Making partner. That’s what it’s all about, right? From the moment you set foot in law school, partnership was beckoning you from a distance — as a measure of success, an ultimate achievement. Right up there with becoming a judge or running for office. Partnership meant money, success, prestige and power. It meant you’d made it.
Yet that prestigious title has always been steeped in mystery. And these days, getting there is tougher than ever. No longer can an associate put her head down and crank out billable hours, expecting that the call from a senior partner inviting her to join the firm’s upper echelons will surely follow. A stagnant economy means firms are offering fewer partnerships — and extending the invitation later in the game. The window for equity partnership has shifted from years five-to-seven up to years eight-to-10.
But there is an upside. Fewer spots, combined with more Canadian firms merging globally, means some firms are starting to dish on the ins and outs of their partnership structures and telling associates what it takes to join. Plus, a few ballsy associates are pushing the boundaries. Jonathan Marsden, principal of Marsden Legal Search & Recruitment, who advises lawyers and law firms on career moves and strategies, says a few will “look the senior partners in the eye and have those difficult conversations on a yearly basis, like, ‘Am I going to make it?’”
Along with mapping out a clearer path to promotion, a few progressive firms are actually disclosing financials to associates about to make partner and spearheading a truly more transparent industry.
For many firms, honesty about the partnership process starts early — very early. When Jennifer Mathers McHenry interviewed with Teplitsky, Colson LLP in 2008, founding partner Robert Colson raised the topic. “I was told that the firm seeks to hire people who will eventually be partners and I was asked up front whether that was of interest,” says Mathers McHenry. She moved to Teplitsky, Colson as a fourth-year associate after working at Lerners LLP.
Teplitsky, Colson’s philosophy — to encourage partnership out of the gate — is one shared by Davies Ward Phillips & Vineberg LLP. Here, all associates climb the same ladder to partnership: in general, at four years they’re eligible for non-unit (another name for nonequity) partnership, and two years later for unit partnership.
Some firms that traditionally had a less transparent partnership process have been inspired to open up because of international mergers. Norton Rose Canada — formed from mergers between Ogilvy Renault LLP, Macleod Dixon LLP and global behemoth Norton Rose LLP — has been working to standardize practices and guidelines for making partner with those of its international affiliates.
Recently, Norton Rose released a partnership promotion policy that lays out the objectives associates should be meeting to make partner. “Now there’s an objective set of standards to measure yourself up against,” says Dan McDonald, an employment and labour law associate who began his career at Ogilvy Renault in 2006. “It used to be a bit like trying to build a case out of mere circumstantial evidence.”
Working at an open firm helps associates map out their future and takes away some of the worry and stress of not knowing whether they’re going to make it.
At Davies, while not every associate makes partner, there are no surprises, says Patrice Thomas, who made equity partner in January 2012. “From your first year as an associate, every six months you get a comprehensive performance review. So it’s not like suddenly five years in you get this terrible review and aren’t offered partnership,” says Thomas.
Along with having more open conversations about how to make partner, some firms are being more honest about the hard figures behind the business.
At Teplitsky, Colson, partnership decisions and arrangements are made at the group level: the firm is comprised of small practice groups that operate with their own rules in regard to partnership.
“We’re an entrepreneurial shop,” says Mathers McHenry. Her practice group allowed her to negotiate her partnership agreement. That’s a big difference from the usual buy-in practice of signing on with little ability to dictate terms (see sidebar).
When Mathers McHenry was offered partnership in the Colson Group, which specializes in employment litigation, she was given the option of buying into equity partnership immediately, or contributing a much smaller amount to become an income partner. At the income partner level, she could demonstrate her commitment to partnership more gradually through a smaller capital contribution, and in return, be part of decision-making and get access to most of the business’s finances.
She took that option last year. “I wanted to take time to understand the business I was planning to buy into. Otherwise, as an associate you don’t know how the business is doing. Sure, you can do a back-of-napkin calculation, but you don’t know full costs,” she says.
Similarly, at Davies, once a lawyer becomes a non-unit partner, she gets access to most financial documents and voting rights in the majority of matters, like the recent decision to move the office from First Canadian Place to Wellington Street. The only things out of view: decision-making power on admittance to equity partnership and partner compensation. At Davies, the philosophy is, “If you treat people like owners, they act like owners.”
And talking to Thomas, it’s clear the mantra is working. “You think of things differently when you have an equity stake in how it all plays out,” she says. “When you have an equity investment you realize that your contribution affects the overall performance of the firm.”
