Large law firm partnership models are changing.
An American Lawyer article reports that BakerHostetler (along with several others, including DLA Piper and Akin Gump) has shifted to an “all-equity” partnership model, leaving behind a two-tier partnership system. This doesn’t mean that all partners have full equity membership, however: it simply means that all partners have some equity, though a “significant number of partners are both firms . . . . still receive more than half their compensation in the form of fixed pay.
While the article (and a law firm consultant) recognizes that the shift gives all partners a stake in the firm that may eliminate an employee mentality among nonequity partners, this is the paragraph I found most interesting:
[Roger] Meltzer [co-chair of DLA Piper] also noted that DLA Piper raised more capital from the shift, with all partners required to make some contributions. “It creates more of an equity cushion,” said Meltzer, ho declined to specify how much capital was raised.
Read more here.
It’s no surprise that large firms continue to evaluate and tweak partnership models, but I’m not sure I’d be dancing just yet if I were a nonequity partner just granted a stake in the firm.