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The decision at Shearman & Sterling to de-equitize some partners is making headlines. It fits into a broader trend of Am Law 200 firms becoming increasingly reliant on salaried partners. ALM Intelligence analysis reveals, since FY10, the compound annual growth rate (CAGR) in number of non-equity partners (defined as those who receive more than half their compensation on a fixed-income basis) has eclipsed that of equity partners within every level of the Am Law 200 (Figure 1).

While the percentage of firms with single tier partnership structures versus those with two-tier structures has remained relatively static in recent years, in terms of raw headcount, the growth in non-equity partners has far exceeded those in the equity class. In FY15, there were 21,089 non-equity partners and 29,523 equity partners across the entire Am Law 200, compared to 17,726 non-equity partners and 28,712 equity partners in FY10. The disparity in growth is most apparent with firms in the second hundred of the Am Law rankings. Since FY10, they have seen negative growth in equity partners while increasing their non-equity ranks between 2% to 3%.

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