NonEquity Partnership: Ramped-Up Incentive to Unionize Large Law Firms

The standard argument against unionizing non-equity-partners in large law firms was this: Most don't stay long enough to have the incentive to organize for compensation, terms and conditions of billable hours, job security, termination processes and more. That hesitation has held on even though professionals at a branch of Wells Fargo had formed a union. So much for the idea of knowledge work not being a fit for collective action.  

Well, in the past few years enough has changed in large law firms to try out unionizing. The developments include creation of the Nonequity Partnership, the impact of AI on decline in demand for junior lawyers and the increase in demand for experienced ones and the need for most large firms to overhaul their systems and structure. About the latter, they have to come up with a new model anyway so unions could be part of that.

As is well-known, the NEP designation works well for equity partners. The model yields multi-dimensional benefits for them, documents Bloomberg Law:

"Law firms have grown their use of the non-equity partner tier to retain talent and boost profits for those at the top. Lawyers in the classification get the title and bill hours at higher rates than associates while foregoing large payouts that traditionally accompany partnership status."

However, from the get-go, those anointed with the NEP title have contended it was a raw deal. There have been three lawsuits. More recently, Law.com reports:

"As Big Law continues expanding income partner levels, 'a clear satisfaction gap' remains between the partnership tiers, according to new Law.com data, with nonequity partners reporting the lowest satisfaction levels over their compensation and hourly rates." 

Advocate for non-equity partners Abovethelaw singles out these beefs:

Accountable for a higher standard than associates

Add-on of administrative and supervisory tasks. 

Little authority. Probably you can't sit in on equity partner meetings. If you do, you'll probably be asked to leave when financial matters are discussed.

Fewer equity slots created, especially with all the mergers. Fewer equity slots mean more money for each equity partner. 

In some cases, a capital contribution is required.

Meanwhile, I point out, there is lacking the opportunity to negotiate:

Compensation

Job security

Promotions

Terminations terms and conditions 

Parental leave.

So, conditions are not all that wonderful. However, demand for experienced lawyers grows. Evolving is the diamond structure, from the pyramid one, with the bulge in the middle filled with midlevels. AI is blowing up the grunt tasks which had made the pyramid, bloated with inexperienced associates, necessary. Even SCOTUS chief justice John Roberts predicts fewer jobs for entry-level lawyers. In addition, of course, lawyers could be remaining at a particular law firm for many years, not a few. Fold in, too, that NEPs are employees who could be fired at any time. For equity partner force-outs there are processes. Unionizing makes sense.

Of course, a lot of the old reasoning against unionizing still hold a gigantic share of mind.

At the top of the list is the one which should seem most of date. That's the hope that the NEP is a platform to catapult to the equity status. 

Paul, Weiss partner Brad Karp positioned and packaged the introduction of the NEP to the firm as containing that possibility. The NEP structure could give some lawyers more time and experience to prove themselves equity partner material. Promotion to equity would proceed along the standard track and the NEP one. Hey, folks, as hammered previously, there are fewer equity slots. 

Another obstacle to the unionizing option is the high compensation. Some lawyers might actually feel blessed to be pulling down so much in salary and potential bonuses.

A third is the culture. It is individualistic in large law firms. What's the incentive to organize for the collective good? 

And, four, there is the usual terror about retaliation. Even being associated with an organizing effort could result in blackballing. Big Law is a small club. Moreover, what follows the creation of a union? Apple just closed its first unionized store in Towson, Maryland. 

Although a blue-collar street kid I embraced the concept of talent/hard work as creating destiny. That was until the Jack Welch engineered corporate downsizing in the late 1980s. The current analogue is the efficiency mandate, through AI and other systems. Yes, it's look at for yourself but maybe the most effective way to do that is through collective action.

Career Paths? So Over. It’s about Earning a Good Living. No matter what.

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