Everyone is talking about the recent Partners Compensation Survey conducted jointly by Major, Lindsay and Africa, and Law 360. Perhaps rightly so. The data for the Survey came from some 1800 equity and nonequity partners. While it was not specified, my guess is that those surveyed primarily came from larger firms.
The big headline from the Survey is that 2021 was a great year to be a partner in big law, at least financially. It was a record year across the board. So much for the notion that you can’t be productive working from home. But there were some other takeaways that are perhaps not so attention-grabbing. I recently talked with Craig Savitzky of Law360 about some of these.
Here is what caught my attention:
Consistent with everyone else, partners (2/3rds of them) want to work remotely. Although, as the recent announcements of Ropes and Gray, and Cravath suggest, they don’t necessarily want to give everyone else the same freedom.
While it was a record year for compensation for partners, the average rate increase in 2021 was 5%. That sounds good, but it probably didn’t keep up with inflation in 2021 and certainly won’t this year. If demand declines (and it seems to be), then law firms and partners might face a squeeze.
Another potentially troubling finding: average originations increased only slightly. This slight increase may be because partners didn’t have time to chase new business like they used to. But if present work declines and rates don’t increase much, partners may regret not being more aggressive about origination. In addition, Savitsky and I both speculated that the compensation increases primarily came from increased revenues. Not decreased costs. So if revenue declines, firms may be forced to cut costs, perhaps even significantly, to keep compensation