How much does a partner at a big law firm make? It’s a question that many of us have wondered but it’s, by no means, an easy one to answer. Law firms are private entities, allowing them to keep salaries and compensation figures under wraps which they chalk down to privacy concerns and not wanting to be seen as gouging clients.
For this reason, and the fact that so many factors determine a partner’s salary is why this question is a difficult one. This article explores the question “how much do partners get paid at law firms?” to give you an idea of the average partner drawing.
Not all partners are making millions
The fact that a lawyer is a partner typically means that he or she makes more money than non-partners at the same firm, but it does not necessarily mean that they are making millions per year. At the most profitable law firms in major cities, yes, partners often make millions. Wachtell Lipton Rosen & Katz in New York, for example, is the world’s most profitable law firm with profits per partner (PPP) averaging $6.5 million in 2018. Kirkland & Ellis, founded in Chicago and the largest law firm in the United States by revenue, also reported averaging $5 million in 2018.
Similarly in the U.K, Magic Circle firms Allen & Overy and Freshfields both released 2018/2019 figures showing an increase in PPP to £1.7 million and £1.8 million respectively. Seeing an even bigger increase, Silver Circle firms Macfarlanes and Travers Smith have also followed suit (£1.7 million and £1.25 million respectively as of 2018/2019). While dozens of the top law firms are dishing out PPPs averaging £1 million and more, there are also plenty of law firm partners who are earning between five and six-figure incomes.
There’s more to how much a partner really earns
How much does a partner at a big law firm make? Remember when I said this wasn’t an easy question to answer? While I started off with the money made by the high flyers of the law world, it’s important for me to highlight that these figures do not represent money in the bank!
As most equity partners have paid a pretty penny to get where they are, a portion of their earnings will go to repayments and interest on any partnership loans, a slice will go to their pension pot, and finally, they’ll also pay income tax as a self-employed person. These deductions can be significant so it’s worth bearing in mind.
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Do all big law partners get paid the same amount of money?
‘How much do partners get paid at law firms?’ doesn’t have a straight forward answer because not every partner gets paid the same. Here are some factors that determine how much money they make:
- Partners are NOT earning a salary – partners are self-employed and they get a share of the firm’s profits. Proft and loss also differ each month.
- The size of the share depends on points – profit is allocated as a bell curve with the lowest shares being distributed to junior partners who have not had the time to build up their equity points, fixed-share partners rather than full equity partners, and the low performers.
- The share also depends on the partner value – partner level, service line, the importance of their clients to the firm, their back-office duties, and fees earned per year, all determine how much they get paid.
- The firm structure – every firm has a different hierarchy and culture and will have different terms mentioned in the partnership deed.
How much do partners get paid at law firms?
Hopefully, we’ve given you some food for thought here but to leave you with a more definitive answer to ‘how much does a partner at a big law firm make?’ here are some average estimates from recent annual reports.
- $350-575k – Average income for a junior partner at a large firm for the first few years as well as non-equity partners regardless of their time at the firm.
- $3-10 million – Top lawyers at big law firms in the U.S
While there will be some instances where a young partner develops business quickly and crosses seven figures earlier than average, there will also be instances where a new partner makes only slightly more or even less than a senior associate the first couple of years due to taxes and other deductions.
The point is, partners do make more than non-partners but not all rake in millions. For many, it’s a long climb up to the equity ranks filled with blood, sweat, and tears..(Read What it really means to be Partner at a law firm)
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