Empire Search Partners’ Post

"Big Law's most successful lawyers continue to take home bigger and bigger paychecks. But as their firms continue to make tectonic compensation shifts inside partnerships, does partner pay have nowhere to go but up?" (The American Lawyer) https://lnkd.in/exR-86gE #legalsalary #biglaw #legalsalary #lawpartners

Old school cool: Midsize firms lock step with tradition in pay race Amid broader shifts within the legal industry, some midsize firms like Harter Secrest & Emery LLP and Warner Norcross + Judd continue to uphold the traditional lockstep compensation system, which bases partner pay primarily on seniority. Despite pressures to adapt to performance-based pay to attract high-performing partners, these firms value the collaboration and client service that the lockstep model fosters. Leaders of these firms acknowledge the competitive hiring landscape but choose to maintain their pay structures due to the benefits of reduced internal competition and enhanced teamwork. Both firms have operated under this system for over 50 years, with their leaders asserting that it supports a more collegial and client-focused firm culture, promoting long-term fairness and stability within the partnership. Subscribe to Legal Slice if you want to stay up-to-date on the latest news and trends in the legal world: ➡️ https://lnkd.in/dZp_tvpt #law #Legal #LawFirms

Our Co-founder and Partner Scott Yaccarino shares with The American Lawyer his view of Big Law partner pay trends, noting that new high-water marks in compensation are sustainable. "I don’t believe we’re seeing a bubble with respect to partner compensation. Demand for legal services is up, billing rates seem stable, and given interest rates and the state of the capital markets, the market isn’t even moving near full speed." #legalindustry #lawfirms #lawfirmleadership #lawfirmlife #biglaw #legalrecruitment #legalcareers #lawcareers

It's a simple business principles - if you make a significant investment, you'll want to do everything you can to avoid losing money on that asset. And the most important assets for professional services firms are their most talented and in demand people - especially those who are the highest compensated. I shared my thoughts with Andrew Maloney of The American Lawyer on law firms imposing financial penalties on departing partners. Why do law firms do this? Because they are businesses are applying the leverage that they can to either keep that talent or ensure some of the investment in that talent is recouped when a partner leaves. This isn't new - law firms have long had policies in place that address partner exits -- but firms are more determined in particular to make sure that they haven't celebrated the arrival of high-profile, very well compensated partners only to see them depart without the firm recouping the benefits of those hires. #biglaw #amlaw200 #lawfirms #lawfirmstrategies #businessoflaw #lawfirmtalent #legalindustry #lawfirmcompensation #lawfirmpartner #equitypartner #lawyercoaching #lawyercoach #attorneycompensation #lawyercompensation

With the upward pressure on fees within Biglaw caused in part by ever-inflating associate salaries as firms battle to keep hold of their little darlings, are we starting to see clients looking for advice and expertise elsewhere to shave legal costs? ❓ What effect is this likely to have on both sectors of the industry? ❓ Could this see an acceleration of the bleeding away of talent from the elite to mid-tier firms? https://lnkd.in/ezq2HkEu

Law firm managers are having to figure out ways to satisfy competing needs within the firm. On the one hand, you have the needs of partners to satisfy their positions at the top of the ballooning partner compensation scales which seem possible only by collecting and hoarding origination credits. On the other hand, you have the firm's needs to promote agendas like DEI, cross-selling and succession planning for big clients and within active practice groups. For the moment, no one firm appears to have the answer to these questions. But rest assured, the minute one firm figures out a working solution? Other firms will be fast in following.

