Welcome back to Of Counsel, my monthly advice & asks column. If you ever find yourself wondering, “What would Cece do/think?” then you’ve come to the right place! You can find previous columns here and submit questions here. And if you appreciate the work that goes into this newsletter and want to help ensure that my educational and informational content remains free for all, you know what to do!
ICYMI: I finished the first draft of my book’s manuscript!! I’ll be writing more about the first draft process in next week’s newsletter for paid subscribers, but for now, my mind is in a Biglaw hangover after spending the past seven months reading, writing, and thinking full-time-and-half about Biglaw. Which makes today’s Of Counsel question extremely apt:
I feel like if one is in big law it is only worth it to be a partner. how are big law partners compensated? what is usually the compensation/structure?
- Anonymous
If you were raised by parents who extolled the value of hard work or who talked about “practical” majors, you likely developed a vague sense of what’s considered a “stable” job. Medicine, law, finance, and accounting are the classic examples. Throw in media portrayals of lawyers (I’m looking at you, Suits), and we come to this idea that Biglaw partners make a lot.
And they do. But as always, the devil’s in the details. The traditional measure of compensation for Biglaw partners is Profits Per Equity Partner (PPEP). (Which used to just be Profits Per Partner (PPP) in the era before firms introduced a new class of “partners” in name but not in sharing profits. Ah, capitalism!) The American Lawyer magazine publishes PPEP annually, and the numbers would certainly make my ancestors curse me for ever turning in my keycard.
Kirkland & Ellis, the firm with the highest PPEP in 2022, boasted a PPEP of $7.51 million. Wachtell comes in at second highest with PPEP of $7.29 million. My former employers clock in at $5.31 million and $2.33 million, respectively. But as with most distributions in our post-industrial economy, it’s eye-popping at the top but drops off quickly and precipitously. The AmLaw 90-100 firms (i.e., at the lower end of the rankings, which are arguably still all “Biglaw”) have PPEP of $876,000 or less.
In other words, the highest PPEP in the AmLaw 100 is 19 times the lowest U.S. law firm PPEP. Nineteen times. How’s that for compensation disparity? Not all Biglaw is billed equal. And while many would kill themselves at work for $7.51 million, fewer would do so for $394,000. (That’s just supply and demand.)
To complicate matters, PPEP is an increasingly meaningless indicator of what individual partners at any firm receives. Understanding why requires delving into statistics—mean, median, and mode. PPEP is the mean compensation for partners at a firm. But it doesn’t mean you’ll receive the PPEP amount when you make partner. PPEP is helpful for understanding Biglaw comp, but averages can always be misleading if we don’t know median or mode.
For illustration, let’s pretend like we are at a firm like K&E, where PPEP is $7.51 million. Historically, Biglaw firms had a lockstep structure for partner compensation—that is, a first-year partner earned the same as all other first-year partners, with compensation increasing as one gets more senior as a partner. So two first-year partners might make $750,000 each while a senior partner makes $21.03 million, and our hypothetical three-partner firm would still have a PPEP of $7.51 million.
This historical lockstep partner compensation model contributes to our societal conception of what a Biglaw lawyer is—collegial (all first-year partners are equal!), a hard worker (gotta make it to senior partner!), and extremely wealthy, as long as they stick it out long enough.
This lockstep model has also fallen apart in recent years. In 2016, the former leader of Cravath’s corporate department left for Paul Weiss, presumably lured by promises of higher compensation than Cravath’s lockstep model could provide. (In 2018, he reportedly earned $10 million.) In 2018, Kirkland enticed a Cravath senior partner to join its litigation department to the tune of $11 million a year for five years, plus a signing bonus. Even more recently, Paul Weiss reportedly paid lateral partners as much as $20 million a year.
Let’s do the math. Paul Weiss has a PPEP of $5.72 million, but if multiple lateral partners are earning significantly more than that, then there must be partners who are earning significantly less than that, as well.
When I started as an associate in 2016, I remember a partner telling me about the firm’s lockstep compensation for partners. “It creates a more collegial culture,” she told me. I didn’t think much of it at the time—partnership politics was low on my list of priorities. As long as associate compensation remained lockstep, I figured, it didn’t affect me.
But as I got more senior, it became clear to me where Biglaw, as an industry, was heading. In 2016, most Biglaw firms had a lockstep system for both associates and partners. In 2024, most Biglaw firms have moved away from lockstep for partner compensation—and even obscuring partner compensation so as to “minimize discontent and tensions within the partnership.”
Even Cravath—often seen as the last bastion of old-school lawyer values (only electing homegrown associates to the partnership, lockstep comp for both associates and partners, no “income partner” tier)—has yielded to market forces, ending its pure lockstep partner compensation structure in 2021 and introducing an income (i.e., non-equity) partner tier in 2023.
All of this to say: the title of “Biglaw partner” means less and less. Firms are increasingly beefing up income partner classes and electing fewer equity partners in an effort to keep PPEP high. And even if you are an equity partner, what does that really mean? Are you one of the partners guaranteed $20 million a year, or one of the partners balancing out your colleague’s monster pay?
Biglaw is becoming increasingly entrepreneurial and capitalistic. It’s silly to pretend otherwise. The forces of capitalism also mean that partners won’t just see other partners as potential competition—they might also see rising associates as potential competition. Why promote someone to equity partner, inviting them to share your piece of the pie, when you can keep them as an income partner for as long as possible, billing hours on behalf of the equity partners?
That’s cynical, for sure, but at the size of firms we’re talking about—over 500 attorneys, some even over 1000 attorneys—numbers speak louder than individual loyalties. If you need to convince a partnership of 345 attorneys (Gibson Dunn) or 505 attorneys (Kirkland) that you should be elected to partnership, you’ll need to back it up with evidence on how you’ll make all hundreds of them richer. Being “really nice” and a “hard worker” just doesn’t cut it anymore.
One of my biggest reasons for writing my book is my frustration with how many times I heard from partners that associates should just bill their hours, do good work, and let the partners handle everything else. Maybe they meant it as care, trying to lessen the burden on associates—but even then, they are unintentionally fostering associates who are “weak” by emerging Biglaw standards, associates who won’t be properly apprised of, or prepared for, the new realities of the legal industry.
The irony of my legal career is that I went into it hoping to learn the rules, follow the blueprint, and find safety in the world. But there are no hard-and-fast rules anymore. I can’t tell you what the “usual” compensation structure in Biglaw is anymore. And even if I could, it will likely change in the period between one’s arrival at a firm and becoming eligible for partnership. Who knows what partner compensation will look like in five years, ten years? I even have doubts that the lockstep salary system for associates—a magnet for high-strung, anxious, stability-craving law grads like myself—will survive the writing on the wall.
Maybe firms will continue following the Benjamins, paying out massive guarantees to rainmaker partners; or maybe some firms will rebel and attempt a return to lockstep form. But one thing is clear: Biglaw is not safety, or stability, or practicality, not really. Biglaw is a business. ◆
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