An open process and open financials are not yet the norm in the industry. And some firms, in fact, may string associates along, warns Marsden. “Firms don’t want to lose the senior lawyers at the most profitable times in their careers; this is driving firms to try and keep a hold of senior associates as long as they can.” But he argues that it’s not only firms who need to make the path to partnership clear. “Associates have to build a case for partnership — it should be difficult to get,” says Marsden.
While not every firm is upfront about the partnership process and figures, the industry is moving toward more transparency, albeit slowly. For today’s young generation of lawyers, these changes should mean that making it will be increasingly about passing clearly defined benchmarks, not reading tea leaves.
Just sign here
You may deal with legal documents on a daily basis, but that won’t prepare you for reviewing your own partnership agreement
When it comes to signing on to be a partner, put away your hard-core negotiating skills. Adam Lepofsky, president of RainMaker Group, says most partners scrutinize the partnership agreement before they sign, but there’s little room for changes. “Once you’re admitted into the partnership, as either equity or non-equity, the firm fixes the terms, and the contract is set in stone.”
While some new partners will negotiate their compensation terms up front, most are “so elated about being admitted to partnership that they accept whatever terms are put in front of them,” says Lepofsky. So if you want to be partner, give that agreement your signature. It’s that simple.
Buying into the buy-in
Wanna make partner? It’ll cost you. To find out how the money side of things works, we talked to Jason Heath, a financial planner and managing director of Objective Financial Partners Inc.
Q: How do you buy into a partnership?
A: In rare cases, the capital loan comes out of your annual draw (this can be up to half of the amount), but in all of the cases I’ve seen, the firm arranges a loan through a bank. Typically the bank provides the loan at the prime rate of interest, which is currently three percent. So if you buy in at $100,000, you’d have to pay back $3,000 a year in interest, but the firm covers that interest, so it’s a wash.
Q: How much does it cost to buy in?
A: Anywhere between $50,000 and $500,000. I typically see $100,000 to $200,000 for mid-size firms.
Q: Since the firm pays the interest, should partners be in any rush to pay off their loans?
A: There’s not a lot of incentive for new partners to pay down the debt. Still, there’s nothing to stop you. If you’re conservative you might want to pay it off, while others might focus on their mortgage or put money in their RRSPs.
Q: What are the risks of this type of loan?
A: In the rare case that the law firm goes bankrupt, you’ll never see that money again.
Q: Recently, the laws changed to allow partners to register as corporations. Good idea?
A: There are costs involved to incorporate and some firms allow you to, while others don’t. Incorporating can be a way for a lawyer to pay less tax. It’s best to seek advice from an accountant or a tax lawyer at your firm to see if it’s a good fit.
Make partner! 5 easy steps!
Making partner is about more than just putting in your time. You’ve got to be strategic. Carrie Heller, president and founder of The Heller Group Legal and Executive Search, suggests these five smart moves
1. Build your book of business: Don’t solely depend on partners to feed you work — aim to be self-sustaining. Go to networking events, take prospects out for lunch or drinks, or cold-call potential clients.
2. Find a champion: Find a senior partner who has influence to be your champion. If she likes you, she’ll introduce you to her clients and teach you how to get some of your own.
3. Be visible: Think of yourself as a mini-corporation and build visibility through social media, writing and speaking engagements that can position you as an expert.
4. Bill, bill, bill (and bring in business): Work hard and maintain high billable hours. But billing high isn’t enough to make partner in most firms — you also have to demonstrate the ability to bring in new business.
5. Think beyond bill, bill, bill: Contribute to the firm in meaningful ways. Mentor junior lawyers, display leadership potential or volunteer on boards and committees.
What’s with equity?
Non-equity partnerships (also known as income, salaried, junior equity and non-unit partnerships) are becoming common in more and more firms. Should you consider signing on? We stack up the differences
|Capital contribution||Yes, at least $50,000||No, but a few firms ask you to chip in a smaller sum to show your commitment|
|Average year of practice||8–10||4–6|
|Decision-making power||Varies. Usually votes in most firm matters, including employee and partner compensation, admittance to partnership||Varies. Usually votes in non-compensation and non-financial matters, i.e. standards committee, subcommittees|
|Access to information||All documents (except partner earnings in closed-compensation firms)||Usually most financial documents, except for partner compensation|
|Compensation||Tied to your own “points” and the firm’s annual performance. Fluctuates year-to-year||Fixed salary, ranging from $250,000 to $600,000|
|Expected to bring in new clients||Yes||Yes|
|Expected to bring in work for associates||Yes||No (but it’s a bonus if you do)|
|One-way ticket to the top?||Financially, yes, but only if you bring home the bacon via landing new clients||Some firms treat this as a legitimate stepping stone, others keep you in limbo here for the highest-earning years of your career|
Photography by Andrew B. Myers