Is Equity Partnership the Right Choice for Every Associate?

By Deanne Katz, Esq. on November 13, 2012 | Last updated on March 21, 2019

Equity partnership used to be the only top position an associate could aspire to. Now, as more firms try to restructure and create a new partnership model, some are offering a nonequity partnership track that is separate from the equity track.

In some cases, associates are offered one track or another when it comes time for a promotion. In other cases, the firm hires certain associates on the nonequity track and others on the traditional equity track. Once they're placed in one track, associates can't really move to another one, according to the ABA's Law Practice magazine.

It's different from situations in which "junior partners" start out without equity and get promoted into an equity position. So when there's an offer of a permanent nonequity partnership, is it worth it?

It's not that one type of partnership is better than the other. At firms that offer both tracks, making partner is a prestigious promotion and lets you know that the firm values your work.

But just because both partnerships are important doesn't mean they're treated the same.

One of the main differences is pay. Equity partners get paid with equity, as the name suggests. Instead of getting a salary, equity partners share the firm's profits as their income. In good years that can mean a sizeable payout. But in lean years it can be less than a senior associate's salary.

Nonequity partners keep their salaries when they get promoted to partner. The job generally comes with a raise as well as a title, although the salary isn't as much as an equity partner can expect to make. Then again, it provides a stable income, something equity partners don't have.

Along with their pay, equity and nonequity partners have different work goals and incentives. Equity partners are expected to bring in more clients and focus on the business administration side of the firm.

Nonequity partners have some role in the running of the business, but they keep a larger caseload and do more of the "attorney" work than equity partners who often focus more on business.

In some firms, nonequity partners are unofficially considered "second-tier," but in public all partners are just called "partner." The firm's attitude toward different partners may also be part of your decision.

Equity partnership is the traditional idea of a law partner, but permanent nonequity partnerships provide an alternate path that may work better with your lifestyle. Don't forget to consider your options when job opportunities come knocking.

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