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.
Thanks for this thoughtful comment! I certainly agree that Biglaw partners make much more than the average American--and I state as such--but I do think the "floor" forces you cite are missing key considerations:
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?
[In a lockstep system, absolutely. A previous vision of partnership acknowledged that some partners were better at selling, some were better at lawyering, and some were better at administrating--and all would have been compensated equally if they were of the same seniority. But what happened is Biglaw firms started valuing the "sellers" more, because they bring in more direct revenue. And if you're a partner who does bring a lot of value to the firm--just not in selling legal services--you won't necessarily get asked to bring in more business or leave; you might just get your comp decreased for as long as you're willing to take it. There's nothing inherently wrong with this system, but it is a marked departure from how partners used to be compensated, and it's way less of a "partnership" than the name would suggest.]
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?
[This is an example of "everywhere you go, there you are." Switching firms theoretically could lead to greater revenue generation opportunities if the reason you couldn't generate revenue at your old firm was due to (a) the firm's policies limiting your business development in some way (sector, rates, etc.) or (b) not having a partner ready to give you their book of business when they retire. But absent those circumstances, even if you switch firms, you're going to have to start selling. You can sell at your old firm, or sell at your new--but you have to learn to sell. If you're uncomfortable with selling or didn't develop your sales skills as an associate (because you were too busy billing hours and believed the partners who told you that you didn't need to worry about building a book of business as an associate), then you have a tough road ahead, no matter which firm you're at.]
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?
[No. The AmLaw 98 firm has a PPEP of $394,000, which is below the top of the known associate salary scale. Biglaw is notoriously "up or out," which means a firm won't honor the associate salary scale after a certain point--if they want you out, they'll signal that to you, usually through lowering your comp. Some Biglaw firms don't even honor the associate salary scale after the first few years, and there's nothing you can do about it regardless of whether you're an associate or partner except (a) take it or (b) leave. I spoke with a junior partner who was making less than I did as a fourth-year associate when they first became partner.]
I wrote this piece because my parents, and my schools, and partners themselves downplayed the importance of being able to win clients or be business-oriented as a lawyer. We understand that Biglaw is a lottery of sorts, as you point out, but we also were led to believe that the lottery could be won through simply doing good work. And that was the case in the past, which further bolsters this conception. I agree that Biglaw is, relative to other jobs, safe, stable, and practical--but I also believe it is less safe, less stable, and less practical than we were told. All discussions about Biglaw culture can be seen as "out of touch," really, but I still think these discussions are worth raising to a particular audience (i.e., those hoping to become Biglaw partners because they think it will enable them to have the lifestyles depicted in Suits). I'm not lamenting the lack of safety, stability, or practicality of Biglaw partnership--but rather the ways the existing powers-that-be obscure the realities of Biglaw partnership and what is important in partnership advancement.
The gini coefficients you've calculated are a great example of what I find troubling in conjunction with the downplaying of client development to associates. I'd push back against your contention that "more talented lawyers surely win and retain more clients," though--if partnerships value "sellers" more, they also implicitly value intergenerational wealth and the relationships that come from intergenerational wealth more. The associate who grew up with children of Fortune 500 CEOs will walk into any Biglaw firm more partner-ready than the associate who is first-gen. In fact, partnerships will have more of an incentive to promote associates who are worse lawyers but have better relationships with potential clients. I spoke with a partner who told me: "We used to expect A+ lawyering from partners; now, it's probably better for partners to be B+ lawyers but A+ salesmen." However true, this was particularly disheartening for me to hear after years of believing in the American Dream and the legal profession as a meritocracy. I also do think Biglaw partnerships now have incentives to do worse legal work for clients because of how capitalistic and "eat what you kill" partnerships have gotten--but given the length of this comment already, that is an essay for another day (and will be in the book!).
Thank you for the thoughtful response! I really appreciate the insider perspective, and think I now have a much better understanding of the problem you're describing.
