Becoming a partner at a major U.S. law firm is one of the most lucrative career goals an attorney can achieve. Partners at big law firms, also known as Biglaw firms, earn substantially more than associates or other attorneys working in smaller firms or solo practices. But exactly how much do big law partners make? Let’s take an in-depth look at Biglaw partner compensation.
What is Big Law?
Big Law refers to the largest law firms in the world. They are multi-national firms with thousands of attorneys spread across dozens of global offices. While there is no definitive list, Biglaw firms generally have at least 1,000 lawyers and generate over $1 billion in annual revenue.
Some of the most recognized Biglaw firms include Jones Day, Kirkland & Ellis, Latham & Watkins, Skadden, and Sullivan & Cromwell. These firms handle high stakes litigation, corporate transactions, and other complex legal work for major companies, banks, and ultra high net worth individuals. Their client rosters include nearly all of the Fortune 500.
Biglaw partners belong to an exclusive club at the pinnacle of the legal profession. Let’s look at what enables them to command some of the highest salaries in the industry.
Biglaw Partner Job Description
Being a partner at a major law firm means you have partial ownership in the firm and share in its profits. Partners manage the firm’s clients and supervise teams of associates. They are responsible for business development, securing new clients, and maintaining relationships with existing clients.
In addition to management duties, partners continue to practice law. They provide legal advice directly to clients and actively work on cases. Partners delegate research, drafting, and other grunt work to associates and legal assistants. This leverage allows them to take on multiple client matters at once.
Partners also participate in firm leadership. They serve on committees that make strategic and operational decisions. Experienced partners often open new offices in other cities or countries. The most senior partners hold the top positions like chairperson or managing partner.
Becoming a law firm partner is extremely difficult. Only about 1-2% of associates are promoted to partner. It can take 8-10 years or even longer. Candidates must demonstrate legal excellence and the ability to attract new business. However, those who achieve partner status are rewarded handsomely.
Biglaw Partner Salary vs Associate Salary
The starkest difference between partners and other lawyers is compensation. Biglaw base salaries follow a rigid structure based on seniority. However, partner pay is highly individualized. Here’s a comparison:
- First year associates usually earn $205,000 per year. This jumps to $235,000 by year 5.
- Senior associates in years 6 – 8 may make $265,000 – $300,000.
- Partners at top firms take home well over $2 million per year. Some earn tens of millions.
As you can see, there is a vast chasm between senior associates and the lowest level partners. Let’s look at some key factors that allow partners to earn so much more.
Origins of Biglaw Partner Pay
In the early 20th century, most law firms were modest sized partnerships. Lawyers shared profits from fees earned on client work. However, firms gradually adopted a tiered structure. Young lawyers were hired as employees and paid a fixed salary. They supported partners who managed the firm and clients.
This enabled firms to grow rapidly without partners having to share profits. The arrangement persists today at major firms. Partners are the equity shareholders. Associates are employees paid a predictable base.
However, partners still share profits distributed from the firm’s earnings. The spread of profits allows the most powerful partners at prestigious firms to make extraordinary sums of money.
Biglaw Partner Compensation Models
While base associate pay is uniform across firms, partner compensation varies significantly. Firms use different models to determine how much each partner earns:
Lockstep Model
- Partners earn higher pay at set intervals based on seniority.
- Salaries increase on a “lockstep” every year or two.
- Earnings depend mostly on tenure, not performance.
Performance Based Model
- Partner pay is tied directly to individual metrics like:
- Client billings
- New business generation
- Billable hours
- Collections
- Outperforming peers yields higher compensation.
Hybrid Model
- Base pay starts equal but diverges over time based on merit.
- Seniority sets initial partner salary, but individual performance causes differences over years.
- “Eat what you kill” systems pay partners based on business they directly bring in.
Most firms use a hybrid approach weighing both seniority and productivity. Let’s look at real-world Biglaw partner salaries.