𝗛𝗼𝘄 𝗵𝗶𝗴𝗵 𝗰𝗮𝗻 𝗳𝗶𝗿𝗺𝘀 𝗴𝗼? According to some in this article, $25 million to $30 million is the new top rung for valuable laterals, high-performing partners and some Big Law leaders. Some key quotes from this article as to why partner remuneration has skyrocketed for rain makers: • "Frank Ryan, global co-chair of DLA Piper, said as the world grows more complex and regulated, lawyers who may nominally be merger and acquisition or litigation experts have to connect the dots across a constellation of issues so that their talent and foresight goes beyond their subject-matter expertise.   Top talent also tends to bring in top teams of lawyers and professionals, Ryan noted. Match all of that with the built-in competitiveness of Big Law firms, and no real restraint on lateral movement, and the intrinsic value of what top lawyers bring to the table very arguably matches the current price."    • "Law firms have also never been more focused on growth, or more active in trying to poach high-profile talent. As a consequence, the most profitable firms continue paying their top performers more money, setting aside more for incentives and making infrastructural changes, such as moving away from lockstep, moving toward “black box” setups and adding “super points” to accommodate partners who reach the highest levels of performance."    • "Compensation increases for elite firms are not only a function of a competitive lateral market, they are also in line with the increased profitability at elite firms over the last five to six years"

𝗕𝗶𝗴 𝗟𝗮𝘄 𝗙𝗲𝗲𝘀 𝗢𝘂𝘁 𝗼𝗳 𝗖𝗼𝗻𝘁𝗿𝗼𝗹? 𝗖𝗹𝗶𝗲𝗻𝘁𝘀 𝗦𝗵𝗮𝗿𝗲 𝗦𝗼𝗺𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗕𝗹𝗮𝗺𝗲 It’s no surprise that legal fees are skyrocketing, especially at the top firms. But let's be real: the issue goes beyond law firms and their “rock-star” lawyers. Clients are also a huge part of the problem. By limiting their pool of firms to just the biggest names, they’re artificially inflating demand. Sure, clients want the best talent for high-stakes cases, but in doing so, they’re driving the very price hikes they complain about. Firms are poaching talent and pushing salaries sky-high because they know clients will pay for it. It’s a cycle fueled by the choices clients make: fewer firms, higher stakes, higher costs. Clients need to diversify who they work with. As some general counsels have already pointed out, there are plenty of smaller firms and boutiques that offer the same quality work at a fraction of the price. By broadening their options, clients can create competition and, over time, put pressure on these fees. But sticking to the same small circle of elite firms? That’s just going to keep pushing prices up. If clients truly want to bring down costs, it’s time to take responsibility and consider different options. Otherwise, nothing's going to change. https://lnkd.in/gff4hvRZ   #LawFirms #LegalFees #LawFirmRates #CorporateCounsel #BigLaw

It’s time law firms were upfront about which of their partners are actually salaried partners… Annual partner promotion rounds are met with plenty of fanfare. And they’re getting bigger. Kirkland & Ellis, for instance, just announced that “200 attorneys have been promoted to partner”. Others are making similar announcements. These newly minted ‘partners’ are undoubtedly talented lawyers. But, despite the “promotion to partner”, most if not all will remain as salaried employees. It clouds important factors like true experience level, billing rates, personal liability, accountability, ownership etc. And clients don’t like it. As law firms prioritise profitability, charge-out rates are rocketing. So GCs are getting laser-focused on billing, zeroing in on precisely who is doing the work they’re getting billed for. I wrote about it: https://lnkd.in/eqzjhjYG #law #lawfirms #corporatelaw #lawyers

The root of the issue lies in how law firms still prioritize billable hours and measure performance on an hourly basis. If firms shifted their KPIs to focus on generating business per person instead of emphasizing hourly pace, they could eliminate the need to constantly juggle associates just to fill time. Imagine if a firm knew that a project would generate $500K in billables and didn’t need to worry about pace or hourly metrics—they’d have complete flexibility in staffing that matter however they saw fit. This flexibility could empower firms to bring in a team of juniors, letting them work on real projects and develop their skills. With a focus on solving the client’s problem as effectively and efficiently as possible, juniors might even complete the work in record time. This kind of hands-on, outcome-driven experience is far more valuable than endless hours spent on tasks solely to meet billable requirements. The current focus on pace and billable hours creates negative pressures. Partners and associates feel the strain of "playing the game," maximize billables, and meet hourly targets, which often overshadows client-focused, value-driven work. Most importantly, I think most clients would prefer an associate to in-house pipeline of attorneys who worked efficiently and effectively. Given two associates who did the same work and offered the same results but one did it in 500 hours vs one doing it in 1,000 hours. Who would they choose? Its not the hours worked that determines the value of that associate so why are we measuring them and holding them to that.