The traditional law firm. Composed of partners: the firm owners who toiled in the associate vineyards for several years and who were ultimately rewarded with the brass ring. A partnership, a piece of the ownership of the firm. A piece of security that tied you to the firm and your partners. On the other side were the associates—those who worked hard toward partnership and the security it brought.
But this model and accompanying culture is changing before our eyes, especially in Big Law (if it hasn’t already). More and more, law firms are moving away from the idyllic cultural-centric guild they view themselves as and toward a corporate model. A model where there are only a few owners, and the rest are mere employees. And this change has profound repercussions on what it means to be a lawyer in a big law firm.
A recent analysis of data collected by ALM Intelligence shows that in 81 of the 151 firms surveyed (well over half), membership in nonequity partnership tiers grew in 2020. Fifty-one saw growth of more than 5% in the nonequity level. This trend was particularly pronounced among the Am Law 50. The nonequity partner tier grew at dozens of large law firms, while far fewer firms shrank their nonequity tier. (For a good discussion of these results, see this recent article byLizzy McLellan and Christine Simmons.
The ranks of nonequity partners (employees) continue to swell while the ranks of equity partners (owners) may be shrinking
The ranks of nonequity partners (employees) continue to swell while the ranks of equity partners (owners) may be shrinking. This trend could signal a new norm: progression from associate to nonequity partner may become the endpoint for many.
The move toward more nonequity partners and fewer owners could have serious repercussions. From a governance standpoint, consensus decision making might become easier among a smaller number of like-minded equity owners. This smaller group of owners will, by definition, be the outperformers. As Kent Zimmermann and Peter Zeughauser recently put it in an article on law firm performance:
“The Outperformers generally prioritize and manage to the interests of the high-performing partners in their firm. This starts with the recognition that high-performers usually want to practice with other high-performers. This creates a more satisfying experience and an advantage in attracting and retaining sought-after lawyers, clients, and matters.”
Small groups of owners all with similar views of the world and how to conduct the business could actually lead to poorer decision-making
But this comes at a price: the breadth of viewpoints that the old model with more real partners encouraged will be gone. Small groups of owners all with similar views of the world and how to conduct the business could actually lead to poorer decision-making, especially when views of those with different and diverse interests are ignored. And, of course, it can not be ignored that thus far most of law firm outperformers are white and male.
And let’s face it, one of the key desired benefits of partnership, independence, will soon be a vanishing ideal for significant numbers of lawyers. The loss of autonomy and control among large numbers will undoubtedly change law firm culture and even the desire to continue to climb the career ladder.
And what does it do to firm loyalty when most of the firm’s lawyers aren’t owners but simply employees?
And what does it do to firm loyalty when most of the firm’s lawyers aren’t owners but simply employees? As a business model, it may make sense. But we can’t pretend the old collegial law firm model with its esteemed culture will be the same when most of the people there are mere employees, not owners.
Whatever the ramifications, suffice it to say that big law firms will start to look more and more like corporations than traditional law firms. That may be better, but it will undoubtedly be different. We can’t pretend that the old guild system and society that ruled law firms for so long will survive. Law firms are businesses pure and simple.