Comes word that Cleary Gottlieb is abandoning its increasingly rarefied “single tier” status and will begin naming Non Equity Partners “with immediate effect.” The intrepid Roy Strom of Bloomberg Law has the story:
Cleary recognizes the “innovation and adaptation” occurring across the legal industry, managing partner Michael Gerstenzang said in an interview. The firm’s goal is “to create more opportunities for people to become equity partners,” he said. […]
“The principal focus here is to allow associates to be promoted to non-equity partner with the goal of having them then take advantage of development opportunities and demonstrate professional development so that we can promote them to equity partners,” he said.
By our count, Cleary’s embrace of two-tier leaves about a dozen single-tier firms in the AmLaw 200, down from, uh, 200 within not too exceptionally long ago.
And the headcount of Non-Equity Partners compared to Equity Partners has been on a linear upward vs. flat trajectory for a long time:
At this rate those lines will cross very soon indeed and Non-Equity Partners will outnumber Equity Partners.
Note how our settled assumptions have migrated, unconsciously or at least unintentionally, out from under us all over the past decade or so. Whereas Non-Equity Partners used to be exotic, of dubious professional competence, and too close for comfort to camels (in the well-worn quip, “a horse designed by committee”), today they are a densely populated and economically indispensable component of any mainstream law firm’s workforce and P&L structure.
So what?
So, for starters, let’s take a step back from our siloed Law Land worldview and ask the obvious question: Why should anyone be surprised? More pointedly, how could we all have adopted the transparently obvious delusion that any kind of “two-tier” professional workforce was entirely, boringly, normal and business-as-usual and not to see it as bizarre, bordering on hallucinatory? Do we see this in the manufacturing or transport or governmental sectors, in nonprofits, academia, healthcare, construction, publishing, consulting, hotels, food service, or even criminal enterprises….? (I’ll stop now; you get the picture.)
We’ve actually been studying the phenom of multi-tier partnerships for awhile now; here’s a link to our write-up of a report we conducted last year.
Cementing the impression that Cleary was motivated to finally adopt the Non-Equity Partner model because of economic pressures and not entirely because they fell out of love with the Manichean two-tier structure are a few remarks the firm’s managing partner, Michael Gerstenzang, shared with Patrick Smith (disclosure: a friend of Adam Smith, Esq.) over at Law.com in “Cleary Creates Nonequity Partner Tier, Calling for ‘Innovation and Adaptation’” :
In launching and expanding nonequity tiers, other firms have cited talent development, recruiting and retention advantages, flexibility and the ability to build scale quicker. Of course, another advantage is the potential to increase the profits of the equity partnership. But Gerstenzang was quick to quash that narrative.
“We didn’t do this because we wanted talent leverage,” he said. “We are not doing it to create a different leverage model within the firm. Just as we have done in previous partner promotions, we are not asking ourselves how it might affect that leverage. We are doing it to create more opportunities in promotion and development.”
[…] [And the “money quote”—no pun:] When asked if Cleary would consider $16 million to $20 million for a lateral partner, Gerstenzang said the firm would “for the right candidate.”
In other words, good old economic imperatives are alive and well in Law Land. Would you prefer they remain under covers or come out into the open?
Cleary has voted.
Courtesy Photo by Oliver Roos on Unsplash
