What Law Firm Titles Mean: Of Counsel, Non-Equity Partner, Equity Partner Explained
 

In this article, readers will learn what the various titles given to attorneys in a law firm mean and the roles and responsibilities usually associated with those positions. They will also learn what kind of person most often fills these jobs.

A. Harrison Barnes
Harrison Barnes
 
  • What does of counsel mean?
  • What is a non-equity partner?
  • What is a partner/shareholder?
 

These distinctions (and what you have to look forward to if you are ever made one of them) are discussed below.

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This is what awaits all associates if you are not asked to leave or are fired from your law firm after several years of service.

It is important to know what awaits you because it gives you the ability to make decisions about your future. It is also important to understand whether you want to accept one of these positions.



 

1. What Does Of Counsel Mean? The Types of Attorneys Who Are Of Counsel

 

Of counsel is a role that is traditionally given to attorneys who the partnership of the law firm and others like and want to have around; however, it is reserved for the attorneys who traditionally do not have much business and are also not interested in working extremely hard. This depends on the caliber of firm, however. Someone who is "of counsel" at Skadden Arps would likely be a partner at a firm like Dechert. The quality of the law firm and its competitiveness often determine what types of attorneys are of counsel.

Of counsel is by definition an interesting role. It is not a partner and it is not an associate. The role has a "permanence" about it, unlike an associate. Someone who is "of counsel" in a law firm is generally someone who has been around a while and will also stay around. In contrast, the shelf life of most associates is quite limited. Clients and partners in the firm know that the associate is likely to be gone at any time.

See the following articles for more information:

 

Here are the types of attorneys who generally find themselves in an of counsel role:

