Long time fan of your content, but I think this piece misses the mark.
"being a biglaw partner ain't what it used to be"
From an outsider perspective, this is true. It is better. Between 2019 and 2023, PPEP increased at all of the top 50 law firms. PPEP outpaced inflation at 47 of these 50 (and the 3 that didn't? All UK firms, and all involved in scandals during this period). In fact, total PPEP among the top 50 increased by 46% during this time, compared to cumulative inflation totaling 19% for the same period. Furthermore, the number of equity partners at the top 50 law firms increased by 420 people, with 33 firms adding equity partners during this period.
These results are even more startling considering 2019-2023 coincided with the greatest societal and economic crisis the world has faced in over a decade.
You are right that the median equity partner is a fictitious concept. However, while I don't know the intrafirm profit split, nor do I have any insider knowledge of biglaw, I would guess that there are three forces that essentially enforce a floor on the lower bounds of the intrafirm PPEP distribution:
1. Internal pressure within the partnership.
Wouldn't the partnership look unfavorably upon partners who continually underperform vs. the median PPEP data, forcing those partners to bring in more business or leave?
2. Lateral hiring environment.
If partners are not able to generate sufficient profit at firm A, is it not possible for them to switch to a firm where they might be able to generate higher revenue for the firm and profit for themselves?
3. The Big Law associate salary scale.
Doesn't PPEP exceed any associate salary, which gives people transparency on an absolute lower bound at approximately $550,000?
So, being a big law partner is incredibly lucrative. Even at my dubious, theoretical absolute lower bound of $550k, a top 50 lawfirm partner would be in the 100th percentile of incomes in the US. They would earn more than 9 times greater than the average American salary (a figure that is itself skewed by the likes of biglaw partners). Is it "worth" playing a lottery where half a million dollars per year is a bad outcome? It's not even really a lottery, because your ability to win clients and do good work for them is rewarded with more profit.
This brings me to a more important point, an implicit conflation of income and worth. Your article touches on it, but surely the question new/soon-to-be grads should ask themselves is whether the anxiety of the rat-race is going to be worth it to their mental (and physical health). I know that this is the focus of a lot of your content, and I am incredibly appreciative of it. However, a piece like this, lamenting the un-safety, or un-stability, or un-practicality of biglaw compensation feels so out of touch.
Lastly, I agree with the point you made regarding interfirm PPEP. That 19x gap you pointed to is startling, but what I find even more surprising is how the inequality has grown. I calculated the gini coefficients for the top 100 law firms PPEP data in both 2019 and 2023, assuming all law firm partners made the average PPEP of their respective firm. In 2019 that number was 0.352, roughly equivalent to the income inequality in Spain. In 2023, the figure grew to 0.42, closer to the likes of Argentina. In itself, this might not be the most troubling result - more talented lawyers surely win and retain more clients. However, it would be interesting to hear your perspective on whether high powered firms are doing more to stifle competition, for labour and clients, creating an increasingly stratified system.
Love this entry, and this makes me even more excited for your novel.
Hi Cece,
Long time fan of your content, but I think this piece misses the mark.
"being a biglaw partner ain't what it used to be"
From an outsider perspective, this is true. It is better. Between 2019 and 2023, PPEP increased at all of the top 50 law firms. PPEP outpaced inflation at 47 of these 50 (and the 3 that didn't? All UK firms, and all involved in scandals during this period). In fact, total PPEP among the top 50 increased by 46% during this time, compared to cumulative inflation totaling 19% for the same period. Furthermore, the number of equity partners at the top 50 law firms increased by 420 people, with 33 firms adding equity partners during this period.
These results are even more startling considering 2019-2023 coincided with the greatest societal and economic crisis the world has faced in over a decade.
You are right that the median equity partner is a fictitious concept. However, while I don't know the intrafirm profit split, nor do I have any insider knowledge of biglaw, I would guess that there are three forces that essentially enforce a floor on the lower bounds of the intrafirm PPEP distribution:
1. Internal pressure within the partnership.
Wouldn't the partnership look unfavorably upon partners who continually underperform vs. the median PPEP data, forcing those partners to bring in more business or leave?
2. Lateral hiring environment.
If partners are not able to generate sufficient profit at firm A, is it not possible for them to switch to a firm where they might be able to generate higher revenue for the firm and profit for themselves?
3. The Big Law associate salary scale.
Doesn't PPEP exceed any associate salary, which gives people transparency on an absolute lower bound at approximately $550,000?
So, being a big law partner is incredibly lucrative. Even at my dubious, theoretical absolute lower bound of $550k, a top 50 lawfirm partner would be in the 100th percentile of incomes in the US. They would earn more than 9 times greater than the average American salary (a figure that is itself skewed by the likes of biglaw partners). Is it "worth" playing a lottery where half a million dollars per year is a bad outcome? It's not even really a lottery, because your ability to win clients and do good work for them is rewarded with more profit.
This brings me to a more important point, an implicit conflation of income and worth. Your article touches on it, but surely the question new/soon-to-be grads should ask themselves is whether the anxiety of the rat-race is going to be worth it to their mental (and physical health). I know that this is the focus of a lot of your content, and I am incredibly appreciative of it. However, a piece like this, lamenting the un-safety, or un-stability, or un-practicality of biglaw compensation feels so out of touch.
Lastly, I agree with the point you made regarding interfirm PPEP. That 19x gap you pointed to is startling, but what I find even more surprising is how the inequality has grown. I calculated the gini coefficients for the top 100 law firms PPEP data in both 2019 and 2023, assuming all law firm partners made the average PPEP of their respective firm. In 2019 that number was 0.352, roughly equivalent to the income inequality in Spain. In 2023, the figure grew to 0.42, closer to the likes of Argentina. In itself, this might not be the most troubling result - more talented lawyers surely win and retain more clients. However, it would be interesting to hear your perspective on whether high powered firms are doing more to stifle competition, for labour and clients, creating an increasingly stratified system.
I would love to hear your thoughts.
Thanks