That time is long since gone.\u00a0Today, partners\u00a0change\u00a0firms like prize college athletes\u00a0willy-nilly transfer to\u00a0schools\u00a0offering\u00a0a better deal. Partners that don\u2019t\u00a0perform\u00a0are \u201cde-equitized\u201d and either demoted or asked to leave. And there is a new class of lawyers \u2014 the \u201cnonequity\u00a0\u201cpartner.\u00a0<\/p>\n
Nonequity partners\u00a0are PINOs \u2014 partners in name only. They typically don\u2019t share in profits and have no say in decision-making. They are in fact\u00a0employees\u00a0of firms, just like associates. The only benefit they get is the ability to hold themselves out as \u201cpartners\u201d to clients, itself a\u00a0sleight\u00a0of hand designed to make clients\u00a0think they are\u00a0getting\u00a0something they aren\u2019t, a\u00a0real\u00a0partner working on their case.<\/p>\n
Why\u00a0the\u00a0Nonequity?<\/strong><\/p>\n The profession, er, business, got into this in the great expansion of lawyers that began in the 80s.\u00a0All of\u00a0sudden, firms were faced with large classes of associates that were up for\u00a0partnership. They were also faced with more\u00a0distinctions\u00a0in talent within associate ranks. More than that, as the law became more of a business and less a profession, talent was\u00a0more and more defined as origination of business, profitability,\u00a0and hours worked.<\/p>\n There was less room for talented lawyers needed to work the cases who didn\u2019t necessarily have business\u00a0origination\u00a0skills.\u00a0But the law firms and equity partners thought they couldn\u2019t afford to lose these \u201cworker bees,\u201d as they called them. Hence a new category that cost the equity partners little.<\/p>\n And there was another factor. Since partners share profits, it stands\u00a0to reason that the fewer partners to share with, the greater the share to each. All of this culminated in the new nonequity class. Today, it\u00a0is\u00a0standard in most large law firms for there to be a large\u00a0group\u00a0of these\u00a0nonequity\u00a0partners \u2014 workers with little voice, who could be fired at will (even in today\u2019s times,\u00a0de-equitizing\u00a0an equity partner requires a bit of hard analysis), and who were expected to continue to work like associates to keep their heads above water.\u00a0<\/p>\n So\u00a0how\u2019s this idea working\u00a0out for the lawyers caught in the middle?<\/p>\n So,<\/strong>\u00a0<\/strong>How\u2019s<\/strong>\u00a0that Working Out for You?<\/strong><\/p>\n Equity partners would say\u00a0this is a good thing. It enables younger lawyers who can\u2019t quite meet partnership standards to not be\u00a0unilaterally\u00a0dumped into the job market. It assures them a continued job (at least\u00a0as long as\u00a0they perform). It enables the firm to keep the talent they need to\u00a0serve\u00a0the\u00a0clients.<\/p>\n But what do the\u00a0nonequity\u00a0partners have to say?\u00a0According\u00a0to a\u00a0recent article<\/a>,\u00a0in\u00a0a\u00a0flash\u00a0Law.com survey of 1,345 attorneys,\u00a0nonequity\u00a0partners\u00a0reported the lowest satisfaction scores on questions about compensation, their hourly rates, and their current role in their firms.\u00a0Associates\u00a0scored\u00a0better on\u00a0all of these categories.\u00a0<\/p>\n Think about that\u00a0paradox. It suggests that\u00a0associates\u00a0are more satisfied with their roles than the\u00a0nonequity\u00a0so-called partners.\u00a0Thanks for the promotion.<\/p>\n And\u00a0it\u2019s\u00a0easy to see why\u00a0nonequity partners aren\u2019t very happy. Nonequity partners are held to a higher standard\u00a0than associates. They are often expected to\u00a0manage\u00a0associates and their profitability but\u00a0may not get firm\u00a0financial\u00a0information to help them do that.\u00a0<\/p>\n They have little\u00a0authority\u00a0and get little\u00a0recognition\u00a0for their efforts. In many respects, they are treated like second-class citizens.\u00a0In many cases, they aren\u2019t allowed to sit in on partner meetings or if they are, may be asked to leave when financial or\u00a0important\u00a0issues are discussed.<\/p>\n One other surprising finding,\u00a0according to the article,\u00a0about a third of the sample are required to provide a capital contribution to receive this lofty status, just like equity partners. You\u00a0have to pay to be in the\u00a0club,\u00a0but you can\u2019t use the facilities.\u00a0You\u00a0have to pay for a promotion that feels like a demotion.<\/p>\n And it\u2019s getting worse as law firm mergers and lateral partners results in equity ranks being\u00a0increasingly\u00a0closed.\u00a0<\/p>\n For all these reasons, nonequity partnership isn\u2019t beloved by those forced into it. It\u2019s why the concept faced internal resistance when first proposed. It\u2019s also why equity partners kept pushing for it: the math works\u00a0for them.<\/p>\n The Impact of\u00a0Nonequity\u00a0<\/strong><\/p>\n However one views whether the nonequity distinction is good or bad, it\u2019s not going to change.\u00a0The real difficulty comes from thinking we are\u00a0living\u00a0in the\u00a0\u201conce upon time\u201d\u00a0days where there was a law firm culture and workplace family. It\u2019s long gone.