Peril of Non-Equity Partner Tier in Big Law - But Model Might Actually Be a Plus at Kirkland & Ellis and Paul, Weiss

Right now 85 of the 100 largest law firms have instituted the Non-Equity Partner (NEP) tier. And 70 of those have increased its size. Essentially the objectives are two-fold: Retain experienced lawyers and boost the Profits Per Partner of those in the Equity box. The latter happens because the NEPs can be billed out to clients at a higher rate than senior associates.

All that sounds like a model created in Management Paradise. However, Bloomberg Law documents the troubles it can generate. They include:

Possible falloff in quality and work ethnic. After all, the culture of large law firms is quite political. Surely, NEPs recognize they are a not in the Shareholder box. They might become less hard-charging. 

Loss of billable hours. A Reuters investigation found that NEPs typically bill seven to 11 fewer hours a month per lawyer, in contrast to Equity Partners. 

However, some law firms may bypass those constraints. Bloomberg Law cites Kirkland & Ellis and Paul, Weiss. Both have at the top a star-driven dynamic that brings in and often retains high-billable accounts. Its not vulnerable to the machinations of other parts of the firms' financial systems.  The model mirrors that of Old Hollywood which depended on the bankability of the stars. 

In addition, at K&E, where the NEP has been operational for years, those not producing are exited and they can be "rehomed" through K&E's extensive alumni network. Incidentally, so many I have coached have done their time at K&E. It's big and it has been the "training ground" for myriad young lawyers. Meanwhile, Paul, Weiss is getting bigger as it expands geographically both in the US and overseas. In London, Brussels and Latin America it has beefed up its presence. 

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