 
  • Attorneys Who Do Not Have Business—Or What It Takes to Be a Partner in a Major, Major Law Firm. If you last 14+ years at a firm like Skadden Arps and work extremely hard, the odds are very good they will make you "of counsel." Only attorneys with huge clients or who achieve some sort of national prominence are likely to be made partner in a firm like Skadden. If you are not asked to leave after 12 to 14 years, Skadden and similar firms will generally make you "of counsel." This is in a rarefied world. Someone who is of counsel at a firm like Skadden would almost certainly have been made a partner at a firm like Kirkpatrick and Lockhart, Kirkland and Ellis, or White and Case. Of counsel is an excellent "safety net" for very good attorneys who are not yet ready to be a partner at a major, major law firm, or who will never be. A law firm like Skadden may pay an of counsel attorney $375,000 a year and bill the same attorney out at $750 an hour. It is happy to do this all day long because it is profitable and gives the of counsel attorney enough security to remain happy.
  • Attorneys who do not want the pressure of being a partner in a law firm and just want to do their job and go home each night. There are all kinds of pressures that go along with being a partner that will be discussed later in this article. Many attorneys choose to become of counsel after being a partner for some time simply because they do not want this pressure. They consciously choose to make $225,000 a year in a large law firm instead of the $350,000+ as a partner. Of counsel attorneys would much rather just bill 1,800 hours a year and not be evaluated on all of the factors that partners are evaluated on (business generation, collections, outside activities, mentoring, and so forth). I have seen many great attorneys who were partners in a major law firm tell the law firm they preferred to be of counsel. For many attorneys, this is a great choice.
  • Attorneys who are older and may have left the law firm environment to go into politics, in-house, become a judge, or something else and want to return to the law firm. An attorney may start out his career and work several years at Gibson Dunn & Crutcher or a similar firm and even make partner there. Then, he may go to work for the State Department or something similar for 15 years before deciding to return to the practice of law. Attorneys like this can generally "make a deal" these firms to come back in an of counsel role. The firm will utilize this attorney's high-level government qualifications to impress clients and everyone will be happy. The attorney will be given as much work as the firm has to give him (generally, not a ton of work), and much of this work may come from people who were contacts of this attorney. In addition, the attorney can do work for clients who may flutter in from time to time.
  • Attorneys who are simply very old and do not have the energy to work hard any longer. Many partners eventually start losing steam and no longer want to work long hours and face the pressure of bringing in clients. These attorneys may then decide that they would prefer to, instead, have a less stressful life that allows for the occasional golf game, days off during the week now and then, and regular vacations. If an attorney has put in 30+ years of service at a law firm, it is often more than happy to give the attorney this title and steady salary—or an arrangement that gives the attorney a percentage of its billings.
  • Smart, nerdy attorneys without client generation skills whom the partners in the law firm like. There are generally attorneys inside of law firms who are very intelligent—some startlingly so—but who do not have the ability to bring in clients (and in some cases even relate to them). These attorneys may be excellent writers, great at catching details in deals and otherwise exceptional. At the same time, they may not have the best interpersonal skills with other attorneys in the firm and may be more comfortable in their offices with their doors closed. These same attorneys are also (quite often) very committed to their jobs and loyal to the law firm. These are great candidates to be of counsel in a law firm.
  • Attorneys with various personal demons who have trouble "getting it together" but still do good work. In one law firm I worked in, there was an attorney who was a graduate of Yale Law School and incredibly brilliant. He found himself in and out of the hospital for various psychological demons. The firm—quite obviously—could not make him partner, but when he worked, he worked very hard and provided a ton of value to the law firm. He was of counsel. Other attorneys who are of counsel may take frequent time off, be sick, or injured consistently and otherwise have issues that make it difficult for them to be 100% dedicated to the firm. These attorneys are often of counsel.
  • Attorneys in a practice area of the firm that does not have enough business to make it very profitable. Some law firms often get work from time to time deal with bankruptcy, patent prosecution, trademark, trusts and estates, or other practice areas. Because the law firm does not have a lot of work but needs senior people to do the work for important clients, it generally has an attorney on its payroll in an of counsel role who is able to provide service to these clients when the work comes in. Large law firms often have trust and estates practices for their larger clients, for example, but the money these practices generate is minimal compared to more active practice groups such as litigation and corporate. Therefore, the highest anyone can often go is of counsel in this practice group. One interesting fact about these "niche" practice groups is that law firms often significantly reduce their hiring standards when bringing on associates. They do this because they want attorneys who will stay and not be overly ambitious and likely to leave. They want someone who will be happy graduating into a role such as of counsel. Thus, a trusts and estates practice may hire someone from the middle of their class (who is attractive, refined, and has excellent social skills) from a second-tier law school when the majority of the attorneys in the firm went to first-tier law schools.
  • Attorneys for niche management-related jobs inside of law firms who do not necessarily involve a lot of interaction with clients. Large law firms often have attorneys who do things such as work on conflict checks and negotiate these conflicts with clients. These attorneys are often made of counsel so they have some authority in the law firm, but this is generally a glorified clerical-type role. In addition, law firms often have people in various administrative roles that they make of counsel. For example, of counsel attorneys are often made firm administrators and mediate various disputes among the attorneys and staff of the law firm. Other of counsel attorneys may work on collections for the law firm. Some may be in charge of firing people and doing exit interviews.
  • Attorneys who may have a lot of other stuff going on (outside businesses and so forth) and want to maintain a connection with a law firm. Some attorneys may have outside interests that are very strong. Yet, they want to maintain a connection with a law firm. I have even seen an of counsel attorney with a major law firm have a side solo law firm practice. Still, other attorneys may be spending a lot of their time teaching law, for example. These attorneys are frequently made of counsel.
  • Women who have left the practice of law for a period of time and then come back. Many women may become partners or may be hardworking senior associates who left to have children for a time and want to come back to the practice of law—albeit, on a reduced schedule. Law firms will often make these women of counsel. The women may choose these roles voluntarily because they need to spend time with their children or have other obligations.
  • People with political and other ambitions that keep them away from the office a lot. I have met many people who view practicing law as just a way to pay the bills—their real ambition is politics. Law firms generally do not have many problems with this. They like people who make them look good (and what better way than politics). Law firms will often give attorneys this title and a lot of leeway when they have political ambitions.
 

Of counsel is a way for good attorneys to stay involved inside of law firms and, at the same time, not be as accountable as equity and non-equity partners need to be.

 

2. What Is a Non-Equity Partner? The Types of Attorneys Who Are Non-Equity Partners

 

"Non-equity partner" is a relatively recent invention that started to gain popularity in the 1980s. At that time, law firms were beginning to hire consulting firms and started to realize there were partners inside of their law firms who were not that profitable.

New methods of rating and categorizing partners were suggested, and the practice of having equity and non-equity partners took off.

While numerous law firms today continue with the practice of just having one tier of partnership, the non-equity partner is something that becomes more and more common in law firms each year. Non-equity partner is by definition a frightening title and suggests less permanence in a law firm than even of counsel. In reality, being of counsel is probably a "safer" position if someone wants to survive long-term inside of a law firm. Being a non-equity partner is sort of like being an associate with the knowledge and added pressure that if you do not bring in business, you are likely to be out of a job within a few years.

So what is a non-equity partner?

In reality, it is not much different than being of counsel. Most non-equity partners:

 
  • Do not have significant business
  • Receive a salary (and not partnership distributions)
 

The biggest difference between a non-equity partner and of counsel is that a non-equity partner is someone who shows the ambition and drive to potentially be an equity partner. They generally have interpersonal skills, are willing to work very hard, and also have good legal skills. They are just not really quite there yet.