Biglaw Partner Salary Ranges
Partner compensation reporting is murky. Firms guard specifics closely and forbid partners from disclosing pay. However, industry surveys provide ranges:
- Entry-level partner (1-5 years): $300,000 – $500,000
- Mid-level partner (5-10 years): $500,000 – $1,000,000
- Senior partner (10+ years): $1 million – $3 million
- Top earning partners: $3 million – $10+ million
These figures are averages across major markets like New York, Chicago, and Los Angeles. Top partners can earn far more in cities with higher billing rates.
Keep in mind compensation drops significantly outside the elite Biglaw circle. partners at small and mid-size firms average around $200,000 per year.
What Affects Biglaw Partner Salaries?
As a part-owner, your compensation as a Biglaw partner largely depends on the firm’s profits. A few key factors impact how much the firm earns and what portion flows to you:
Billing Rates
Firms bill clients by the hour for partner and associate work. Rates range from around $600 for junior lawyers to $1,800 per hour for senior partners. Partners keep a percentage of their billing receipts. Higher rates equal bigger individual payouts.
Hours Billed
Partners get credited for hours billed to clients at their rate. Those who record more billable time collect a larger share of profits.
Origination Credits
Partners are awarded origination credit for new business they bring into the firm. This entitles them to a share of downstream revenue even if other partners handle the work.
Client Collections
Partners are paid on actual collections from billed work. Partners with slow-paying clients earn less than those with clients who pay promptly.
Firm Profitability
After paying overheads and associate salaries, partners split remaining profits. At more profitable firms, all partners make more.
Lockstep Seniority
Biglaw partners see their pay rise steadily based on tenure. Loyalty and years of service mean higher compensation at many firms.
Leadership Roles
Partners who manage departments, oversee global offices, or serve as firm executives are paid for their additional responsibilities.
The interplay between these factors enables elite partners to make staggeringly high incomes each year. Let’s look at some standout examples.
Highest Paid Biglaw Partners
Precise pay for top earning partners is murky, but press reports have revealed massive compensation packages:
- In 2015, Cravath chairman Evan Chesler was reported to make over $40 million per year.
- Wachtell Lipton boss Herbert Wachtell earned nearly $53 million in 2017 according to legal blog Above The Law.
- Former Skadden head Eric Friedman reportedly took home over $62 million in 2010 during the height of Biglaw profits.
These are older reports, so current pay packages are likely even higher. Consistently, the chairs and managing partners at top New York firms like Cravath and Wachtell appear to be the industry’s highest paid lawyers based on average partner distributions. Leaders at other elite firms like Kirkland & Ellis and Latham also likely earn compensation in the tens of millions.
The next tier of senior partners probable make between $10 million to $20 million at top firms. Even regular senior partners can make several million or more once they build a book of business. With client billing rates soaring every year, top partner pay continues to scale new heights.
Factors Limiting Biglaw Partner Pay
While partnerships remain lucrative, a few trends have put pressure on profitability and partner compensation:
- Increased Expenses – Higher pay to retain top associates and growing technology costs have squeezed margins.
- Billable Hour Backlash – Some clients resist hourly billing and demand alternative fee deals. This caps law firm revenue.
- Competition – Leaner mid-size firms have poached clients with lower rates.
- Recession Vulnerability – Partner profits tanked in the 2008 financial crisis and COVID-19 pandemic.
Firms have had to spread profits among an ever-expanding equity partner tier. And top partners capture a disproportionate share of earnings. This dynamic has somewhat limited the gains for mid-level and junior partners in recent years.
Yet legal industry experts agree Biglaw still offers attorneys their best shot at generating immense wealth. Let’s look at how partners can maximize their pay.
How to Increase Biglaw Partner Salary
While compensation systems vary, partners can grow their incomes by:
- Consistently exceeding annual billable hour targets – aim for 2,000+ hours
- Expanding book of business by landing new clients and matters
- Collecting payment rapidly and efficiently from clients
- Developing niche experience in lucrative practice areas
- Managing client relationships to generate recurrent work
- Spearheading expansion into new regions and practice areas
- Publishing articles and speaking at conferences to build profile
- Taking leadership roles in firm management and on committees
- Mentoring young partners and associates to create loyalty
- Avoiding gaps in productivity during slow periods or recessions
Law firm partners already sit atop the legal industry’s financial hierarchy. But those who follow the above principles can scale their earnings well into the millions or tens of millions.
