Exploring Law Firm Dynamics: Named Partners Explained

A name partner is a partner whose name is part of the official name of a partnership. A law firm partner is a senior attorney who has partial ownership of the firm. Partners typically share in the firm's profits and decision-making, often leading teams, managing client relationships, and overseeing business operations. The number of named partners a law firm can have is not legally limited, but most firms have 5-6 names formally, with only the first 2-3 being well-known.

Law firm partnership structures

A law firm partner is a senior attorney who has partial ownership of the firm. Partners are usually at the "top of the pyramid" in a law firm and are responsible for leading teams, managing client relationships, and overseeing business operations. They also share in the firm's profits and decision-making.

The number of named partners a law firm can have is not set in stone and can vary depending on the firm's partnership structure and size. Some firms have 5-6 names, but people usually only know the first 2-3. For example, everyone in the legal world knows Skadden, but they may not know the official name is Skadden, Arps, Slate, Meagher & Flom LLP.

The criteria for choosing a law firm partner vary from firm to firm, depending on the law firm's partnership model. Traditional law firm partnership structures tend to choose partners based on years of experience and billable hours, with senior lawyers promoted to partners after a certain number of years of experience. These equity partners are compensated with a share of the profits and additional powers over factors like firm decision-making, usually in exchange for a buy-in.

In newer law partnership models, partners may be selected based on alternative performance factors, and there are different pay and profit-sharing structures. Some firms have a "two-tiered" partnership structure, with "salaried partners" or "non-equity partners" who are allowed to use the "partner" title but do not share in profits. These positions are often given to lawyers on track to become equity partners or former equity partners who do not generate enough revenue to maintain their status. Non-equity partners need to bring in more business to the firm and aim to become equity partners.

In profit-sharing structures, law firm employees are given a percentage of the firm's profits based on the firm's earnings. In some firms, all partners share equally in the profits, while in others, senior partners might receive double the shares. Formula-based models reward multiple aspects of performance rather than focusing on only one or two factors, providing transparency into the compensation structure. Despite considering multiple factors, it may still not account for all valuable contributions to the law firm.

How to become a named partner

While there is no universally defined number of named partners a law firm can have, firms tend to have around 5-6 names formally, with only the first 2-3 being well-known.

Becoming a named partner at a law firm is a prestigious position that many lawyers aspire to. However, it is important to note that it is not a promotion or a job title that one can be promoted into. Instead, it signifies ownership of the firm and is akin to becoming a co-owner or co-CEO of a company. Here are some steps and strategies to increase your chances of becoming a named partner:

• Understand the Firm's Partnership Structure: Law firms have different partnership models, and it is crucial to understand the specific criteria of your firm. Traditional law firm partnership structures tend to choose partners based on seniority, years of experience, and billable hours. In contrast, newer law firm partnership models may select partners based on alternative performance factors, such as business development skills and understanding the economics of the firm.
• Develop Business Acumen and Niche Expertise: One of the key responsibilities of a named partner is to bring in business and contribute to the firm's growth. Demonstrating a knack for business development, identifying new client relationships, and exploring additional revenue streams can set you apart. Additionally, developing expertise in a specific niche within your practice area can establish you as the go-to lawyer in the firm for those cases.
• Build a Strong Professional Reputation: Named partners are often individuals with a strong professional reputation, both within the firm and externally. Focus on providing a client-centred experience, establishing yourself as a reliable and skilled lawyer.
• Seek Mentorship and Guidance: Navigating the path to becoming a named partner can be challenging, and having mentors and advocates within the firm can be invaluable. Seek guidance from current partners who can offer insights into what the firm's leadership looks for in potential named partners. They can also provide recommendations for cases or committees that can enhance your experience and visibility.
• Understand Law Firm Economics: In addition to legal expertise, named partners are often expected to have a solid understanding of the economics of running a law firm. This includes knowledge of profit-sharing structures and compensation models, and the overall financial health of the business.
• Develop Interpersonal Skills: Becoming a named partner often involves selling yourself and proving your marketability to the firm. Maintain a positive and inquisitive personality, and focus on building relationships with colleagues, clients, and potential business connections.

