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Why BigLaw Is Backtracking on the Non-Equity Partner Trend

Andrea Coe law360.com

BigLaw's non-equity partner ranks grew at a faster rate than any other law firm job title over the past six years, but the trend appears to be reversing as some firms counsel out income partners in an effort to save on costs and boost profitability.

Income partner headcount at U.S. law firms saw a compound annual growth rate of 3.4 percent between 2010 and 2016, according to research conducted by Citi Private Bank's law firm group, far outpacing both equity partner headcount growth, at 0.2 percent, and the annual uptick of 1.5 percent in the number of all other salaried lawyers.

Consultants say two-tier partnerships aren't all bad, though. Law firms stood to gain in several ways by moving from the traditional one-tier system to a two-tier partnership system, a transition that has happened over the past several decades.

According to Peter Ocko, managing director in the partner practice group at Major, Lindsey & Africa, two-tiered partnerships allow younger lawyers, sometimes with a minimal buy-in, to achieve a professional milestone.

"The title can assist them with business development and a profile that indicates a certain level of experience and achievement to clients, with a runway to an ever-shifting equity goal line," Ocko said.

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