A salaried partner approaches the equity partnership
Over 2,000 legal staff, so far, have spilt the beans in RollOnFriday's Best Law Firms to Work At 2023 survey. If you're in private practice, have your say in the form below.
Partners have been airing their views, with some of their biggest gripes arising over pay.
A number of them have been complaining about the size of the carrot dangled to entice new joiners. "Frustrating that external candidates often seem to join the firm on enhanced packages greater than those of people already at the firm," said a Clarke Willmott partner.
An Irwin Mitchell partner voiced the same concern: "If you work your way up you are always treated less favourably than lateral hires. We know it happens but the disparity is staggering." However, a fellow Irwin Mitchell partner said that while pay was not market-leading, it "would be "churlish to complain, not least as a couple of my best friends work for the NHS and they would murder me." She added: "There is also something reassuring, in the current economic climate, about being a cheap partner."
An Addleshaw Goddard partner was not impressed with the calibre of their new peers: "some of the firm's recent lateral hires, are inexplicable."
Salaried partners at some firms noted the gap in pay compared with those in the rung above.
"The equity partners' salary review committee seem to give huge amounts to themselves and the Management Board, most of whom don't deserve the remuneration they receive, and less to those who do the work and bring in the revenue," said a HFW salaried partner, "Turkeys and Christmas."
Another HFW partner agreed: "I appear to be working to make equity partners richer".
A DWF partner was equally unimpressed with the distribution at their shop: "The big bosses took enormous bonuses and told everyone else there wasn’t enough money in the pot to pay any bonuses out," while the firm's "junior lawyers and support staff" received "below market pay."
Another partner at the firm commented that "the fact the members took a 19% profit increase in 2020/21 when much of the firm took a 20% pay cut (which wasn't paid back) has not been forgotten."
At Eversheds Sutherland, there were grumbles about the pay imbalance between offices, as one partner said the firm's regional offices are now "being charged out at London hourly rates but told that regional pay levels will be retained."
A Penningtons Manches partner believed that poor pay for junior staff was having a knock-on effect: "associates are getting picked off by other London law firms due to inadequate pay."
At the happier end of the scale, Gunnercooke partners seem satisfied with their 'eat what you kill' deal. "You take home most of what you bill, so its up to you how much you get paid," said one. Another agreed: "The consultant model comes with risk but the opportunities are huge. I work a lot less and earn a lot more compared to my last outfit (which was no Scrooge by any stretch)."
At other firms, partners felt pay wasn't everything. "I could get paid a lot more at another firm," said a Clifford Chance partner, "But I would lose a lot of things that make my life better. And I do still get paid enormously well".
At Osborne Clarke, one partner said: "Clearly there are firms where you could sign your life away and get paid more. And there are firms where you can work less and get paid less," but "it's a personal decision about what you want from your life / career."
A Bird & Bird partner said that they sometimes consider leaving when they see "how much people at Goodwin get paid", but "then I see how deprived of vitamin D they are, and I think again."
At Ropes & Gray, a partner believed they "could move somewhere else for more pay" but "the level of idiots/horrid people and amount of politics" would "almost certainly...increase". Putting it in perspective, they added: "I earn (and have earned from first qualifying) more than any member of my family / any person with whom I grew up - I am extremely lucky." Another partner at the firm agreed that pay was excellent, "without the dire culture at some of the other elite US firms."
A TLT partner was proud of how the firm looked after its people, saying TLT "works hard to try and fairly reward its staff and support them during the current cost of living crisis" - other firms have also dipped into their pockets with varying degrees of generosity.
Comments
"Another HFW partner agreed: "I appear to be working to make equity partners richer"."
It's slightly concerning that this person appears to have reached salaried partner level and is only now realising that is exactly how law firms are designed to work. We, the peons, work to make money for the partners. It has always been and will always be thus.
I daresay if/when they make it to equity, they won't be complaining!
The comments of the DWF salaried partners (bonuses for the big bosses and pay cuts for the rest) certainly resonate with our firm.
We all know that, thanks to furlough grants, vat deferrals, Sunak’s stamp duty holiday, and redundancies, lots of law firms had a very, very profitable pandemic.
