Nonequity Partners: It's Not Personal, It's Just Business - Above the Law

"Once upon a time, there were two classes of lawyers in law firms: partners and associates. The associates typically came straight out of law schools, worked for 5-7 years under the tutelage of the partners, and then most of them became partners. The ones who didn't would often end up in-house as clients, so it behooved everyone to treat each other with some respect. The partners shared in the profits and decision-making and were generally at the firm of the rest of their career."

"Nonequity partners are PINOs - partners in name only. They typically don't share in profits and have no say in decision-making. They are in fact employees of firms, just like associates. The only benefit they get is the ability to hold themselves out as "partners" to clients, itself a sleight of hand designed to make clients think they are getting something they aren't, a real partner working on their case."

"Why the Nonequity? The profession, er, business, got into this in the great expansion of lawyers that began in the 80s. All of sudden, firms were faced with large classes of associates that were up for partnership. They were also faced with more distinctions in talent within associate ranks. More than that, as the law became more of a business and less a profession, talent was more and more defined as origination of business, profitability, and hours worked."

Law firm structure shifted from a two-tier partner-associate model to a market-driven system with frequent partner moves, de-equitizations, and new non-equity roles. Nonequity partners function as partners in name only (PINOs): employees who lack profit sharing and governance but can represent themselves as partners to clients. The expansion of law school graduates in the 1980s produced large associate cohorts and wider talent variation. As firms adopted business metrics—origination, profitability, and billable hours—firms created nonequity roles to retain productive non-originating lawyers while protecting equity partners' profits and decision-making control.

Read at Above the Law