It is important to remember that the path to becoming a named partner can vary depending on the firm and its unique culture and criteria. While these steps can enhance your chances, the decision-making process may also involve factors beyond your control, such as diversity and inclusion challenges faced by women and attorneys of colour.

The role of a named partner

Becoming a named partner is a significant career goal for many lawyers, as it comes with ownership, profit potential, and prestige. While the path to becoming a named partner varies across firms, it often involves demonstrating business development skills, establishing new client relationships, and finding additional revenue streams for the firm.

In traditional law firm partnership structures, partners are typically chosen based on years of experience and billable hours, with their compensation increasing as their seniority and years of service increase. However, newer partnership models may select partners based on alternative performance factors, such as revenue generation and individual performance.

Overall, the role of a named partner in a law firm entails significant responsibility and influence in the firm's operations, decision-making, and financial success. It is a highly sought-after position that recognises the partner's expertise, reputation, and commitment to the firm's growth and development.

Equity vs non-equity partners

The number of named partners a law firm can have is not fixed. Some firms have 5-6 names, but only the first 2-3 are well-known. Law firm partnership structures can take many forms, and the criteria for choosing a law firm partner vary from firm to firm, depending on the law firm's partnership model.

Traditional law firm partnership models tend to choose partners based on years of experience and billable hours. In contrast, newer law partnership models tend to have different pay and profit-sharing structures.

Now, let's delve into the differences between equity and non-equity partners.

Equity Partners

Equity partners are senior attorneys who have partial ownership of the firm. They buy into the company, which means their income is directly linked to the profit that the company makes. This usually forms part of their salary or an incentivized bonus. Equity partners have a financial stake and a personal interest in driving the business forward. They are also rewarded for bringing in clients and revenue.

Non-Equity Partners

Non-equity partners are attorneys with titles like "Partner," "Shareholder," or "Principal", but they are employed by the firm and do not have ownership. They are paid a salary instead of sharing directly in firm profits and typically don't vote on management decisions. Non-equity partnerships are often used as a stepping stone to full equity partnership, allowing lawyers to develop business development skills and feel valued.

Downsides and Benefits of Each

The boost in status that comes with being an equity partner is paired with a financial burden in the form of a required capital contribution, which can be a significant sum. On the other hand, non-equity partnerships offer the opportunity to avoid this substantial capital contribution, making it appealing to younger partners who may not have built up sufficient investment portfolios. Additionally, non-equity partnerships provide flexibility for senior partners transitioning to retirement, as they can invest the capital returned by their prior firm.

The benefits of being a named partner

Being a named partner at a law firm is a highly prestigious position that many lawyers aspire to reach. While the specific partnership structure varies across firms, there are several benefits to being a named partner. Firstly, named partners are typically owners of the firm, which comes with a level of prestige, influence, and decision-making power. They have partial ownership and are often involved in leading teams, managing client relationships, and overseeing business operations. This level of responsibility and involvement in the firm's strategic direction can be rewarding and fulfilling.

Another benefit of being a named partner is the potential for increased earnings. Named partners often share in the firm's profits, with some receiving double the shares of other partners. This profit-sharing structure can significantly enhance their income and financial stability. However, it is worth noting that, in some firms, the profit-sharing model may be based on various factors such as billable hours, client lists, and business development contributions.

Becoming a named partner also brings recognition and distinction within the legal industry. Named partners are often respected for their expertise, experience, and strong professional reputation. They are seen as leaders in their field, which can lead to additional opportunities, such as speaking engagements, mentorship roles, and industry recognition. Being a named partner can open doors to exclusive networks and enhance their reputation both within their firm and in the broader legal community.

In addition to these benefits, being a named partner can provide a sense of stability and longevity in their career. While the legal industry can be highly competitive and volatile, achieving this level of partnership demonstrates a firm's commitment to an individual's talent and contributions. Named partners are often integral to the firm's success and are likely to have established relationships with clients and colleagues, solidifying their position within the organization. However, it is important to remember that, as with any leadership position, being a named partner also comes with increased responsibilities, challenges, and expectations.

Frequently asked questions