Source: Adam Smith Esq, Bruce
In a move that signals the end of an era, Cleary Gottlieb has officially abandoned its single-tier partnership structure, embracing the two-tier model that now dominates Big Law. This decision, announced on October 15, 2024, leaves only a dozen single-tier firms in the AmLaw 200, a stark contrast to the recent past when all 200 firms adhered to this model.
Michael Gerstenzang, Cleary’s managing partner, framed the shift as a response to industry-wide “innovation and adaptation.” He emphasised, “The principal focus here is to allow associates to be promoted to non-equity partner with the goal of having them then take advantage of development opportunities and demonstrate professional development so that we can promote them to equity partners.”
The numbers paint a clear picture: non-equity partners are on a steep upward trajectory, while equity partner numbers remain flat. Industry analysts predict non-equity partners will soon outnumber their equity counterparts, fundamentally altering law firm dynamics.
This trend raises provocative questions about the nature of partnership in the legal profession. As one industry observer noted, “How could we all have adopted the transparently obvious delusion that any kind of ‘two-tier’ professional workforce was entirely, boringly, normal and business-as-usual and not see it as bizarre, bordering on hallucinatory?” Such stratified structures are indeed rare in other professional sectors.
Despite claims that the move isn’t about “talent leverage,” economic imperatives are evident. When asked about offering up to $20 million for a lateral partner, Gerstenzang admitted the firm would consider it “for the right candidate,” underscoring the fierce competition for top legal talent.
The two-tier system offers several advantages:
- Clearer career progression for associates
- Enhanced recruiting and retention
- Greater flexibility in recognizing high performers
- Faster firm expansion
- Potential for increased profits per equity partner
However, it also raises concerns about creating a second-class tier of partners and potentially diluting the partnership ethos.
As law firms evolve in response to market pressures and changing client demands, Cleary Gottlieb’s shift serves as a poignant reminder of the legal industry’s ongoing transformation. The death of the single-tier partnership model at this prestigious firm marks a significant milestone in the profession’s journey towards more complex, stratified structures.
In embracing this change, Cleary Gottlieb exemplifies the industry’s willingness to adapt, even at the cost of long-held traditions. As the legal world watches this transition unfold, it’s clear that the partnership models of tomorrow will look vastly different from those of yesterday, reshaping the career trajectories and aspirations of lawyers for generations to come.
Read more: Adam Smith Esq, Bruce
