Congratulations, You Made Equity Partner at the Law Firm - Well, There's Up to a 40% Chance Your Compensation Will Go Down (and you could be forced out)

 Being voted in as an equity partner at a law firm is no longer a guarantee of 1) Increasing compensation or 2) Employment security.

Depending on the consultant calculating the odds, reports Law.com, you have a 10% to 40% chance of having your compensation cut. That may or may not be a signal that you are being forced out. Getting a "haircut" is a shameful experience. However, the reduction in compensation could just indicate you are on the way to retirement. 

Unlike more genteel times when practicing law was a public-service profession, the current law firm, like public companies, operates in the short-term. Profits this year determine a lot. 

If profits go down, so can the compensation of some of the partners whose financial performance declined that year. The expose on large law firms "Servants of the Damned" by David Enrich provides flashbacks to a more mission-driven period. Now, the focus in on the amount of the money.

Even if profit increases and significantly, much of that windfall could be distributed to the "stars" who have been poached from other firms and bring with them a bulging book of business. That extra compensation could be extracted from the annual compensation of those who don't twinkle so brightly. 

As global competition becomes more aggressive, law firms ranging from Kirkland & Ellis to Paul Weiss seem to be playing that premium compensation game for the very top performers. Chatter puts it at $10 million to $20 million annually, sometimes with multi-year guarantees, for the brandname celebrities. Of course, embedded in that mode of compensation is the risk of evolving into another Dewey & LeBoeuf. It was hell-bent at growth and eventually crashed. Many lawyers and staff lost those good jobs. 

The new widening spread among what equity partners are paid and how that can keep fluctating year to year could be what's driving firms such as Paul Weiss to adopt the black box approach to equity partner payouts. Otherwise, internal conflict could fester among equity partners. What's the motivation of the equity partner pulling down $6 million a year when others are being compensated $20 million? In addition, that money matter can spill over beyond dollars to who has the most influence and power.

As it is, junior equity partners, even when their compensation is increasing, are quite aware that they still "haven't made it" in that highly political structure of the large law firm. 

There is some good news. If profits are rising all equity partners could benefit through what is known as the "peanut butter" phenomenon. The goodies could be spread out across the board. 

As a coach I am finding that the most soul-wrenching aspect of professional life is the lack of certainty about the future. More and more often, clients ask me: "Do you assess that I am being forced out?" Exactly for this reason white-collars are struggling to start their own businesses. 

Life is hard. Business is even more difficult these days. Get answers – and relief. Jane Genova is a results-driven intuitive coach, tarot reader and content-creator related to careers. Complimentary consultation (please text/phone 203-468-8579 or email janegenova374@gmail.com)