A Guide to Law Firm Partnership Structures

Navigating one’s law firm partnership structure isn’t just about achieving a rank. For many lawyers, attaining the status (and accompanying ownership, profit potential, and prestige) that comes with becoming a partner is a lifelong career goal.

However, capturing that dream isn’t always an easy feat—especially with the variability of law firm partnership models today.

While you may have a vision of what your partnership track could look like, the traditional structure is no longer the only option. If you’re an lawyer looking to become a partner, start by learning the ins and outs of your firm’s partnership structure. That way, you can master the rules of the game you’re playing.

In the following guide, we’ll start highlighting some law firm partnership models. Then we’ll explore what a partner is and what their responsibilities are. We’ll also provide tips for increasing your chances of becoming a partner in a law firm.

How do partnerships at law firms work?

Law firm partnership structures can take many forms. In addition, the criteria for choosing a law firm partner varies from firm to firm, depending on the law firm’s partnership model.

Traditional law firm partnership structures tend to choose partners based on years of experience and billable hours. In contrast, newer law partnerships models tend to have different pay and profit-sharing structures. Newer partnership models may also select partners based on alternative performance factors.

Let’s explore some of the common types of law firm partnership structures.

Traditional law firm partnership structures

Traditional law firm partnership models reward experience and incentivise bringing in clients and revenue. Typically, people believe these are key factors to long-term success at a law firm. Commonly, traditional law firm partnership models follow a single-tier approach, where:

• Firms promote senior lawyers from within the firm to partners after a certain number of years of experience.
• Firms compensate these equity partners with a share of the profits and additional powers over factors like firm decision making, usually in exchange for a buy-in.

Different firms calculate profit shares differently, depending on the firm’s structure and size.

Profit-sharing models

Law firm profit sharing is complex, with many law firms creating their own formula for profit sharing and compensation. In profit sharing, the law firm’s employees are given a percentage of the firm’s profits based on the firm’s earnings. In some law firms, all partners share equally in the profits, whereas in others, senior partners might receive double the shares.

Formula-based model

In a formula-based model, the law firm develops a compensation formula based on a variety of factors such as, billable hours, client list, business development, or other important contributions. This model rewards multiple aspects of performance rather than focusing on only one or two. It also provides transparency into the compensation structure. Despite considering multiple factors, it still might not account for all valuable contributions to the law firm.

What is the law firm hierarchy of titles? What is the hierarchy of titles in a law firm?

As owners, law firm partners are typically at the “top of the pyramid” in a law firm. Below partners, you will find associates—lawyers who are employed by the law firm but do not have ownership of the business. In addition, some law firms may also engage the services of “of counsel” lawyers who are not employees of the firm but work for the firm as independent contractors. Typically, “of counsel” lawyers are specialists or highly experienced lawyers who offer their services to a law firm on a part-time basis.

Challenges of traditional law firm partnership structures

However, some challenges commonly emerge when we look more closely at traditional law firm partnership structures:

• Time and skill aren’t always parallel paths. When promoting lawyers to partners, traditional law firm partnership structures tend to prioritise lawyers’ years of experience over skill levels. However, time and skill levels don’t always correspond with each other.
• Promoting from within isn’t always what’s best for the firm. Similarly, hiring partners outside of the standard path (laterally or externally instead of from within) complicates things.
• Traditional law firm partnership structures leave non-lawyer staff out of the equation. If a firm’s partnership and profit-sharing model focuses on rewarding lawyers who bring in the most work, non-lawyer staff and non-partners may feel undervalued. If non-lawyer staff feel undervalued, the firm will likely experience high turnover and low morale. Non-lawyer staff will also likely feel disincentivised to push to meet firm goals.
• Lawyers can become overly focused on competition. When the partnership is linked directly to hours and experience, lawyers can get bogged down with issues like office politics and burnout from billing quotas.

Origination credit vs. work performance

One of the most common challenges of traditional partnership structures is that it can drive competitiveness. When partners have the responsibility (and profit reward) of bringing in new business, other lawyers and non-equity partners have less incentive to participate.

To mitigate this, some law firms may give credit and origination bonuses to partners who bring in new cases—and reward lawyers who perform work on the matter.

Consider a scenario where a partner brings a case to the firm, but another lawyer performs the work. Depending on the compensation structure, the partner could receive a percentage of origination credit for the work the colleague completed. At the same time, the colleague who did the work would also receive a percentage of the revenue from the work they completed.

However, when using this type of structure, it’s important to bear in mind any potential for discrimination or misuse of the model that prioritises certain demographics.

