Source: Financial Times
Decades ago, Kirkland & Ellis pioneered a radical departure from legal tradition: promoting lawyers to “partner” without granting them an ownership stake in the firm. What critics dismissed as “handing out” partnership “like candy” has now become the industry standard, fundamentally reshaping Big Law.
The Revolution Spreads
As Kirkland rose to become the world’s highest-grossing law firm with nearly $9 billion in revenues, competitors took notice. Today, 87 of the 100 largest law firms have adopted salaried partner structures. Even prestigious holdouts like Debevoise & Plimpton, Paul Weiss, and Cravath, Swaine & Moore have capitulated in recent years.
“The now near-universal adoption of the non-equity partner tier is part of the ‘Kirklandisation’ of Big Law,” says Scott Gibson of legal recruitment consultancy Edwards Gibson.
The Economics
The financial incentives are compelling. Non-equity partners receive the prestige of the partnership title and higher billing rates while preserving the profit pool for equity-holding partners. It’s “a leverage play,” explains one global firm partner. “There’s a tier of hundreds of lawyers who are not eating into the profits of the equity partners—in fact they’re adding to the profits.”
The pay differential is stark. Equity partners average $1.9 million compared to $558,000 for non-equity colleagues. At Kirkland, the gap is even wider: salaried partners earn about $750,000 while equity partners average $9.3 million.
Strategic Benefits
The model allows firms to poach rivals’ talent by offering partnership status at younger ages, enables expansion without diluting equity partners’ profit shares, and shifts costs to non-equity partners for benefits like social security contributions.
Resistance and Legal Challenges
Not everyone embraces the trend. Last year, a non-equity partner at Duane Morris sued the firm, alleging salaried partners “are in fact employees” but were denied benefits. Her lawyer argued the model “takes advantage of a lawyer’s dream of climbing the ladder, while shifting costs away from those who have actual ownership.”
Some firms resist: A&O Shearman phased out its non-equity tier, while Slaughter and May maintains its traditional all-equity model. But market pressure makes adoption increasingly inevitable. “Once everyone has it, you’re too at risk of people being poached,” noted one US lawyer.
The New Reality
For young lawyers, partnership titles come easier but true financial partnership remains elusive. The traditional clear path to partnership has been replaced by a complex, multi-tiered system.
Kirkland’s innovation has permanently altered elite legal practice. In an industry steeped in tradition, one firm’s willingness to challenge convention has reshaped how the world’s most prestigious law firms operate and compete.
Read More: Financial Times
