Since we were young, we have completed steps in our educational and career goals. Graduation from kindergarten; attending middle school; graduating high school; getting into and graduating college; getting into and graduating law school; passing the bar exam; getting a job. At this point, if you work at a law firm, there is one more goal: making partner—that thing that seemed so elusive on the first day of law school.
In the early days of our careers, we all think about it: “When I’m a partner . . . ?;” “What do they talk about in those partner meetings?;” “Finally, I will have proved myself when I am a partner;” “I can’t wait to spend all of that money when I make partner;” “Respect at last;” “Maybe I will finally take a vacation.” These days, in most firms making partner may not be the final step. Now, when we get there—to the partner ranks at last—we find we still have one more rung to climb: to equity partner.
If your firm is like mine, the how of getting to that final step isn’t always clear. You may find, as I did, that you’re stuck in the non-equity partner position for the long-term, with no easy answer on how to earn that last, ultimate promotion. My experience may be instructive to other soon-to-be partners on how to avoid the non-equity trap.
I first was elected as a non-equity partner, and I remain in non-equity status today. I also was the first person in my firm elected under a new model of making all new partners non-equity for their first year. In recent years, law firms of all sizes have been instituting different tracks of “partnership,” from salaried parties, to of counsel, to non-equity—many variations exist. Every firm defines their “classes” of “partners” differently. Hundreds of articles have examined the differences, the positives, the negatives, and the reasoning behind having varied types of partnership. Studies have looked at job satisfaction, profitability, and a whole host of issues surrounding the multi-tier structure of partnerships. I can’t tell you anything about any structure other than my own. As my firm’s “test case,” I got stuck in the system. I want to share how I ended up where I am.
Practically speaking, does equity status really make a difference as long as you are a partner? As in most things, the answer is—it depends. For me, the answer is “not really.” My firm has long had the distinction between non-equity and equity status. Non-equity status was designed for those lawyers who were partner material, but for whatever reason, didn’t want to make the same investments as an “owner” of the firm. Most of the non-equity partners chose that status. For some, it was a transition as they got older to wind down their practice. For others, financial considerations were the key. Still others made a conscious lifestyle choice to not invest the same commitment (in time and capital) as equity partners.
The distinctions were primarily that equity shareholders had a capital investment in the firm; they voted on firm policies and a few other things. For all other appearances, publicly and internally, the partners were all treated the same. Non-equity partners also had the opportunity to move to the equity ranks if they wanted. To make equity partner, all you had to demonstrate was that you were “all in.” If you could show that, you would be elected an equity partner, unless you chose the non-equity status for whatever reason. That structure lasted, successfully, and was used for its intended purpose until the recession.
The differences in the structure changed—slowly and almost silently, and with unintended consequences. As with most firms in mid-2008 and 2009, we got hit by the recession. In mid-2009, I made partner. The recession was not crushing to us, but it made us rethink our firm structure, policies, and procedures (not unlike most firms at that time). We all remember (and always will) when the legal market began to change. Lawyers, firms, and legal professionals began to look internally to try to adjust to the changes. Firms, including mine, began looking for ways to weather the recession, including analyzing the partner structure and the productivity of each lawyer. Around the industry, attorneys began losing jobs, partners were being de-equitized, senior associates were being squeezed, and the advancement to partnership slowed dramatically.
The year that I was elected partner, the “partners” decided that all future partners would be made “non-equity” initially (with the exception of the male in our two-person partner class—but that’s a different article). At that time, no reasons were given for the change, other than a policy change. No indications were given of how to navigate to that now-second step of equity partnership. Although I was not the first partner to start off as non-equity, I was the exception up until that point, and I was given no explicit reason for the exception, except an unknown policy change. Since that time, I have remained as a non-equity shareholder. Other shareholders have risen out of the non-equity status to equity (all of whom made partner after me), but no one can tell me why I am still here, other than to emphasize to me how valuable and important I am to the firm. Confusing? Yes, it is to me, too.
In addition to the firm changing the partnership structure and providing little guidance on how to make it to the equity ranks, practice groups began instituting their own criteria, that differed from group to group. My practice group instituted the strictest criteria (which still are largely unknown to any of us in the group). And I got stuck here. The firm is now looking at the unintended consequences of the change in structure. Looking back, I realize that I should have done things differently… I ended up in non-equity purgatory because I didn’t do enough to look out for myself and advocate on my own behalf. The lesson I’ve learned is that if you want to make the equity ranks, don’t sit back and wait for things to happen.
I have three pieces of advice for those on the cusp of partnership who want to take that final step to the equity ranks:
- First, find out your firm’s criteria for the different types of classes in the partnership structure. Ask your partners and firm management how to get to the next level. Firms don’t always have clear-cut guidelines on how one advances to any different class after associate. If your firm does not have clear, written criteria, pester your other partners and firm management to give you guidelines, milestones, tips to get to equity partner. If your firm is like mine—good luck in getting that information. Make your firm set some structure, at least for you, so that you will know when it is time for you to be elevated to the next step. Because I was the first attorney to begin this new structure, and it was in the height of the recession, I don’t think anyone knew what my step would be—or even how the firm was going to implement this new policy. So, I did the wrong things, and sat and waited to learn whether I needed to do something that I wasn’t doing. All I ever heard was “keep doing what you are doing.” I should have pushed for more. I should have asked what I needed to do more of to make equity partner. I don’t know that the answer would have been different for me—but I should have tried, and so should you.
- Advocate for yourself, beginning on day one. No one at the firm is waiting to make you an equity partner. You need to tell the firm you are ready. Tell anyone who will listen how great you are. I made the mistake of assuming that I just needed to continue working hard and being a good lawyer, and I would make equity. I have never gotten anything but praise for my work and commitment to the firm. But, in the last five years, I have never asked the firm to put me up for equity. I just assumed they would. Don’t make the same assumption.
- Bring in work. As much as your firm may tell you that other stuff counts, it doesn’t. Business matters. A lot. I have learned that it is basically all that matters. I don’t have much in business generation. That is probably the real answer as to why I am not an equity partner. But, again, that was never an explicit requirement for equity partner. It was “all in”—some combination of fee credits, firm involvement, community involvement, and business generation. I thought that was still the standard. But, it’s not (although the firm won’t publicly take that position). So, I do a lot of mentoring of our young associates. I take care of existing clients, for which I know I may never get “credit,” because it is someone else’s client. I “share” origination credit for most matters I bring in. I do all of the things an equity partner does, except have stellar business generation numbers. So I am left in non-equity purgatory.
As I said, my firm is now re-evaluating the unintended consequences of our new partner structure. I hope I am the only person who has had to test the waters, but if I’m not, and you are in a place like me, don’t sit back and wait. Do something.
About the Author
N.E. Partner is the pseudonym of a shareholder at a successful mid-size U.S. law firm. Comments and questions on this article should be directed to @LawPracticeTips on Twitter.
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