<\/p>\n Management\u00a0has to\u00a0realize\u00a0more and more\u00a0professionals\u00a0in law firms are not happy. That dissatisfaction impacts productivity and law firm culture, if any such thing remains in today\u2019s \u201cit just business\u201d firm workplace.<\/p>\n The result:\u00a0just like equity partners, when nonequity partners aren\u2019t happy where they are, they are going to look elsewhere. With the advent of GenAI tools that\u00a0reduce the learning curve for all sorts of legal work, nonequity partners have more\u00a0opportunities\u00a0to either go out on their own (with the word partner on their resume) or with small firms.<\/p>\n So much for keeping talented lawyers needed to do the work who don\u2019t originate business.<\/p>\n The result is increased\u00a0volatility\u00a0in the marketplace all the way around.\u00a0There is less institutional\u00a0loyalty\u00a0and less\u00a0willingness to act for the good of the firm\u00a0for long-range planning and investment initiatives.<\/p>\n In today\u2019s world, law firms are just a business with players that make business decisions. Maybe that\u2019s a good thing since it reflects capitalism in its basic sense. But the notion of a law firm as a work family is long gone. Thinking that there are any remnants is a mistake for associates, nonequity partners,\u00a0equity partners, and law firm\u00a0management.\u00a0Just like law firms are a business, so are the\u00a0individuals\u00a0who work in it, who will also make business decisions.\u00a0<\/p>\n Want to keep nonequity partners? Better\u00a0take into account\u00a0how they view the whole concept.<\/p>\n Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes\u00a0TechLaw Crossroads<\/a>, a blog devoted to the examination of the tension between technology, the law, and the practice of law<\/strong><\/em>.<\/p>\n The post Nonequity Partners: It\u2019s Not Personal, It\u2019s Just Business<\/a> appeared first on Above the Law<\/a>.<\/p>\n Once upon a time, there were two classes of lawyers in law firms: partners and associates. The associates typically came\u00a0straight\u00a0out of law schools, worked for 5-7 years under the\u00a0tutelage\u00a0of the partners, and then\u00a0most of them became partners. The ones who\u00a0didn\u2019t would\u00a0often end up in-house as clients, so it behooved everyone to treat each other with some respect. The partners shared in the profits and decision-making and were\u00a0generally\u00a0at the firm of the rest of their career.<\/p>\n 2026 Law Firm Reality<\/strong><\/p>\n That time is long since gone.\u00a0Today, partners\u00a0change\u00a0firms like prize college athletes\u00a0willy-nilly transfer to\u00a0schools\u00a0offering\u00a0a better deal. Partners that don\u2019t\u00a0perform\u00a0are \u201cde-equitized\u201d and either demoted or asked to leave. And there is a new class of lawyers \u2014 the \u201cnonequity\u00a0\u201cpartner.\u00a0<\/p>\n Nonequity partners\u00a0are PINOs \u2014 partners in name only. They typically don\u2019t share in profits and have no say in decision-making. They are in fact\u00a0employees\u00a0of firms, just like associates. The only benefit they get is the ability to hold themselves out as \u201cpartners\u201d to clients, itself a\u00a0sleight\u00a0of hand designed to make clients\u00a0think they are\u00a0getting\u00a0something they aren\u2019t, a\u00a0real\u00a0partner working on their case.<\/p>\n Why\u00a0the\u00a0Nonequity?<\/strong><\/p>\n The profession, er, business, got into this in the great expansion of lawyers that began in the 80s.\u00a0All of\u00a0sudden, firms were faced with large classes of associates that were up for\u00a0partnership. They were also faced with more\u00a0distinctions\u00a0in talent within associate ranks. More than that, as the law became more of a business and less a profession, talent was\u00a0more and more defined as origination of business, profitability,\u00a0and hours worked.<\/p>\n There was less room for talented lawyers needed to work the cases who didn\u2019t necessarily have business\u00a0origination\u00a0skills.\u00a0But the law firms and equity partners thought they couldn\u2019t afford to lose these \u201cworker bees,\u201d as they called them. Hence a new category that cost the equity partners little.<\/p>\n And there was another factor. Since partners share profits, it stands\u00a0to reason that the fewer partners to share with, the greater the share to each. All of this culminated in the new nonequity class. Today, it\u00a0is\u00a0standard in most large law firms for there to be a large\u00a0group\u00a0of these\u00a0nonequity\u00a0partners \u2014 workers with little voice, who could be fired at will (even in today\u2019s times,\u00a0de-equitizing\u00a0an equity partner requires a bit of hard analysis), and who were expected to continue to work like associates to keep their heads above water.\u00a0<\/p>\n So\u00a0how\u2019s this idea working\u00a0out for the lawyers caught in the middle?<\/p>\n So,<\/strong>How\u2019s<\/strong>\u00a0that Working Out for You?<\/strong><\/p>\n Equity partners would say\u00a0this is a good thing. It enables younger lawyers who can\u2019t quite meet partnership standards to not be\u00a0unilaterally\u00a0dumped into the job market. It assures them a continued job (at least\u00a0as long as\u00a0they perform). It enables the firm to keep the talent they need to\u00a0serve\u00a0the\u00a0clients.<\/p>\n
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