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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Unfortunately this is when lots of associates learn that they're not really a "good fit" for the firm and big law shows them the door.  The rest are invited to pay the partnership $$$$$$$ to join the club.  Then they learn what hard work is. [/quote]
OK, please excuse this really dumb question, but... how does this work? A 7 or 8 year associate has to pay the firm to be promoted to partner? Is that a cash buy, or does it come out of future salary/ earnings?[/quote]
If you are asked to be a partner, and you accept, you have to buy a share of the partnership (capital contribution).  This is essentially an interest-free loan to the firm, which lasts as long as you are a partner.  The cost of the buy-in depends on the firm, but most BigLaw buy-ins I've heard of charge about 15-50% of your total compensation, often with escalating percentages for the more senior partners.  So for example, a relatively junior partner might be told she's scheduled to make $350,000, and thus is required to contribute $87,500 (25%).  Those big kahuna equity partners making $1 million might have $400-500k locked up in the firm.  You pay the buy-in about the same time you make partner (before you've actually been paid any of that partner salary!), which usually means that you have to take out a big loan from the bank and start paying interest immediately.

And if you're an equity partner, you are not guaranteed any of that big salary.  You might receive only about 60% of your total anticipated salary in month-to-month payments throughout the year.  Only if the firm makes budget do you receive the other 40% of your salary at the end of the year.  There's plenty of upside potential in a good economy, but lots of downside too.  For example, in Howrey's last year, the firm missed budget by something like 45%.  That means many equity partners made only about half of what they expected, and even were asked to pay money back to the firm at the end of their year.

As a practical matter, what all this means is that junior partners are often relatively cash poor.  Although their anticipated salary increased when they made partner, their monthly paycheck might decrease from when they were associates.  And they're making interest & principle payments on top of that to cover the capital contribution loan.  Many complain that they earn less as junior partners than they did as senior associates.

Of course, no one should be crying for all these jokers, because they're all still in the top 2% of income earners.  But it's no bed of roses either.[/quote]

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