Our two senior partners hold their shares through service companies. The accounts are micro, so don’t include a profit and loss, but for the last two years they show massive increases in capital and reserves. But the real give away is the creditors figure, most of which is down to Corporation tax. That allows you to make a pretty good estimate of the profit figure. It’s huge!
Any chance of sharing equity? Don’t make me laugh. All the talk now is about recession, belt tightening and the hard times ahead. Oh. They also want to pay themselves an increased rent for the offices.
It seems to have come as a surprise to many non equity partners that the people who actually own the businesses they work for want to make as much money as they can out of it whilst paying others just enough to keep them there in line with the markets they work in. Of course, if a salaried partner is made up then I am sure they would be all for reducing their equity share and paying more out to the non salaried partners and associates by way of the egalitarian approach they currently suggest. Of course. No doubt that about that at all.
A few graduates from the Musk School of Management on here it seems.
Speaking as an equity partner the issue for me is whether the owners want:
1 A happy, motivated work force who feel they are appreciated and well rewarded and who will help the business through the next couple of years and into the future: or
2. A disgruntled band of salaried partners who are so fed up that they do the barest minimum required. Especially when those people often hold management positions themselves and no doubt their discontent and lack of genuine interest will communicate itself to members of their teams.
Surely there’s a balance to be found between what owners may regard as a fair reward, but which others will just see as greed?
Salaries have shot up and there’s about to be a massive recession.
Which means some equity partners in badly run firms are likely to get no pay this year.
Will that make you happy?
Part of the issue is the mainstream legal press congratulating firms for increasing PEP. That encourages firms to keep the pool of equity partners small and to put all the cash there to get a nice write up in The Lawyer while the minions (and I'm including salaried partners in that) work harder and harder.
The main issue is regional pay in firms with a London office. It gives a contrast that leaves a bad taste in the mouth of those who bill similar to London but receive much less. Although there is the argument about London's higher cost of living, people in high cost cities note the disparity is unfair. For example the likes of Bristol and Edinburgh are not cheap cities to live in yet fall under regional pay bands similar to Birmingham, Cardiff and Leeds.
PMSL that The Lawyer is now responsible for the greed of some equity partners.
Down with the MSM! 😂
Re: laterals - in my experience the ones that come in on big money are under huge pressure and are usually out the door within 3 years. Very rarely have I seen the ‘rainmaker’ lateral truly pay-off. Even the ones who do succeed inevitably leave for more money, again.
What is the point of a regional office if they actually bill at London rates?
That HFW salaried partner's comment about "Turkeys and Christmas"...isn't the situation they describe the complete opposite of that?
DWF and HFW demonstrating the flaw in Kamikwasi and Trussenomics ..... trickle down doesn't happen if those at the top can avoid it
Absolute nonsense that regional offices charge London rates. That defeats the object.
No sane client will pay London rates for a firm in the sticks, whether or not they have a city office. It would be entirely uncompetitive and destroy the business models for these operations which is to offer cheap and low cost offerings in the regions to get the big ticket work in the city. The guideline rates for litigation matters are all different anyway for central London versus eg the north or south west.
'Dire culture at other US firms'. Name and shame please. Interested to know
An Addleshaw Goddard partner was not impressed with the calibre of their new peers: "some of the firm's recent lateral hires, are inexplicable."
Speaking as a Managing Associate at AG, I'd completely agree with this. Some very weird lateral hires have been made over the past year.
@Anonymous 18 November 16:02
At DWF its the Associates who make the money and the partners who pocket it. It's gravity-defying trickle up, rather than trickle down.
Addleshaws shovelling money to get laterals to come across.
Not surprised there’s jealousy.
@@ DWF Associate 19 November 22 16:27
If you're only realising that associates exist to gain profits for partners then you might need to learn a bit more about the industry.
Especially when you work for a firm that exists for partners and shareholders where the partners hold a huge number of shares and have done for about 3 or 4 years.
Either get promoted to the partnership or leave.
Tbh there is a lot of jealousy at AG at the laterals.
Senior, non partner, types having to leave in droves as laterals come in on massive pay packets, blocking promotions for internal candidates and then they still fail to bring in the clients they promised.
@Seeker 18 November 22 20:26
Paul Hastings certainly springs to mind. I would say it has a dire culture, but actually there isn’t really any culture in London at all, just a highly toxic environment with a bunch of disparate bolted-on lateral teams all doing there own separate thing.