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
Thanks for this thoughtful comment! I certainly agree that Biglaw partners make much more than the average American--and I state as such--but I do think the "floor" forces you cite are missing key considerations:
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?
[In a lockstep system, absolutely. A previous vision of partnership acknowledged that some partners were better at selling, some were better at lawyering, and some were better at administrating--and all would have been compensated equally if they were of the same seniority. But what happened is Biglaw firms started valuing the "sellers" more, because they bring in more direct revenue. And if you're a partner who does bring a lot of value to the firm--just not in selling legal services--you won't necessarily get asked to bring in more business or leave; you might just get your comp decreased for as long as you're willing to take it. There's nothing inherently wrong with this system, but it is a marked departure from how partners used to be compensated, and it's way less of a "partnership" than the name would suggest.]
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?
[This is an example of "everywhere you go, there you are." Switching firms theoretically could lead to greater revenue generation opportunities if the reason you couldn't generate revenue at your old firm was due to (a) the firm's policies limiting your business development in some way (sector, rates, etc.) or (b) not having a partner ready to give you their book of business when they retire. But absent those circumstances, even if you switch firms, you're going to have to start selling. You can sell at your old firm, or sell at your new--but you have to learn to sell. If you're uncomfortable with selling or didn't develop your sales skills as an associate (because you were too busy billing hours and believed the partners who told you that you didn't need to worry about building a book of business as an associate), then you have a tough road ahead, no matter which firm you're at.]
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?
[No. The AmLaw 98 firm has a PPEP of $394,000, which is below the top of the known associate salary scale. Biglaw is notoriously "up or out," which means a firm won't honor the associate salary scale after a certain point--if they want you out, they'll signal that to you, usually through lowering your comp. Some Biglaw firms don't even honor the associate salary scale after the first few years, and there's nothing you can do about it regardless of whether you're an associate or partner except (a) take it or (b) leave. I spoke with a junior partner who was making less than I did as a fourth-year associate when they first became partner.]
I wrote this piece because my parents, and my schools, and partners themselves downplayed the importance of being able to win clients or be business-oriented as a lawyer. We understand that Biglaw is a lottery of sorts, as you point out, but we also were led to believe that the lottery could be won through simply doing good work. And that was the case in the past, which further bolsters this conception. I agree that Biglaw is, relative to other jobs, safe, stable, and practical--but I also believe it is less safe, less stable, and less practical than we were told. All discussions about Biglaw culture can be seen as "out of touch," really, but I still think these discussions are worth raising to a particular audience (i.e., those hoping to become Biglaw partners because they think it will enable them to have the lifestyles depicted in Suits). I'm not lamenting the lack of safety, stability, or practicality of Biglaw partnership--but rather the ways the existing powers-that-be obscure the realities of Biglaw partnership and what is important in partnership advancement.
The gini coefficients you've calculated are a great example of what I find troubling in conjunction with the downplaying of client development to associates. I'd push back against your contention that "more talented lawyers surely win and retain more clients," though--if partnerships value "sellers" more, they also implicitly value intergenerational wealth and the relationships that come from intergenerational wealth more. The associate who grew up with children of Fortune 500 CEOs will walk into any Biglaw firm more partner-ready than the associate who is first-gen. In fact, partnerships will have more of an incentive to promote associates who are worse lawyers but have better relationships with potential clients. I spoke with a partner who told me: "We used to expect A+ lawyering from partners; now, it's probably better for partners to be B+ lawyers but A+ salesmen." However true, this was particularly disheartening for me to hear after years of believing in the American Dream and the legal profession as a meritocracy. I also do think Biglaw partnerships now have incentives to do worse legal work for clients because of how capitalistic and "eat what you kill" partnerships have gotten--but given the length of this comment already, that is an essay for another day (and will be in the book!).
Thank you for the thoughtful response! I really appreciate the insider perspective, and think I now have a much better understanding of the problem you're describing.
Looking forward to the book!
Thanks so much, Jimmy! It will be nonfiction, even ;)