Non-equity partners are generally:

 
  • People who were formerly associates who are now being "groomed" and tested to see if they can fill a real partnership role or
  • Attorneys who were formerly equity partners but are no longer cutting it and are being given time to get business.
 

If I had to choose a way to describe a non-equity partnership, it would be "secret probation." It is a role that (generally) only other attorneys in the firm know about. In addition, it is a role and title that is not likely to last more than a few years unless the attorney brings in some business.

Many non-equity partners are likely to be men with young families who really want to get ahead. They have mortgages, car payments, and other commitments, and the law firm channels this drive into its growth and survival. Women, of course, are also non-equity partners when they show consistent commitment and the sort of drive that this role suggests—but they achieve this position less often because they frequently start families. People generally make non-equity partner after years of pressure and billing extreme amounts of hours at a level that is nearly impossible to do for attorneys spending a lot of time with families.

If you go to White and Case or a similar law firm, work extremely hard as an associate, and impress all of the right people, at some point in your association with this law firm, it will either ask you to leave or tell you that that "you are on the right track." (Alternatively, the firm may make you of counsel if you are not sufficiently motivated.) If you joined this law firm as a lateral, it will likely not have this conversation with you until you have been there at least three years working your tail off.

I want to be clear that at a law firm like White and Case, it is not easy to get to the point where you are considered for even a non-equity role (you need to be really outstanding). The odds of making non-equity partner in a large law firm that hires 60 first-year associates each year is low. Only one or two of these people will even be around long enough to be considered for a non-equity partner role. It is not easy.

After a year or two of the law firm stringing you along, you will be made a non-equity partner. Once you are made this at a very large law firm, the following will happen:

 
  • You'll be given some money to decorate your office.
  • You will be given a salary of around $350,000 a year.
  • You will be told in no uncertain terms "congratulations" but you now need to generate some business.
 

A whole new set of expectations will fall upon you. You are expected to begin bringing in enough business to not only support yourself but also support a few associates with work and also [hopefully] support some partners and of counsel attorneys in the law firm as well. The point is that becoming a non-equity partner is sort of like being on probation.

The law firm is basically giving you the title of partner because it wants to make sure that you have credibility with potential clients. The general counsel of a bank is never going to be as enthusiastic talking to an associate or person in an of counsel role as he is a partner. Thus, the title is important for you to get business.

The expectation is that you will either rise to the challenge or fail. Regardless, the law firm is giving the attorney a vote of confidence, and a title, to go out and get business.

An attorney who is a non-equity partner generally does need to get business. While I am not going to get too far into this discussion, non-equity partners will use all sorts of methods to get business. They are expected to go out into the community to develop business and find ways to bring more work into the firm. Not all non-equity partners will do this, of course. These non-equity partners can sometimes get around this requirement by latching onto an extremely powerful equity partner (or partners) with a TON of business who feeds them a lot of work. If this occurs and the powerful partner sticks up for the non-equity partner, the non-equity partner can make partner with that person backing him.

Each year, the non-equity partner will be reviewed and the number of hours he billed and generated will be tallied. He may be shown an "average" number that equity partners are generating and told he needs to get to that level if he hopes to make it. If after a few years of this, the non-equity partner is still not pulling his weight, he will lose his job or be given another role in the law firm if he is well-liked enough.

What happens to most non-equity partners who do not make it? Generally one of a few things:>/p>

  • They go in-house, open a solo practice, or take another job. This is the most common thing that non-equity partners end up doing. They realize that, for whatever reason, they do not have what it takes to be an equity partner—but they are skilled legally—so they decide that they are going to go in-house. This works very well for many attorneys, and I would estimate that this is what the majority of them do. Clients think this is a great deal because they can save money compared to what the same attorney would cost inside of a major law firm. Given the competitiveness of finding in-house work, many of these attorneys get frustrated and attempt to open their own practice. The results of this can be mixed. If the attorney could not get business with a partner title and major law firm behind him, how is he supposed to do this on his own? Fortunately, at this point in their careers, many of these attorneys have substantial savings to support themselves while they figure everything out. It does not always go well, though—and the entire thing is scary. I've seen many attorneys fail because they have little understanding of business once they open their own practices.
  • They go to another law firm legitimately. Sometimes the amount of business an attorney needs to become an equity partner can be staggering—even up to $2 million. Thus, an attorney at a major firm with $500,000 in business and very good legal skills in an in-demand practice area can be very marketable to smaller firms (or even similar-sized firms with a need). Even with no business, these partners can be in demand by many larger and smaller firms. Thus, using their qualifications, these attorneys can move to a law firm and carry out their careers elsewhere.
  • They go to another law firm illegitimately (and start a cycle of moving around while exaggerating the amount of business they have). This is extremely common. As a legal recruiter, I know more attorneys around Los Angeles than I can count who have been carrying on this scam for years.
 

