Our report, Disloyal lawyers: has the partner track lost its lustre?, explores the evolution of the partnership model. The partnership model was once, quite simply, the only choice in career path. It was the dream: partners shared profits, liabilities, and management of firms. But, due to the shifting ambitions of associates, new demands in the market, and new competitive forces, the partnership model is fading, at least in its earlier form.
Our report shows 49% of law firm leaders believe associates are less interested in becoming partner, and only 25% of associates want to make partner at their current firm in the next five years. A statistic that drops to 22% for associates at large law firms and 23% at medium-sized firms. The allure of the partnership model has declined, but not gone away entirely. The model is evolving to meet new demands.
In this article, we track this evolution and explore the pros and cons of taking on partners versus keeping equity tight.
Associates re-evaluated their priorities during and after the pandemic. Work-life balance became important: more than two-thirds (71%) placed it in their top priorities. Partnership, with all the perceived stress, long hours and the , has dwindled as an aspiration.
Law firms started changing to meet new ambitions. For example, offer a 'switch on/switch off' scheme, allowing associates to reduce hours to 0.9 or 0.8 FTE, in exchange for reduced remuneration. Slaughter and May also allow associates to take accrued non-working time off in pre-arranged blocks. The changes boost flexibility and ensure long-term career paths, hoping to prioritise work-life balance.
Many firms are following suit, aiming to reduce demands on associates. The move seems a counter-argument to the pitch of US firms, which have disrupted the UK market in recent years and have enticed top talent with promises of high pay. Reduced time demands in UK firms is particularly appealing as US firms demand so much. , for example, found that junior lawyers at US firms work 14 hours per day.
Some US law firms, such as , seem aware that such excessive time-demands will limit their ability to attract talent. These firms, too, offer a slimmed-down partner track, with options of billing 1,600 hours of 1,900 hours per year, providing a better work-life balance. US hours, even on the slimmed-down partner track, resemble the high-end of UK expectations: Magic Circle firms, , set targets at around 1,700-1,900 hours.
We should expect even further reductions in time demands in the future. But evolution has appeared in other forms, as highlighted in in 2023. Many firms now offer 'fixed share equity partnerships', a form of partnership that typically relies on self-employment, fixed profit share, and restricted voting rights.
Other firms are creating career paths akin to the partnership model but with less time demands and responsibility. offers associates at the partner stage of their careers the change to become '', instead. Legal Directors have responsibility, autonomy, and clout, but no financial responsibilities or business obligations.
Similarly, offer the 'Professional Attorney' track. This provides career advancement, skills development, and firm involvement without the business development obligations.
The partnership model has already evolved. But the evolution will accelerate, as the demand for talent increases. The old partnership model, once an assumed career path in the legal sector, may soon seem a rarity. New forms of the partnership model, and indeed entirely new career paths, will likely take its place. Law firms, and lawyers, need to adapt to such changes.
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The showed the average profits per equity partner (PEP) declined by 7% for the top 11-25 firms by revenue (to £807k) and by 10.8% for the top 26-50 firms (to £580k). PEP increased 3.2% for the top 51-100 firms (to £479k). The decline in PEP provokes a challenge for law firms and raises the question: do law firms need more partners?
Our report highlighted one benefit. Mark Smith, Director of Strategic Markets at UUÂãÁÄÖ±²¥ stated fewer partners can improve the overall PEP. "But the reality is, if a firm is going to grow, the whole pyramid needs to grow along with it," Smith says.
That's one potential benefit of creating new, attractive career paths. Law firms could still retain talent, allowing them to work fewer hours and providing greater work-life balance, while increasing PEP for existing partners. They're growing the pyramid, but limiting the share of PEP. The risk here, Smith highlights, is that firms may have a bulge of expensive senior associates or legal directors, all of whom have less stake in the success.
Less partners means more control, with less opportunity for conflict. That also means greater speed of decision-making and less bottlenecking. You can have a greater alignment of vision with fewer stakeholders, too, which can provide a streamlining effect on operations. Too many partners can slow down a dynamic law firm.
But more partners enables access to greater investment potential, faster expansion, and more available resources. It also means you have a diverse skill set, allowing firms to meet market demand, interact with new clients, and provide unique solutions to unique problems. All of which serves to grow revenue, and PEP.
In short, the argument is evolving as the partnership model evolves. But the core, long-standing arguments remain, and remain unanswered. The decision to take on more partners, or to keep equity tight, will largely depend on the financial position of the law firm, the needs of the firm, and the challenges provided by the legal market.
Delve into the full insights in our report, Disloyal lawyers: has the partner track lost its lustre? Download today!
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