American Lawyer Editorial, $20M and Climbing: Is There a Ceiling for Elite Partner Pay?:
Big Law’s most successful lawyers continue to take home bigger and bigger paychecks. But as their firms continue to make tectonic compensation shifts inside partnerships, does partner pay have nowhere to go but up?
It’s conceivable that pay increases could slow down or temporarily reverse, said law firm leaders, recruiters and other industry observers, but they mostly agreed that the going price for star lawyers is not some kind of bubble. It will keep rising as law firm profits soar and as law firms diversify their practices to hedge against any downturns, the sources said.
“It’s not like the tulip bubble or the tech bubble,” said Alisa Levin, co-founder of the legal search firm Greene-Levin-Snyder, adding that it could slow or stall but “I don’t think it’s going to burst.”
Not long ago, $10 million annually was an astronomical sum for even the highest-profile lateral partners. More recently, $20 million—once “unheard of”—seemed to be the standard of top partner pay at the most elite firms. Now, according to some industry observers, $25 million to $30 million is the new top rung for valuable laterals, high-performing partners and some Big Law leaders: still very rare, but previously unfathomable, and another checkpoint along the route that has Big Law looking more like the big businesses they count as clients.
That kind of staggering increase is the result of a variety of factors, observers noted. …
Law firms have also never been more focused on growth, or more active in trying to poach high-profile talent. As a consequence, the most profitable firms continue paying their top performers more money, setting aside more for incentives and making infrastructural changes, such as moving away from lockstep, moving toward “black box” setups and adding “super points” to accommodate partners who reach the highest levels of performance. …
Kirkland & Ellis is often pushing the industry’s compensation and lateral battle. The firm’s average profits per equity partner have skyrocketed 58% in the last five years, according to American Lawyer data. The Am Law 100 as a whole has increased PEP by more than 40% in the last five years.
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