US law firms opt for smaller equity partnerships

May 11, 2013 The American Lawyer reports that leading US law firms are shrinking the proportion of equity partners relative to the number of fee-earners, and routing capital to improve profits per partner.

The American Lawyer looked at the statistics for 97 law firms, all of which where in the top 100 for 2012 and among the top 200 firms for 2002. Over the period the average proportion of equity partners at the top firms declined from 27.8 percent to 23.7 percent. The 43 firms that cut their partner classes the most had an average increase in profits per partner of 100.7 percent, compared to an average of 74.5 percent for the others.

And it looks as though the trend is set to continue. The American Lawyer’s December Law Firm Leaders survey found that 46 percent of respondents planned to de-equitize partners in 2013, an 8 percent increase from the year before.

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