worked hours that you'd think were billing fraud if they were coming out of anywhere other than KE or some renown sweatshop. Lateraling to KE and sticking around for a couple of years is fine, but it's not a place to build a career in EC.

[Anonymous User]

I should have known this thread would inevitably end up in a debate about how often NSPs from KE's EC group get elected. 9/10 TLS.

[Anonymous User]

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.

Not in the group, but off the top of my head at least two EC NSPs have made shares the last two years. So that factual bit isn’t quite accurate.

"Off the top of your head," lol. You didn't stop there because that's all that was "off the top of your head." You stopped there, because those are the only two NSPs who have ever made SP from within the EC group, so that's not really the good look you think it is. I said every "few years" in my OP for the sake of being generous to the group. The reality is the group has existed for 16+ years and has only made 2 internal share partners (i.e., 2 of the 7 equity partners were internal promotions). The next internal promotion will likely be in '24 or '25 when the group's superstar NSP gets it. After that, there is no clear candidate for SP promotion who has both the skill and internal rep. Wouldn't surprise me if they don't do another SP promotion until '28 or '29 after that. The group also has also specific roles where you have 0 choice of getting shares in exchange for drafting equity plans and public company documents. KE EC is where you go if you want a nearly 0 chance of getting equity. The two people who have made it and the one identifiable superstar pretty much sold their souls to the firm. I like all of them, but I know at least 2 of the 3 have worked hours that you'd think were billing fraud if they were coming out of anywhere other than KE or some renown sweatshop. Lateraling to KE and sticking around for a couple of years is fine, but it's not a place to build a career in EC.

No need to belabor it, but I was specifically responding to the poster after you who said:

“I think the NY/Boston exec comp partner was the last person in like 5+ years (maybe more?) to get shares.”

[Anonymous User]

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.

Not in the group, but off the top of my head at least two EC NSPs have made shares the last two years. So that factual bit isn’t quite accurate.

"Off the top of your head," lol. You didn't stop there because that's all that was "off the top of your head." You stopped there, because those are the only two NSPs who have ever made SP from within the EC group, so that's not really the good look you think it is. I said every "few years" in my OP for the sake of being generous to the group. The reality is the group has existed for 16+ years and has only made 2 internal share partners (i.e., 2 of the 7 equity partners were internal promotions). The next internal promotion will likely be in '24 or '25 when the group's superstar NSP gets it. After that, there is no clear candidate for SP promotion who has both the skill and internal rep. Wouldn't surprise me if they don't do another SP promotion until '28 or '29 after that. The group also has also specific roles where you have 0 choice of getting shares in exchange for drafting equity plans and public company documents. KE EC is where you go if you want a nearly 0 chance of getting equity. The two people who have made it and the one identifiable superstar pretty much sold their souls to the firm. I like all of them, but I know at least 2 of the 3 have worked hours that you'd think were billing fraud if they were coming out of anywhere other than KE or some renown sweatshop. Lateraling to KE and sticking around for a couple of years is fine, but it's not a place to build a career in EC.

No need to belabor it, but I was specifically responding to the poster after you who said:

“I think the NY/Boston exec comp partner was the last person in like 5+ years (maybe more?) to get shares.”

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

[BigLawPartner]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

Unless I'm missing something, didn't your income just triple? How can that possibly not be noticeable?

[BigLawPartner]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

Unless I'm missing something, didn't your income just triple? How can that possibly not be noticeable?

Yeah, unless he has a half dozen kids in private school or something, I don't understand that either.

[Anonymous User]

First-year equity partner here at one of the V10 (not K&E/Latham that have been discussed a lot here; I was an associate before this year). I won't know exact comp until end of the year, but it will be something in the range of $1.5m.

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

Unless I'm missing something, didn't your income just triple? How can that possibly not be noticeable?

Yeah, unless he has a half dozen kids in private school or something, I don't understand that either.

Magically went overnight from childless associate to partner with kids in schools.

[Anonymous User]

Can I ask how it feels? To finally get the golden ring? Did you know it was coming for a while or was it out of the blue? Do you feel fulfilled or empty that you finally got there? How does the money feel? Just curious what it's like.

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

Unless I'm missing something, didn't your income just triple? How can that possibly not be noticeable?

Yeah, unless he has a half dozen kids in private school or something, I don't understand that either.

Magically went overnight from childless associate to partner with kids in schools.

Lord, you all are difficult. It's a mystery to me why anybody would answer any questions here.

1. If we're talking about what changes literally overnight, then certainly nothing happens with money. You have neither more nor less. That was my first answer. I felt no different. My income in the first year was maybe slightly higher than before.

2. I had my first kid a year before making partner and my second a year after. And I don't know where you got the idea that school is what makes kids expensive. School is *less* than what my pre-school aged kids cost.

3. With kids you need a house. That's where the money goes. I don't want a house, but now I have one, and it eats up all my money at the moment.

In any case, the question was literally all about how it "feels". I'm telling you my answer.

[Anonymous User]

Not OP, but I'll still give an answer. Neither fulfilled nor empty -- life goes on. The job is the same, I'm the same. One can quibble over details, but that's the basic reality.

You didn't answer the money question, though. The money feels nice.

I have kids, and the money is basically enough to make me feel like a DINK again. That's better than the alternative, but I don't actually feel richer than I did as a senior associate without children (regardless of whether it's true or not). Maybe in 10 years the answer will be different, but the question as I understood it was basically what happens right when you make partner.

Unless I'm missing something, didn't your income just triple? How can that possibly not be noticeable?

Yeah, unless he has a half dozen kids in private school or something, I don't understand that either.

