Profits per partner for top firms in 2006: http://www.xoxohth.com/thread.php?thread_id=563047&mc=57&forum_id=2

For 2005: http://www.xoxohth.com/thread.php?thread_id=373243&forum_id=2

...those articles fail to adequately take into account the rise of income partners (i.e., those that do not share in the profits). To be completely fair, they should be included in the associate pay percentages, because--just like associates--they are employees.

The real story should be how fewer and fewer people are becoming equity partners. But those that do make it are being valued more and more.

Who cares about the rise of income partners. If a firm pursues that strategy in an effort to boast their PPP numbers and look bigger and better than they are, they should deal with all of the consequences and stand by the PPP number they report when it comes to comparing that number to associate salaries as well.

flawed: You have hit the nail on the head. A super star associate starting now at a two-tier firm will be lucky to be a full equity partner in 15 years. Non-equity partners have grown by 200% in the last 10 years. None of these articles take that into account; therefore, they are not even worth reading.

I think the real news is that the different between 125k in 2001 and 160k today is only 4.25% annually. So the money should be there for the raises (from billing rate increases, etc. over those 6 years). Maybe PPP is not the right thing to compare to, but I bet associate salaries are down as a percentage of revenue per lawyer too.

As for a 15 year track to full equity partner, as much as I hate to say it, it might make sense. In what other field can you achieve the highest level of your profession in 8 to 10 years?

the income partner story is not that interesting. there were always income partners on some level at most firms - they were the ones making less money. in reality even most of the equity partners in today's firms are mostly just well-paid employees.

Nice to see the "Cheapness" tag making an appearance. You should attach it to every post about partners.

It's not that the income partner story is interesting. It's that you cannot have a conversation about the growth in associate salary and growth in equity partner salary without taking into account the growth in number of income partners over the last 10 years. Growth that exceeds 200%. I do not know what the income partner salary increases have been since the 125k mark in 2000 and that's the whole point. If salaries for associates are not keeping pace because firms are keeping more associates on as income partners than they have in the past, that changes the conversation some what.

Lat: How about we try to dig up some data on income partner salaries?

I still contend that if RPL is growing, then there should be more money there to pay associates. Any amount by which RPL exceeds associate pay (and overhead) is extra money to be divided among partners. 4.25% annual growth in income in not that much (see 10:50 am). Although the increases look shocking they are merely inflationary.

An article from Jungle Law magazine (from a few years ago) sheds light on how well law firm partners have been doing relative to associates:

Are Associates Slacking Off?


How hardworking are today's lawyers compared to those of the past?

There have been several recent articles in the legal press noting that today’s newer associates—the so-
called “Generation Y”—aren’t as hardworking as they should be. It’s especially interesting that these comments are coming from law partners.

Putting aside the argument that a balanced life may not be such a bad idea, these partners’ perceptions of sloth are troubling because, in fact, nothing could be further from the truth. The complaints are no different from the stories grandparents perennially tell the younger generation about how easy everything is now, and how they had to walk five miles uphill through the snow to school when they were young.

The complaining partners may recall themselves as more hardworking than they actually were, which is understandable—it’s the way that human memory seems to work. We all remember things that stand out, such as the all-nighters we pulled or the time we had to work five weekends in a row, but we tend to forget the unremarkable in-between times.

Arguing about associates’ work ethic through anecdotal evidence is pointless—both sides of the debate could identify specific examples that support their positions until the cows come home, but it would prove nothing. Statistical evidence, however, sheds a purer light on this issue, unburdened by the subjectivity of individual perceptions. The cold, hard data, at least with respect to New York law firms (a market with available historical information), reveals several things compared with 16 years ago: namely, associates are compensated slightly less (adjusting for inflation), they bill significantly more hours, while partners earn quite a bit more, even after adjusting for inflation.

The data is quite striking. The previous rapid increase in associates’ paydays occurred in 1989, when starting salaries rose to $83,000 at large New York law firms. In 1989, the average number of hours billed by associates at large New York firms was 1,800. Today, the starting salary is $125,000, but the average hours billed has risen to 2,100.

Today’s $125,000 starting salary is certainly nice, but once you account for inflation, it actually translates into about $78,400 in 1989 dollars. New York associates are earning $4,600 less, while billing 300 additional hours per year. Thus, today’s associates are actually earning 20 percent less per hour than their predecessors. In addition, the cost of a legal education and its attendant debt burden has skyrocketed during this time period: Tuition has doubled at private law schools and more than tripled at public law schools. Partners at large New York law firms, in contrast, have fared better than their associates. In 1989, the average profit per partner for the largest New York firms was about $520,000. In 2003, it was about $1,500,000—an increase of more than three times the rate of inflation (the 2003 average profits would have been $980,000 in 1989 dollars).

So one must question the efforts by law firms’ management to increase billable hours. The stated excuse for such increased pressure is that the firm needs to offset the salary increases. Problem is, there haven’t been any.

It’s time that some honesty is injected into the debate over associates’ workload at large law firms. With the rapid increase in law firm consolidation, if young attorneys desire to do high-end legal work, they have little choice but to subject themselves to the relentless and unnecessary billing pressure of a large firm, which not only diminishes the quality of their lives, but also the legal profession as a whole.

Building on that information, associates in NYC still earn less per hour in salary than they did in 1989!

$160K in 2007 equals $94K in 1989 (in NYC). Assuming asociates are billing 2,100 hours compared to 1,800 hours in 1989, associates earn $44 per hour in 1989 dollars, compared to $46 per hour in 1989.

Bonuses more than cover the difference, but associate bonuses are undoubtedly paid for by the increase in rates, which have dramatically outpaced inflation. Furthermore, any increase in pay is completely eaten up by associates' higher educational debt burdens, which have also markedly outpaced inflation.

Keep this all this in mind the next time partners express resentment at "overpaid" associates. It is the partners who are reaping the most benefits of the boom in large law firm business, not the associates. Profits at many large law firms are up 300% over the past ten years, and they resent a 50% raise in associate salaries over the same period? Come on.