Other law firm partnership structures

Not all law firms adopt a wholly traditional law firm partnership structure. By rethinking roles and types of partners, more law firms are adopting different law firm partnerships models. Examples of other law firm partnership structures include:

Traditional lockstep partnership structure

In a traditional lockstep law partnership model, a partner’s compensation increases as their seniority and years of service increase. This model encourages partners to stay with one firm, increasing stability and reducing competition. A drawback, however, is that high performers may not be adequately compensated for their work because compensation is directly tied to years of service.

Eat-what-you-kill partnership structure

Rather than tying compensation to years of service, some law firms compensate partners based on the revenue they generate, rewarding individual performance. This encourages partners to bring in more business and ensure their current clients are happy. However, it can also promote competition rather than collaboration.

Modified lockstep model

The modified lockstep model combines lockstep and eat-what-you-kill law firm partnership models. The base compensation uses a lockstep structure where partners are compensated for their years of service. Bonuses and additional compensation are based on individual performance. This balances firm stability with performance incentives, and encourages teamwork and individual achievement. It can be complicated to administer, however.

Two-tier partnerships

This common law firm partnership structure is a twist on the traditional. With two-tier partnerships, instead of all partners splitting ownership of the firm, not all partners are equal.

In this model, some partners are equity partners, while others are non-equity partners. Equity partners have to fund a buy-in for owning a portion of the firm. Non-equity partners don’t have to buy-in, but also don’t have an ownership stake in the firm. Non-equity partners often continue to receive a salary as their compensation—instead of being paid based on firm profits.

Why become a non-equity partner? Non-equity partners may not enjoy the ownership that equity partners have access to, but they receive the prestige of holding the title of partner. Depending on the firm, non-equity partners may also have additional powers like limited voting rights. This allows equity partners to show their confidence in a non-equity partner, without thinning the power of their firm ownership.

After a few years, most non-equity partners usually get the opportunity to become full equity partners.

Managing vs. senior law firm partners

While the law firm hierarchy varies by firm, many firms further differentiate their partnership model to include senior partners and/or a managing partner.

This type of hierarchy may not make sense for small law firm partnership structures. Small firms may have room for a managing partner or senior partners, but likely not both. However, in a medium or larger-sized law firm, senior partners report to the managing partner, who typically also takes on firm management, operational, and strategic duties in addition to legal practice at the firm.

Solo law firms

If becoming a partner at a large law firm doesn’t fit with your career path, starting your own law firm is one excellent way to become your own boss. When running a solo practice, you set your own rates and have the flexibility to make decisions about the firm yourself.

However, starting a law firm may not be the best choice for everyone. While you can immediately become the sole partner at your own firm, it can take a few years (and a lot of support) to get a new firm running and profitable.

Responsibilities and benefits of being a partner

In the law firm hierarchy, law firm partners are considered senior-level positions.

Responsibilities often include:

• Managing key client relationships, bringing in new clients and ensuring client satisfaction.
• Contributing to the law firm’s growth by identifying new business opportunities and developing strategies to attract new clients.
• Managing teams, overseeing junior lawyers and sometimes running practice groups.
• Overseeing the financial health of the firm by managing budgets, reviewing financial reports, and making decisions regarding profitability.
• Handling complex legal work, providing strategic direction, and offering expertise on legal matters.
• Hiring new talent and developing junior lawyers at the firm.

Benefits of being a partner:

• Financial rewards in the form of higher salary and, in some cases, a share of the firm’s profits.
• Equity ownership in some cases, which offers higher potential for financial rewards.
• Ability to guide the firm’s strategic direction, influence major decisions, and set operational policies.
• Professional prestige that comes with achieving partner status.
• Autonomy and influence that comes with having more control over their work, which allows them freedom to shape their practice area and client base.

Qualifications and criteria for becoming a partner

Moving up the law firm hierarchy to become a partner typically requires lawyers to have a combination of experience and achievements. The first steps are to obtain a law degree from an accredited law school and pass the bar exam.

Following that, lawyers usually need several years of experience, between 6 and 10 years depending on the law firm partnership structure. They should also have a solid record of handling cases, transactions, and other legal matters.

There are also some characteristics that law firm partners should have:

• Ability to attract and retain clients
• Networking skills
• Deep understanding of the law
• Ability to handle complex legal issues
• Expertise in transactions or litigation
• Understanding of financial matters such as budgeting, billing, and profitability
• Strategic thinking
• Leadership skills
• High ethical standards and integrity
• Alignment with the firm’s culture and values, including active participation in committees and initiatives.

Lawyers set their own rates

Although the structure may be traditional, firms can differentiate themselves by allowing their lawyers to set their own rates. When partners and lawyers can set their own rates, they work like entrepreneurs—free from billing quotas and the billable hour. This type of system works well for firms that want the freedom to incorporate alternative fee structures in their practice.

How to become a law firm partner

The first step to working up the law firm hierarchy and becoming a partner is to learn about the specifics of your law firm’s partnership structure. You’ll need to know the criteria for your case if you want to meet them and put yourself on the potential partnership track.

