Legal Commentary

The Wall Street Journal today spanned the continuum from the deep and mysterious hard question of consciousness to the Mammon of Big Law Firm partner hourly rates.  The former came in an op-ed from John Searle, using his famous "Chinese room" image to explain why Watson computes but doesn't think.  The latter came in an article about the uncapping of top fees from the self-imposed $1,000 limit at many firms.

I was a partner in a big Midwestern law firm in the late 80s and early 90s, and I don't think my compensation ever overtook what first year associates in New York were making (or it was close).  I leave it to my friend Bill Henderson to do the definitive empirical work on this, or to tell me how it's changed, but the big difference in those days was leverage - big Midwestern firms ran a ratio of "equity" partners to associates of just about 1:1; in New York it was 4:1 or 5:1.  I read somewhere that firms like DLA Piper now pay top partners as much as $6 million, with a 9:1 gap between the lowest and the highest.  That would still leave a "low-paid" partner at the paltry sum of $666,666, which, I suspect, means the partner is still what I would call a partner.

What do I mean by that?  I recall sitting in a partners' meeting years ago, thinking that only some of us (and not I) were really partners.  Even though we were equity partners, the real question, it seemed to me, was whether we were net givers or net takers.  With low leverage ratios, it had to be the case that some percentage of the partners were still the source of profit to other partners (i.e. they made less than what they brought in from their hourly rates, even accounting for overhead).  It was the worst of both worlds, because of what was, in effect, reverse leverage.  Unlike the associates, your compensation wasn't guaranteed.  Instead, if times were not so good, you helped subsidize the lost income to your genuine partners!