X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

While the Am Law 100 reports are still being racked and stacked, one dynamic is already clear: 2018 witnessed little movement in the number of equity partners while their compensation (profits per equity partner) grew strongly; conversely, nonequity partner numbers grew strongly while their compensation was flat. This continues a trend going back over a decade that has been especially pronounced since 2010. To be clear, this is not an artifact of middle and lower tier firms—the data shown are for the 50 most-profitable firms in this year’s Am Law 100.

Law firm traditionalists will decry this dynamic as an erosion of the implicit social contract between firms and their senior lawyers and would-be equity partners. I see it differently: It’s evidence of law firm leaders coming to grips with market reality and managing through the constraints of outmoded traditions.

Following the onset of the global financial crisis in 2008, law firms diddled for a couple of years. This was entirely rational; after the market busts of 1991 and 2000, business returned to rude health in just 12 to 18 months. Alas, not this time. By 2010, it was clear there’d been a permanent shift. Clients were exercising their smarts and their muscle—they moved away from one-stop-shop sourcing from “house” firms to best-of-breed sourcing across many firms; they bulked up their legal departments to take more work in-house; they pushed more work to low-cost and nontraditional providers. They also availed of the shift in market power created by firms rushing headlong into each other’s markets—both practice-wise and geographically (especially New York and London). These moves intensified firm-vs.-firm competition, thereby dampening billing rate increases and enabling clients to achieve ever steeper discounts.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at customercare@alm.com

 

You Can't Manage It If You Don't Measure It

How are you illustrating differentiation to clients and potential lateral targets? How are you measuring performance against peers? Use Legal Compass to benchmark a firm against its competitors, unearthing unique insights about performance, partner retention, market penetration and more. Click to log in, or begin your free trial.

Get More Information
 

The Asia Legal Awards 2020Event

Where the region's top lawyers, law firms and in-house teams will gather to celebrate their most stellar achievements of the year.

Get More Information
 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.