Partner @ Law Firms - Unanticipated Expenses/Income or Disappointed with Starting Compensation

[Anonymous]

Has anyone who became a partner at a mid-size or big law firm tell me if they were surprised or disappointed by their starting compensation? I read an article that at some firms partners receive a draw against income (instead of salary) that starts small in the beginning of the year and increases as the year progresses, but the draw is much less than their salary as a senior associate/counsel and partner profits are distributed once a year (at the end of the calendar/fiscal year). If this is true, have you encountered any difficulty in budgeting your household expenses? Is it true you pay for your share of health insurance? Did you find yourself in a better financial condition after a year in terms of knowing how to budget (I know the firm's profits vary by year). What advice would you give a senior/associate/counsel that you wish you had known regarding compensation and expenses of being a partner at a law firm?

This the article I read - http://www.abajournal.com/magazine/article/i_wish_i_had_known/

[Anonymous]

Pity the poor partners.

[Anonymous]

It actually depends on the firm. At my old mid/big firm, as a partner, even a draw partner, you are considered self employed. Thus, whatever taxes your firm used to pay for you as your employer, you now pay yourself (FICA, I think it is). Plus, most firms do not pay any portion of health insurance premiums for partners. Thus, even if you get the exact same compensation you got before you made partner, you lose money. At that firm, as a partner, I got paid monthly instead of twice monthly. I also got a "draw" against my "income". As a "draw" partner however, I never realized any additional "income." Thus, aside from bonuses, that's all I got. As an equity partner at the same firm, I actually took home less monthly draw, but got an end of the year distribution of my share of the profits. It took me years as an equity partner to get ahead on bills. Plus, as a partner, you get the added fun of paying quarterly estimated taxes. One year, I actually had to put that on a HELOC.

I am currently a "shareholder" in my current firm. As such, I am a w-2 employee, so my health insurance premium and my FICA taxes are paid. Make a huge difference in take home. I still get a "draw" and the true up is at the end of the year.

[Anonymous]

Anonymous wrote:Pity the poor partners.

Pity the small business, because that is what you are as a partner, with the government then getting to double dip on taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pity the poor partners.

Pity the small business, because that is what you are as a partner, with the government then getting to double dip on taxes.

a partnership does not pay any taxes at the partnership level (in fact most small businesses don't) so I don't know what double dip you are talking about.



FWIW, my old firm tried to arrange things so that the new partners didn't take home less than they did before making partner, but it didn't always happen.

[Anonymous]

This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

[Anonymous]

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

[Anonymous]

I remember years ago my office was next to a new income partner. He spoke so loudly that I could hear every conversation. He had multiple conversations with senior (equity) partners about how he was taking a pay cut to become a partner. Apparently, one of their counter arguments was that they, as equity partners, were responsible for the lease. So new income partner would tell them he'd be happy to sign the lease. He ultimately left for another firm bc of comp.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

Sorry, don't buy it. There's no one in HR that can be asked? No one who's already a partner, assuming one would have built relationships over the 7-10 years you mention? This is all a load of crap and even more fuel for the 'BigLaw lawyers are overpaid paper pushers' argument.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

Sorry, don't buy it. There's no one in HR that can be asked? No one who's already a partner, assuming one would have built relationships over the 7-10 years you mention? This is all a load of crap and even more fuel for the 'BigLaw lawyers are overpaid paper pushers' argument.

Not the PP, but, to answer you...you don't know jack about how firms operate. NO, HR won't tell you what you'll be offered, they probably don't even know. And no, most associates can't ask how much they will be offered in advance, it would make them look bad because 1) partners don't like to answer questions about their compensation and 2) associates should never appear to assume that they will make partner. It's the way it is.

[Anonymous]

I am weeping crocodile tears for all the sweet defenseless new partners suffering in their Brooks Brothers suits.

[Anonymous]

Anonymous wrote:I am weeping crocodile tears for all the sweet defenseless new partners suffering in their Brooks Brothers suits.

Here are the questions OP asked:

If this is true, have you encountered any difficulty in budgeting your household expenses? Is it true you pay for your share of health insurance? Did you find yourself in a better financial condition after a year in terms of knowing how to budget (I know the firm's profits vary by year). What advice would you give a senior/associate/counsel that you wish you had known regarding compensation and expenses of being a partner at a law firm?

If you don't have anything helpful to contribute - and from your response, it appears that you don't - why bother? Is it just that you can't contain your envy?

[Anonymous]

Anonymous wrote:

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

It is common for a new partner to take a pay cut when he/she becomes partner. I took around a 30% hit when I became a partner.

It is typical that a new partner does not get a salary. How compensation happens is up to the firm, but at my firm, the firm pays out the partnership profits in December, and then the partners don't get paid again until April or so.

Many firms have a buy-in. You don't just become an equity partner. You purchase equity in the firm. At my firm the buy-in check in the low 6 figures.

If the firm doesn't make money, you don't get paid. My firm has had years where I made a lot of money and years when I made no money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

Sorry, don't buy it. There's no one in HR that can be asked? No one who's already a partner, assuming one would have built relationships over the 7-10 years you mention? This is all a load of crap and even more fuel for the 'BigLaw lawyers are overpaid paper pushers' argument.

HR doesn't know this stuff. They don't have any idea what their bosses are paid.

A partner might lay it out for you and he/she might not. It depends on the partner.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This article is absurd. These big-time lawyers don't ask questions? They're all boo-hoo'ing about how they weren't told certain things, but - who accepts a job offer at any level without understanding how their compensation is offered/affected. Here's one of my favorite quotes:

“I wish I’d have known that my in­come wouldn’t grow any more than it did, but nobody said anything,” says “Sue,” who became a nonequity partner at a midsize Boston firm in 2006. “I’d have had the same increase if I’d have remained an associate.”

Why didn't you ask? Boo hoo, fat cats.

This makes BigLaw partners look like even bigger jackasses than many already think they are.

You are not informed about the compensation package prior to accepting the offer so what are you talking about? At most firms you work your butt off for 7-10 years and then are up and out (eligible, but not offered) or you are eligible and invited to become a partner and THEN you learn how the partnership operates and how compensation works.

It is common for a new partner to take a pay cut when he/she becomes partner. I took around a 30% hit when I became a partner.

It is typical that a new partner does not get a salary. How compensation happens is up to the firm, but at my firm, the firm pays out the partnership profits in December, and then the partners don't get paid again until April or so.

Many firms have a buy-in. You don't just become an equity partner. You purchase equity in the firm. At my firm the buy-in check in the low 6 figures.

If the firm doesn't make money, you don't get paid. My firm has had years where I made a lot of money and years when I made no money.

I also lost all firm subsidies for health insurance. I receive the same match on 401(k).