A Guide to Law Firm Partnership Structures

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Navigating one’s law firm partnership structure isn’t just about achieving a rank. For many lawyers, attaining the status (and accompanying ownership, profit potential, and prestige) that comes with becoming a partner is a lifelong career goal.

However, capturing that dream isn’t always an easy feat—especially with the variability of law firm partnership models today. 

While you may have a vision of what your partnership track may look like, the traditional structure is no longer the only option. If you’re an attorney looking to become a partner, your first step is learning the ins and outs of your firm’s partnership structure. That way, you can master the rules of the game you’re playing. 

In the following guide, we’ll provide an overview of the most common law firm partnership models—from traditional structures to increasingly common models like two-tier partnerships. We’ll also provide tips for increasing your chances of becoming a law firm partner.

law firm partner structure

How do partnerships at law firms work?

Law firm partnership structures can take many forms. But the central idea is that partners generate revenue at the firm in exchange for a share of ownership and profits.

The criteria for choosing a law firm partner varies from firm to firm, depending on the law firm’s partnership model. 

Traditional law firm partnership structures tend to choose partners based on years of experience and billable hours. In contrast, newer partnership models tend to have different pay and profit-sharing structures. Newer partnership models may also select partners based on alternative performance factors.

Let’s explore some of the common types of law firm partnership structures.

Traditional law firm partnership structures

Traditional law firm partnership models reward experience and incentivize bringing in clients and revenue. Typically, people believe these are key factors to long-term success at a law firm. Commonly, traditional law firm partnership models follow a single-tier approach, where:

  • Firms promote senior lawyers from within the firm to partners after a certain number of years of experience.
  • Firms compensate these equity partners with a share of the profits and additional powers over factors like firm decision making, usually in exchange for a buy-in. Different firms calculate profit shares differently, depending on the firm’s structure and size. 

Learn more about law firm profit sharing and compensation models.

Challenges of traditional law firm partnership structures 

However, some challenges commonly emerge when we look more closely at traditional law firm partnership structures:

  • Time and skill aren’t always parallel paths. When promoting lawyers to partners, traditional law firm partnership structures tend to prioritize attorneys’ years of experience over skill levels. However, time and skill levels don’t always correspond with each other.
  • Promoting from within isn’t always what’s best for the firm. Similarly, hiring partners outside of the standard path (laterally or externally instead of from within) complicates things.
  • Traditional law firm partnership structures leave non-lawyer staff out of the equation. If a firm’s partnership and profit-sharing model focuses on rewarding lawyers who bring in the most work, non-attorney staff and non-partners may feel undervalued. If non-lawyer staff feel undervalued, the firm will likely experience high turnover and low morale. Non-lawyer staff will also likely feel disincentivized to push to meet firm goals. 
  • Lawyers can become overly focused on competition. When the partnership is linked directly to hours and experience, lawyers can get bogged down with issues like office politics and burnout from billing quotas.

Other law firm partnership structures

Not all law firms adopt a wholly traditional law firm partnership structure. By rethinking roles and types of partners, more law firms are adopting different law firm partnerships models. Examples of other law firm partnership structures include:

Two-tier partnerships

This common law firm partnership structure is a twist on the traditional. With two-tier partnerships, instead of all partners splitting ownership of the firm, not all partners are equal. 

In this model, some partners are equity partners, while others are non-equity partners. Equity partners have to fund a buy-in for owning a portion of the firm. Non-equity partners don’t have to buy-in, but also don’t have an ownership stake in the firm. Non-equity partners often continue to receive a salary as their compensation—instead of being paid based on firm profits.

Why become a non-equity partner? Non-equity partners may not enjoy the ownership that equity partners have access to, but they receive the prestige of holding the title of partner. Depending on the firm, non-equity partners may also have additional powers like limited voting rights. This allows equity partners to show their confidence in a non-equity partner, without thinning the power of their firm ownership. 

After a few years, most non-equity partners usually get the opportunity to become full equity partners.

Managing vs. senior law firm partners

While it’s slightly different in each law firm, many firms further differentiate their partnership model to include senior partners and/or a managing partner.

This type of hierarchy may not make sense for small law firm partnership structures. Small firms may have room for a managing partner or senior partners, but likely not both. However, in a medium or larger-sized law firm, senior partners report to the managing partner, who typically also takes on firm management, operational, and strategic duties in addition to legal practice at the firm.

Solo law firms

If becoming a partner at a large law firm doesn’t fit with your career path, starting your own law firm is one excellent way to become your own boss. When running a solo practice, you set your own rates and have the flexibility to make decisions about the firm yourself. 

