The Benefits of a Two Tiered Partnership
Law firms of all sizes are being much more selective about who makes equity partner. Gone are the days where doing good work and putting in your time is enough to get you to a profit sharing level. Today, equity partners almost always have to prove that they can contribute their share to the firm. So what does this mean for associates and how can a two-tiered partnership track be beneficial? With a two-tiered partnership structure, associates get more time to prove themselves and also more time to determine whether partnership is the right goal for them.
Two-tier partnerships (non-equity and equity) exist so the firm can train and develop associates into equity partners. The non-equity track to partner at most firms is on average, 6 years long. After the associate is promoted to non-equity partner, they are usually up for equity partner anywhere from 2-4 years later (entire track to equity partner being about 9-10 years long). If the firm doesn't think they are "ready" for equity partnership at that time, they will offer a few options: the non-equity partner could be given another look in a year or two, they may move into a permanent non-equity partner role (or of counsel), or the firm may help them move into an in-house role (often times with a client or firm connection). The non-equity track effectively serves as a transition phase. The non-equity partner is given many of the responsibilities of being a partner without having to buy into the firm, develop a large book of business, etc. Non-equity partners are often the ones leading the deals, interfacing with clients and managing the associates while the equity partners are managing the clients and the deal flow.