Now, This Is Different: Paul Weiss Hires a Lateral for Its Non-equity Partnership

Paul Weiss 2.0, its disruptions detailed to John Quinn in a podcast, has pulled off another kind of shift. 

We all know that the law firm has been conducting an aggressive hiring spree of global "stars" for equity partnerships. Now this: It has actually accomplished a lateral hire for the non-equity tier, which it created late in 2024. Paul Weiss chair Brad Karp has positioned that innovation as an "experiment."

The lateral hire for the income partnership, reports Bloomberg Law, is deals counsel for LA-based Latham. That's Michael Montgomery. 

Paul Weiss wins in two ways, at least for now. Not only has it created a mechanism to attract talent. It also is able to use the non-equity tier as a strategy to increase Profits Per Equity Partner. 

And, that juicing of PPEP is the rub. 

See, controversy surrounds the non-equity creation. For example, in a recent proposed class action lawsuit against Duane Morris non-equity partner Meagan Garland, documents Bloomberg Law, contends that she earned less, thanks to that "promotion." That's because business and tax obligations were transferred to the non-equity partner. The details, according to the complaint, are:

"The firm shifted business expenses and state and local tax obligations to non-equity partners, withheld 18% of their fixed-fee compensation to pay down expenses and directed back to itself 4% of their gross annual compensation as a capital contribution ..."

In addition, Garland objects to the title "partner" since she is not an owner. She's an employee and can be fired-at-will. Does that title circle back to the observations of George Orwell on how language is used? His classic "1984" showcased how words can be leveraged to mask reality and create illusion. 

Overall, tensions are growing in law firms about compensation. That's not only in the non-equity tier. Equity partners have become aware of the spread in annual compensation between what the stars receive and what they earn. Meanwhile Paul Weiss, like Jones Day, has introduced the "black box" to maintain compensation as confidential. 

Will that lack of transparency eventually backfire at Paul Weiss? The black box concept will come under scrutiny in the November 2025 trial about paid parental leave for fathers in "Savignac, et al. v Jones. Day." Those opposed to the black box assumed it would be broken open for inspection  in gender discrimination lawsuit "Tolton, et al. v Jones Day." But, the lawsuit went poof. 

Obviously, post-COVID, power has returned to the leadership of law firms. That power, though, can be undermined through litigation such as "Savignac." The plaintiffs, a married couple who had clerked at SCOTUS, have been effective in generating and sustaining publicity about this personnel issue. Timing is almost everything and right now fathers' rights is a hot issue. If the verdict favors them an arctic blast could go through the power structure of Big Law.

In my career coaching, I guide Knowledge Work clients on how to decode leadership's policies and messaging. One kind of tutorial is for them to read mystery novels and learn to identify and interpret "clues." That triggers the unique kind of alertness. So many should not be lamenting on professional anonymous networks - Glassdoor, Blind, Reddit and Fishbowl - that they were "blindsided" by a management decision.

Affordable Career Coach Jane Genova provides end-to-end career services, ranging from diagnosis of the challenges and fix-it strategies to preparation of resume/cover letters/LinkedIn profiles and how to gain control of an interview. I specialize in over-50 work issues. My edge is a background in marketing communications. For a confidential complimentary consultation please text/phone 203-468-8579 or email janegenova374@gmail.com. Remote and in-person.