Familiarise yourself with your firm’s partnership criteria. You can usually do this by talking with current partners and reading through internal documents. Make sure you understand what your firm values most.

Steps and milestones on the partnership track

While the specific steps to becoming a partner vary by law firm, there are milestones that are typical of the journey up the law firm hierarchy.

• Hired as an associate: Introduced to the firm’s culture, policies and procedures.
• Early associate years: Regular performance evaluations to provide feedback and set goals; often working with a mentor for professional development.
• Mid-level associate: Increasing responsibility, more interactions with clients, participation in business development activities.
• Senior associate: Taking on leadership roles in the firm, bringing in new clients, actively participating in firm committees.
• Consideration for partnership: Formal review process where partners evaluate your performance, business development efforts and overall contributions.
• Navigating the promotion process and evaluation criteria

In addition to meeting any specific criteria and doing consistently excellent legal work, you should also consider the following:

Business development

A good lawyer helps a firm by serving clients, but being a partner in a law firm goes beyond client service.

If you can bring new opportunities to your firm—from establishing new client relationships to finding additional revenue streams—you can make yourself more valuable. This is why making business development part of your professional journey is key to your success as a lawyer and a potential partner.

Develop a niche or specialty

If you and your fellow firm associates are working at the same level, excelling in a niche area is a smart way to set yourself apart. Developing a niche could mean identifying a legal area that your firm works in, but no one else has real expertise in; or focusing your work on a specific industry.

In addition to taking on cases or volunteering to assist on projects in that niche, focusing your ongoing lawyer training (such as CPD learning, conferences, and courses) in that area of law can raise your profile within the firm. Developing a niche or specialty can also help elevate you towards a partner track more quickly.

Building a strong professional reputation

No matter what law firm partnership model your practice follows, it’s in your best interest to stand out from the crowd positively.

Your goal should be to:

1. Identify your brand, including your exceptional skills and abilities.
2. Find ways to communicate and showcase your distinct brand.
3. Manage how people perceive that brand.

To develop your personal brand, you might consider a combination of strategies like:

• Writing articles in your niche are for legal publications and blogs.
• Speaking at legal events and conferences.
• Refreshing and refining your professional profile online. For example, you can leverage your LinkedIn profile to build your brand.

Networking and maintaining good professional relationships

Building and maintaining a network of strong professional relationships is a pillar of success for any lawyer. Networking is also especially important if you want your firm to see and support you as partner material.

If you struggle with networking, you’re not alone. But it’s in your best interest to develop your skills so you can build better professional relationships. 

Provide a client-centred experience

As Jack Newton explains in his book, The Client-Centered Law Firm, today’s legal clients have many options when it comes to legal services. That’s why law firms who want to stay competitive must adopt a client-centred approach.

Similarly, lawyers who want to differentiate themselves within their firm can strive to deliver a client-centred experience and consistently exceed client expectations. This could mean strategies like:

• Reframing your decision making to put clients first.
• Actively improving your client communication skills. For example, you can improve your client communication skills by finding ways to give clients regular updates on their case status.
• Prioritising building positive client relationships so you can create lasting clients for you and your firm.

Strong, lasting relationships with clients are a solid foundation for building your case for partnership at your firm.

Find a legal mentor

No matter what point you’re at in your legal career, finding a legal mentor is a valuable way to look beyond where you are at the present moment. If becoming a law firm partner is your goal, working with a mentor who is already a partner can be helpful. For example, a mentor may be able to help you set professional goals or focus your career vision.

As you move up the partnership track, seek opportunities to take on leadership roles within the firm. You can lead committees, organise events, or mentor junior associates. Each of these activities shows your commitment to the future of your firm.

Conclusion

Navigating today’s law firm partnership structures can be challenging. Traditional law firm partnership models are no longer the sole option for lawyers. Lawyers now have more types of partnerships—and potential paths to partnership—to consider.

Whatever type of law firm partnership structure you’re working with, becoming a partner requires more than just good legal work. Attorneys who want to become partners need to show that they can bring in new clients and have a mind for the business side of running a law firm.

By learning the specifics of your firm’s partnership structure and setting yourself apart through strategies like business development, networking, and creating exceptional client experiences, you can increase your chances of being a partner.

What is a partner in a law firm?

The typical definition of a law firm partner is an attorney who buys an ownership interest in the firm and receives a share of the profits. Partners can be further differentiated by whether they are non-equity, managing, or senior partners.

How much does a partner at a law firm make?

A partner at a law firm is generally compensated with a share of the firm’s profits, in exchange for an initial buy-in payment to achieve partnership status. A non-equity partner does not have an ownership stake and usually receives salary compensation.

We published this blog post in June 2024. Last updated: August 12, 2024.

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