Partner question for lawyers and such

[ijack]

For those of you that are partners can you explain how your salary works (I don't need specific numbers). If you bring in the business from your book or whatever you call it, what % do you get and what % does the company get?? Is it calculated per job or if you bring in a certain amount of business per quarter/year?
Any explanation helps, thanks!

[Deleted]

I'm just a lowly associate, but compensation will vary greatly. It will depend on the type of firm (big law, boutique, small firm), whether or not the individual is an equity partner, etc.

[Susie]

It varies a lot. In my firm, my comp is calculated in the same manner now that I am a non-equity partner as it did when I was a senior associate, the %s are just slightly different. I get a base salary (paid biweekly), and quarterly bonuses. Those bonuses include a couple of components: productivity ( = 44% of everything I bill (actually receive technically but billing is easier to describe) beyond a set threshold amount, origination (% of work I originate regardless of who does the work; % varies, but tops out around 6-7% I think), and client management (2-3% for work that I didn't originate and don't do myself, but I manage the client relationship now and oversee associates doing the work). My quarterly bonuses are the sum of the amount I earn via productivity + origination + client management. The bulk of it still comes from productivity for me, but I am looking to shift that in coming years.

So say I bring in a particular client, I manage the client relationship, and I do the work. That work goes toward my threshold, or if I've already met my threshold it goes toward my productivity bonus, plus I also get origination credit (%) on top of that. If I don't do the work, it wouldn't contribute toward my threshold/productivity bonus, but I would get an origination percentage and a client management percentage in my quarterly bonus. So it's not really a cut and dry straight %.

Equity partners get compensated similarly, except that just like the move from sr. associate to non-equity (junior) partner, the bump from non- to equity means percentages at each level that are more favorable to the individual and less favorable to the firm. That's just how my firm works, plenty of others do things differently.

[WOT?*]

Susie's program is very similar to DH's firm's setup. DH is an income partner, which means he does not get a percentage stake but as he's the managing partner of the office he knows the numbers and how they crank out. (Note: he's up for equity this year. He just turned in the memo Friday. Wish him/us luck!) He gets credit for managing (X hours per year) plus PCA (primary contact or as Susie put it, client management) credit if he is the primary or secondary contact attorney, and origination credit for client origination or case origination. DH's setup as an income is simply salary plus bonuses, the percentages are irrelevant until he passes for equity. The percentages are decided by formula and by a separate committee, so I have no idea *how* they come up with the percentages other than based on the above PCA/origination/billables formula.

In my old firm, back in the day, we did personal injury work. At the end of each case (settlement or  verdict), the money was split between the associate, the overseeing partner and the firm; if the associate brought in the work directly, the shares were split between the firm and the associate (no partner share without a partner involvement). The percentages were based on individual agreements between the associates and the firms and were determined by their weekly draws (paychecks paid in advance against settlement proceeds).  The settlement/verdict was split so that the associate was paid a percentage, the firm was paid a percentage and the partner was given a percentage. A portion of the associate's percentage was then repaid to the firm for the draw against salary. When they settled enough cases so that the draw for the year was paid (it could take one case in January if they got a good one, or it could take all year) then the associate got the full percentage with no repayment. The partners all got draws (weekly paychecks based on expected income) plus their percentages of cases that settled when they settled. At the end of the fiscal year, they decided as partners how much money they were going to retain for new year operations and split the remaining "firm" funds as equal partners. It sounds more confusing than it actually is because I'm explaining it really poorly.

[DirtySouth]

I'm in the process of negotiating this right now and want a decent base salary plus 25% of the work I bring in plus being given a marketing budget, and this is non-equity partnership at a tiny firm.

[DirtySouth]

Sept 15, 2014 9:38:46 GMT -5 farmvillelover said:

Sept 15, 2014 9:22:54 GMT -5 DirtySouth said:

I'm in the process of negotiating this right now and want a decent base salary plus 25% of the work I bring in plus being given a marketing budget, and this is non-equity partnership at a tiny firm.

I have to admit I've never quite understood what the benefit is of a non equity partner
Wouldn't you get origination fees from your own book even if just an associate?

It's a succession plan where I will buy the business in two years when an attorney retires.  The name on the door just helps me market myself.

My current boss won't give me origination fees, and I brought it almost $200k in my first year here.    20% would have been one hell of a bonus.  Hell, even 10% would have been huge for me.  

[pepperpeople]

at my firm, each partner is assigned a percentage each year, largely based on seniority (lock-step), and when income exceeds expenses, we get our percentage in distribution. No accounting for origination, billings, etc. It's simple, but not entirely fair. And you never know when, or how much, you'll be paid.

[suzyp]

Sept 15, 2014 10:38:52 GMT -5 pepperpeople said:

at my firm, each partner is assigned a percentage each year, largely based on seniority (lock-step), and when income exceeds expenses, we get our percentage in distribution. No accounting for origination, billings, etc. It's simple, but not entirely fair. And you never know when, or how much, you'll be paid.

I'm non-equity (so I just get paid a salary), but it my understanding that things are similar equity partners where I am (but a little more fair).  They are assigned "points" at the beginning of each year that is based upon their seniority and the amount of work where they are the "originiating attorney."  They get paid a smaller salary monthly.  However, once expenses are paid, they are all paid out the extra money based upon how much each point is worth - this is done in two "draws" per year - one at the beginning of the year and one at some other time during the year - it changes each year.  No one know how much the draws will be. 

[ijack]

thanks ladies! I sent this on to H and his response was "you know 3 lawyers? wow!"
I told him I know A LOT of lawyers

[bittybomb]

I am a partner, and draw a salary.

My bonuses as partner, however, are larger and are based on percentage of revenue rather than the billables tier system we use for associates.