However, starting a law firm may not be the best choice for everyone. While you can immediately become the sole partner at your own firm, it can take a few years (and a lot of support) to get a new firm running and profitable.

Origination credit vs. work performance

One of the most common challenges of traditional partnership structures is that it can drive competitiveness. When partners have the responsibility (and profit reward) of bringing in new business, other lawyers and non-equity partners have less incentive to participate. 

To mitigate this, some law firms may give credit and origination bonuses to partners who bring in new cases—and reward lawyers who perform work on the matter. 

Consider a scenario where a partner brings a case to the firm, but another attorney performs the work. Depending on the compensation structure, the partner could receive a percentage of origination credit for the work the colleague completed. At the same time, the colleague who did the work would also receive a percentage of the revenue from the work they completed.

However, when using this type of structure, it’s important to bear in mind any potential for discimination or misuse of the model that prioritizes certain demographics

Lawyers set their own rates

Although the structure may be traditional, firms can differentiate themselves by allowing their attorneys to set their own rates. When partners and lawyers can set their own rates, they work like entrepreneurs—free from billing quotas and the billable hour. This type of system works well for firms that want the freedom to incorporate alternative fee structures in their practice.

law firm partner structure

How to become a law firm partner

The first step to becoming a partner is to learn about the specifics of your law firm’s partnership structure. You’ll need to know the criteria for your case if you want to meet them and put yourself on the potential partnership track. 

In addition to meeting any specific criteria and doing consistently excellent legal work, you should also consider the following:

Understand that there is no secret formula

Even with traditional law firm partnership structures, there are no guarantees when it comes to becoming a partner. However, you can take steps to help showcase your value and stand out from the crowd. Your best bet? Do excellent work as an attorney, while also integrating some (or even all) of the following strategies into your day-to-day career.

Business development

A good lawyer helps a firm by serving clients, but a law firm partner goes beyond client service. 

If you can bring new opportunities to your firm—from establishing new client relationships to finding additional revenue streams—you can make yourself more valuable. This is why making business development part of your professional journey is key to your success as a lawyer and a potential partner.

Learn more about how to integrate business development strategies into your role as an attorney.

Develop a niche or specialty

If you and your fellow firm associates are working at the same level, excelling in a niche area is a smart way to set yourself apart. Developing a niche could mean identifying a legal area that your firm works in, but no one else has real expertise in; or focusing your work on a specific industry. 

In addition to taking on cases or volunteering to assist on projects in that niche, focusing your ongoing lawyer training (such as CLE learning, conferences, and courses) in that area of law can raise your profile within the firm. Developing a niche or specialty can also help elevate you towards a partner track more quickly.

Develop a personal brand

No matter what law firm partnership model your practice follows, it’s in your best interest to stand out from the crowd positively. 

Your  goal should be to:

  1. Identify your brand, including your exceptional skills and abilities
  2. Find ways to communicate and showcase your distinct brand
  3. Manage how people perceive that brand

To develop your personal brand, you might consider a combination of strategies like:

Networking and maintaining good professional relationships

Building and maintaining a network of strong professional relationships is a pillar of success for any attorney. Networking is also especially important if you want your firm to see and support you as partner material. 

If you struggle with networking, you’re not alone. But it’s in your best interest to develop your skills so you can build better professional relationships. For example, being prepared with these top attorney networking tips can help make networking feel more focused and less vague. 

Provide a client-centered experience

As Jack Newton explains in his book, The Client-Centered Law Firm, today’s legal clients have many options when it comes to legal services. That’s why law firms who want to stay competitive must adopt a client-centered approach. 

Similarly, attorneys who want to differentiate themselves within their firm can strive to deliver a client-centered experience and consistently exceed client expectations. This could mean strategies like:

law firm partner structure

Find a legal mentor

No matter what point you’re at in your legal career, finding a legal mentor is a valuable way to look beyond where you are at the present moment. If becoming a law firm partner is your goal, working with a mentor who is already a partner can be helpful. For example, a mentor may be able to help you set professional goals or focus your career vision.

Not sure where to start? Our guide on legal mentors—and how to find one—can help get you started. 

Conclusion

Navigating today’s law firm partnership structures can be challenging. Traditional law firm partnership models are no longer the sole option for lawyers. Lawyers now have more types of partnerships—and potential paths to partnership—to consider. 

Whatever type of law firm partnership structure you’re working with, becoming a partner requires more than just good legal work. Attorneys who want to become partners need to show that they can bring in new clients and have a mind for the business side of running a law firm.

By learning the specifics of your firm’s partnership structure and setting yourself apart through strategies like business development, networking, and creating exceptional client experiences, you can increase your chances of being a partner.

Categorized in: Business

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