Communications in Law Firms - Partners w/o Equity and Compensation w/o Transparency

March 12, 2024 had been a big day of announcements for law firm Paul, Weiss. 

Yes, there was the financial performance: There were revenue growth - up 10.9% to $2 billion - and record Profit Per Equity Partner to $6.5 million. 

In addition, Paul, Weiss indicated two major shifts in policy. Some of it comes down to how the firm communicates. 

NONEQUITY PARTNER TIER

One is the introduction of the nonequity partner tier. Essentially that is a tool for law firms to retain experienced lawyers. It provides the title which can prevent them from doing a lateral as an associate and can give them a shot at becoming an equity partner. 

Increasingly, especially with AI, junior lawyers are creating less value for the law firm. The tasks they do - and senior lawyers have to carefully monitor them as they perform that kind of low-value work - are ripe for automation. Just consider document review.

A sign of these times of reduced demand for the raw untrained newbie lawyer could be the smaller summer class. It has hit an 11-year low. 

But, as I point out in short short fiction, the NEP tier is controversial. Some contend the seasoned lawyer can earn more if they continued as an associate and lateraled. If they took that route they probably could duck taking on so many administrative tasks. 

There is also the reality that the NEP is not necessarily the path to equity partner. 

Pile on that the sense at some firms that the NEP is treated internally as "less than." The equity partners might be invited to the gala retreat and the NEPs have to stay home.

Yes, they can be terminated. There is no job security. 

BLACK BOX COMPENSATION 

Karp also announced the creation of a black box approach for partner compensation. The iconic model for that is Jones Day. Yes, like the NEP, it is also controversial. 

Theoretically keeping the compensation package confidential  prevents an obsessive focus on and resentment about what others in the firm are earning compared to you. That supposedly frees up partners to, monk-like, focus on the vocation of serving the law and clients. 

In reality, though, partners can connect the dots about what they are earning, what they assume they deserve and what is market if they tap into their contacts with other lawyers at other firms. Then they can find out what those other lawyers are pulling down. Over the years, on professional anonymous networks such as Glassdoor there have been discussions about doing just that. If the compensation didn't measure up to what is going on elsewhere the lawyers left.

Therefore, the objective of the lack of transparency as a tool for eliminating internal conflict about who's earning the bigger bucks and who isn't really might not make sense. The ambitious make it their business to ferret out what is going on in the market. 

In my coaching practice I guide clients to decode the language used by those with the power over how they make a living. 

In most cases you have only one shot in communications. Jane Genova is a communications coach and content-creator. Complimentary consultation (please text 203-468-8579 or email janegenova374@gmail.com)


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