Non-Equity Partner Leverage

Another post for those of you considering Big Law. 

Bruce MacEwen of the Adam Smith, Esq. blog weighs in on the subject of leverage by focussing on Big Law’s non-equity partner ranks.   His post was prompted, in part, by the one I linked to in my previous post on law firm leverage.  See the last paragraph of my prior post for why you should care about leverage.   

MacEwen includes a table of the firms with the highest and lowest ratios of equity to non-equity partners and a chart that demonstrates that non-equity partners are systematically among the least productive lawyers at firms.  

His conclusion (other than the obvious fact that the non-equity tier represents the most expensive kind of leverage there is): 

Those with de minimis or non-existent non-equity ranks all share “an unusually high combination of cultural cohesion and readily articulable strategy. . . . [E]ach of those firms . . . stand[s] for something, and      . . . achieving partnership there is dependent on several dimensions beyond that of being a mighty rainmaker.”  As for those firms with ratios greater than 1, “it must be said of that group that their strategies are extremely diverse and, in some cases, as yet unproven.  Additionally, many of the firms in that group have high proportions of relatively new lateral partners.”

He suggests that firms ought to be looking at “deleveraging” in this area and rethinking the two-tiered partnership structure.