Magically went overnight from childless associate to partner with kids in schools.

Lord, you all are difficult. It's a mystery to me why anybody would answer any questions here.

1. If we're talking about what changes literally overnight, then certainly nothing happens with money. You have neither more nor less. That was my first answer. I felt no different. My income in the first year was maybe slightly higher than before.

2. I had my first kid a year before making partner and my second a year after. And I don't know where you got the idea that school is what makes kids expensive. School is *less* than what my pre-school aged kids cost.

3. With kids you need a house. That's where the money goes. I don't want a house, but now I have one, and it eats up all my money at the moment.

In any case, the question was literally all about how it "feels". I'm telling you my answer.

Was not trying to be difficult! I see now what happened in the thread. Someone else posted "First-year equity partner here ... range of $1.5m." Which is approximately 3 times a senior associate salary -- pretty much life changing! Then someone asked how it felt, and you responded saying as another newly minted partner it doesn't feel different. But since you didn't provide numbers, the assumption people made was that your income is similar to the OP. That's it, that's the source of the confusion. Of course it's not going to feel that different if your income doesn't go up.

[Anonymous User]

As to the school comments, that was secondary. On the assumption that we're talking about how income of 1.5m doesn't feel that good bc kids, you must be spending hundreds of thousands on expensive private schools. Etc.

[Anonymous User]

As to the school comments, that was secondary. On the assumption that we're talking about how income of 1.5m doesn't feel that good bc kids, you must be spending hundreds of thousands on expensive private schools. Etc.

I appreciate everybody's effort to bring the tone down instead of escalating -- it's refreshing.

Without revealing too much, what I'll say, and this comes up elsewhere, is that calculating "income" for partners is tricky. There's your actual raw payment from the firm, then tons of taxes and lots of deductions for savings vehicles. On top of that, your take-home pay comes in a lumpy and delayed manner.

Talking to other partners, we all know we're rich, but I don't think you 100% feel it until it has been maybe 5-10 years.

As to kids, here's the difference. Without kids, I could have quit biglaw at any time with zero consequences. I owned my place outright and had savings equal to at least a decade of expenses. I now have kids, and if I quit things will be very different.

Having had kids, my annual expenses are in fact triple what they were before. So my spending rate relative to income is exactly the same now as it was pre-kids (I track it closely). But the difference is that now I can't quit. That's why I don't feel richer.

Obviously I'm conflating kids and partnership, but the reality is that the two transitions happened around the same time, so it's difficult to separate them. If you're a DINK and remain one and your income triples, then, sure, you're rich. The rest of my point would still hold -- at a high level, the job is the same and I'm the same person.

[Sackboy]

Seems like a very reasonable take to me. Also, at the point of being a senior, you're making half a million bucks and have probably chilled in that zone as a non-equity partner for 2-3 years. At half a million plus your significant other's income, tripling your pay probably isn't going to mean you can buy too much more than you already could. You could already afford international vacations, a $80,000 sports car, a nice house (well, except maybe in NYC), etc. At $1.5 million, you can still afford all of those things, but maybe, like OP, you just sink way more into an even nicer house. At that point, it seems pretty easy to think why it might not feel different. I think the real thing that will make you feel "rich" is what OP pointed to in his pre-kid days: the ability to have minimal expenses (through owning your car and home), $500k-$1M (or more) in savings, and the ability to just go "fuck it" and walk away from pretty much any job.

[BigLawPartner]

Seems like a very reasonable take to me. Also, at the point of being a senior, you're making half a million bucks and have probably chilled in that zone as a non-equity partner for 2-3 years. At half a million plus your significant other's income, tripling your pay probably isn't going to mean you can buy too much more than you already could. You could already afford international vacations, a $80,000 sports car, a nice house (well, except maybe in NYC), etc. At $1.5 million, you can still afford all of those things, but maybe, like OP, you just sink way more into an even nicer house. At that point, it seems pretty easy to think why it might not feel different. I think the real thing that will make you feel "rich" is what OP pointed to in his pre-kid days: the ability to have minimal expenses (through owning your car and home), $500k-$1M (or more) in savings, and the ability to just go "fuck it" and walk away from pretty much any job.

For me, it was the ability to actually buy the apartment that worked for my family, so I agree that NYC may be the exception here because of the astronomical cost of housing. And then seeing the bigger savings start to add up. Those were the big differences.

[Anonymous User]

Do you guys think a better way to get really rich would be,

(1) Gunning for partner at my V20,
(2) Working at a biglaw firm just for a few years to pay my debt off, then starting a firm with the intent of scaling,
(3) Leaving law for the corporate world?

[Anonymous User]

Do you guys think a better way to get really rich would be,

(1) Gunning for partner at my V20,
(2) Working at a biglaw firm just for a few years to pay my debt off, then starting a firm with the intent of scaling,
(3) Leaving law for the corporate world?

For sure option 1. Starting your own firm isn’t nearly as easy or lucrative as many people think. Plenty of people fail, and the ones that do succeed are often pulling in approximately what senior associates make in BigLaw (or less).

Similarly, most jobs in “the corporate world” pay way less than BigLaw, even at the senior levels (I see lots of executive compensation numbers in the course of doing deals, and have friends in various senior positions in different industries). Yeah, if you become a C-Suite executive or GC at a large, profitable company then maybe your equity package would eventually be large, but that path is at least as hard as making partner if not harder (and your comp is tied up in stock instead of salary/quarterly partner distributions).

Making partner at a V20 isn’t easy, but the relative level of effort/luck required to do it is better than the level of effort/luck required to out-earn V20 partners as solo founder or in “the corporate world.”