I am the managing partner of a six lawyer firm in Nashville, Tennessee. There are two partners in the firm, myself and another partner, and we have four associate attorneys. Two of our associates have been with firm for over ten years. We are trying to put in place a career progression policy for them and we are thinking about having a non-equity and equity tier which would serve as a prerequisite to equity partnership. What are the differences between the expectations and requirements for non-equity and equity partner?
The main difference between an equity partner and non-equity or income partner is that the equity partners assumes a higher degree of capability in a lot of areas, not just good lawyering. Equity partners are expected to develop business, to manage large client relationships, and to have a level of commitment that allows them to do all of that and maintain a very full practice load at the same time. Non-equity or income partners are generally lawyers that are excellent lawyers in his or her field but doesn’t satisfy the other requirements required of equity partners. In addition, equity partners usually invest capital in the firm and assume the risks of the office lease, credit line, and other liabilities. Non-equity partners usually have guaranteed salaries and equity partners do not.
Here are a few of the typical hurdles that are required to move up to equity partner:
- Attorney has demonstrated a high level of competence and skill in the designated practice
- Attorney provides quality client service and has the ability to nurture and expand client
- Attorney demonstrates an ability to develop a self-sustaining practice or client base.
- Attorney commits to marketing the Firm, not just self, and shows the potential of producing business for other lawyers in the firm.
- Attorney acts in a collaborative, team-orientated manner, complying with Firm policies, systems and procedures and treating all lawyers and staff with respect.
- Attorney commits to the training and supervision of others.
- Attorney demonstrates a high level of commitment to management and shows potential for making a positive contribution in some aspect of the Firm’s management.
- Attorney puts the Firm’s interests first, ahead of one’s individual interests, and
- Attorney is willing to contribute capital and make a financial investment in the firm.
The primary difference is non-equity partners focus is on lawyering and the focus of equity partners is on lawyering and being a businessperson as well – practicing law and managing a business.
John W. Olmstead, MBA, Ph.D, CMC
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