When someone becomes an equity partner in a law firm, he or she becomes an owner of an institution that has a substantial value — certainly greater value than is demonstrated on a cash basis balance sheet. Yet the majority of U.S. law firms admit partners with little or no requirement that they make a purchase of the firm’s capital assets.

Apparently, the theory is that associates labored in the vineyards for a period of years and have earned their right to participate in the fruits of their labors. That may have made sense when the current law firm model evolved in the 1970s and associates worked for comparatively low wages in exchange for a shot at the brass ring of partnership.