Can Biglaw Partners Get Equity in Clients?
Partners sometimes take an equity stake in a client’s company instead of cash payment. They may receive founders shares, stock options, warrants, or participation rights.
This dynamic is especially common when providing legal services to startups and growth companies. Partners help structure financing rounds and other deals benefiting the client. In exchange they negotiate equity compensation from the grateful management team.
If the client experiences a lucrative exit like an IPO or acquisition, the partner profits. Even a small percentage stake in a unicorn startup can leave a partner with tens of millions overnight.
However, most law firms prohibit partners from taking equity in clients due to ethical concerns. Partners could prioritize companies where they have a stake rather than giving objective counsel. Careful vetting is required before approving these arrangements.
Leaving Biglaw for In-House Jobs
Some partners elect to leave behind their lucrative law firm roles for in-house positions with clients. Facebook, Apple, Amazon, and other tech giants hire Biglaw partners for senior legal roles.
Why give up a multi-million dollar partnership? The compensation is still generous at around $1 million annually with bonus potential. But top in-house posts offer better work-life balance along with equity in a hot company.
Partners who shifted to Silicon Valley prove it can be a smart move. For example, former Clifford Chance partner Colin Sandercock was Facebook’s first in-house lawyer. His stock options earned him $43 million when the company went public.
Timing these moves right enables partners to parlay their Biglaw status into an even larger fortune. Let’s recap the key takeaways on partner pay.
Biglaw Partner Salary Recap
- Equity partners have ownership stakes in major firms and share profits.
- Most earn at least $1 million per year with top partners making tens of millions.
- Compensation is based on metrics like billings, collections, and business origination.
- Partners have vastly higher earnings potential than associates and other attorneys.
- But expenses, rate pressures, and other trends have impacted profit growth.
- Partners can maximize pay by expanding books of business and taking on leadership roles.
- Some partners also negotiate equity stakes in hot startups and growth companies.
- Later career moves in-house along with company stock can further boost law firm partners’ wealth.
In an industry known for sky-high salaries, Biglaw equity partners stand in a league of their own. They exemplify how large law firms offer uniquely lucrative careers for attorneys able to make partner and thrive.
In Conclusion
Biglaw equity partners earn staggering sums that seem almost inconceivable to outsiders. While exact pay remains shrouded in secrecy at top firms, the most elite partners take home anywhere from a few million to tens of millions per year on average.
These hefty profits result from client billing rates that can surpass $1,000 per hour for top partners who control valuable books of business. Biglaw remains extremely lucrative despite economic pressures cutting into firm profit margins in recent years. Lawyers who can achieve the rare feat of making partner and building their own client base are rewarded with a lucrative set-for-life career if they play their cards right.
Frequently Asked Questions
How common is it to make partner at a Biglaw firm?
Very few associates reach the partner level at major firms. Only around 1-2% are promoted to partner. The odds are slightly better at smaller firms with 5-10% making partner. It typically takes at least 8 years before an associate is considered for partner.
Do Biglaw partners get yearly bonuses?
Most firms pay partners strictly based on their shares of annual profits. However, some firms also award special one-time bonuses to productive partners who generate major business. Bonuses can reach millions of dollars for senior partners.
How much do partners keep after distributing to others?
The largest, most senior partners at elite firms generally keep well over 50% of all profits they generate through their client billings, after accounting for payments to associates working on their matters and the partner’s share of firm overhead expenses. Top rainmakers can keep 70% or more of their collections.
Do law firm partners ever get fired?
It is rare since partners are co-owners, but poor performing partners not pulling their weight may get pressured to leave “voluntarily” or have their pay sliced drastically. Most firms have policies where partners can be expelled with a majority vote if their metrics fall below expectations for an extended time period.
How much debt do partners have from law school?
Biglaw partners able to earn millions per year typically pay off any remaining student loans quickly once they make partner. Even associates earning six figures generally pay down most of their debt within a few years of entering large firms. The high salaries enable fast repayment.