How much will I earn as a partner in a law firm?
The short answer may be a lot, but the long answer gives realistic advice on what to expect based on firm type/size, as well as explaining the circumstantial element to this; partners take a share of the firm’s profit, so their salary is likely to change year-on-year.
Making partner is a goal that drives many lawyers. But how much might you actually earn?
The short answer is:
Usually between £50k and £2m, depending on a whole host of things! The type of firm makes a huge difference – corporate, public law or high street. Also, because it’s based on profit, market performance and the firm’s performance are key.
This data comes from Major, Lindsey & Africa’s ‘London Partner Compensation Survey’, which looks at partners in London. Also, there’s the Law Society’s survey that covered all private practice solicitors. Both are for the 2016 financial year.
Partners in London:
- About 75% of partners earned more than £250k;
- The mean average total pay was around the £600k mark;
- The top 17% earned over £1m, with the top 2% receiving over £2m.
You’re probably aware of the discussions around this, but the Major, Lindsey & Africa survey includes the data on the gender-pay gap and how much more male partners earn on average than female partners.
Looking more broadly than just London partners, the Law Society’s survey reports quite different figures. The median (equity) partner earned £120k and the mean partner salary was £245k. The lower quartile was reported as £60k, with £260k as the upper quartile.
Lots of variation
This gives the ballpark figures – but let’s look at what makes the difference. There are lots of variables: the type of firm, firm performance, market performance, what the firm’s remuneration structure is, the type of work, and of course a partner’s individual performance.
The best indication of an individual firm can be found in their Profits per Equity Partner (usually ‘PEP’, though ‘PPE’ and ‘PPP’ are also sometimes used). This shows profit divided by how many equity partners there are. However, this is only an indication about the firm’s overall profit (per partner), not how much each partner actually receives. How it is distributed depends on the firm’s remuneration system, and this can create big differences within one firm.
Partnership arrangements differ
The traditional approach is a ‘lockstep’ agreement, which means that a greater share of profit goes to partners who have been there for longer. The MLA survey shows that 35% of firms still have a lockstep agreement, but the rest have moved away from it.
The other end of the spectrum is some sort of merit-based or performance-based remuneration, though this can be done in many ways. Often, it’s linked to the clients and work each partner has brought in or been involved with. This also means that even within one firm, partners working in different areas of law might be earning a very different amount.
Many firms have a mixed approach, such as a ‘modified lockstep’ agreement. A hybrid system could include some profit shared equally, some by performance and some accrued through a lockstep.
Aside from the traditional equity partner, non-equity partners are also possible. This gives some of the status and responsibilities of partner but paid with a salary, not a profit-share. Non-equity partners may have limited or no voting powers and lessened responsibilities, depending on the firm. This allows for a promotion to partner status without yet getting into profits – which could either be a good mid-stage or the equity partners don’t want to share out the profits!
So, it’s possible to get a good indication of what a partner might earn from the surveys the Profit per Equity Partner information. But there are so many variables that it’s very difficult to know exactly what you might earn, or even what a given partner in a firm in a particular area of law earns. If you want to know more about partner pay in your home firm or another one, you might have to ask some sensitive questions to the right people.