Another type of attorney likely to become a non-equity partner is a partner who is not making it as an equity partner. Rather than humiliating the partner and voting him out of the partnership and destroying his career, the law firm makes him a non-equity partner. For many partners, this is a huge indignity and is very upsetting. It is usually a signal that the person should get another job and move on.

Why would someone be voted down from an equity partner to a non-equity partner?

There are many reasons for this. They generally are:

  • The attorney is not billing enough hours.
  • The attorney does not have enough clients and business.
  • The attorney may have serious performance issues—a malpractice lawsuit, poor work product, or other concerns.
  • The attorney may have developed various personal problems that the law firm is uncomfortable with (substance abuse, legal troubles, a messy divorce airing embarrassing personal information).
  • The law firm is at fault and does not have the business to give the attorney that it had when the attorney was made an equity partner.
  • The law firm has hired consultants who have determined that there should be two partnership tiers.
  • A younger generation of "hard-hitting" partners with a lot of business has risen up in the firm, wants more profits for themselves, and is lobbying hard to push down people not carrying their weight.
  • Equity partners are leaving the firm because they are not making enough money and the law firm is under pressure to increase their pay and reduce the pay of nonperformers.
 

The most common reason for making someone a non-equity partner is generally that the person does not have enough business. That is almost always the reason why. In any event, once an equity partner is "de-equitized", it sends him a strong signal that he better "shape up or ship out."

Many partners who are de-equitized subsequently become judges, go in-house, take jobs with the government or inside of law schools.

See the following articles for more information:

   

3. What is an Equity Partner? The Types of Attorneys Who Are Equity Partners

 

Being an equity partner in a large law firm means you are performing at, above, or close to the standard this law firm sets for its partners. Being a partner at a firm like Wachtell, Lipton means something entirely different than being a partner at a firm like Baker & McKenzie. The expectations are simply quite different.

An equity partner is generally going to be someone with an excellent reputation inside and outside of the law firm who is more than capable of carrying his own weight. They are able to generate business for the law firm, able to support associates, and able to bill a tremendous number of hours. To be an equity partner in most large law firms means that you have dedicated your life to your career and to servicing the law firm and its clients. Not only have you dedicated your life to this, but you are succeeding.

View Law Firm Partner Jobs on BCG

When you examine what an of counsel or non-equity partner is inside of most law firms, an equity partner is generally everything they are not:

  • Harder working
  • More committed
  • More clients
  • Fewer problems
  • Fewer excuses
  • More ambition
  • Better interpersonal skills
  • Invested
 

All of these things are what make an equity partner. They are generally wholeheartedly and 100% still in the game, trying hard and making every effort to stand out and do well. In addition, most equity partners will need to be "invested" in the firm to be owners. This means that they may have to come up with anywhere from tens of thousands of dollars to several hundred thousand dollars to be "invested in the firm". This is generally called a "buy-in" or "capital contribution". The law firm will generally loan the partner the money for this, or many law firms have special relationships with banks that do so as well.

What is so interesting to me about equity partners is that all of this is really a product of the demands and expectations of the law firm the person is a partner in. In a law firm such as Cravath Swaine & Moore, which has only one non-equity partner, for example, being an equity partner means something far, far different than being an equity partner in a firm like Foley & Lardner. A higher level of commitment, work ethic, intelligence and client-getting ability is suggested by having a partner title at a firm like Cravath than it is at a firm like Foley and Lardner. In fact, Foley is an outstanding law firm, but becoming a partner at a firm like Cravath (and getting a job there even) is something that is entirely different than becoming a partner at Foley and Lardner.

See the following articles for more information:

 

Being an equity partner also means taking an interest in the "business side" of things. Equity partners are responsible for not just doing work, but often for:

  • Evaluating non-equity partners and associates,
  • Making financial decisions about when to hire and when to cut back,
  • Firing people,
  • Voting to hire new partners and others,
  • Making decisions about opening and closing offices,
  • Being responsible for pitching large potential clients,
  • Making decisions about how to market the law firm,
  • Making money when the firm does not make money,
  • Assuming liability for malpractice and other actions against the firm,
  • Being a point of contact for important firm clients,
  • Keeping the morale up of associates and others in the firm by portraying everything in a positive light,
  • Maintaining (or improving) the hiring standards of the firm,
  • Recruiting other attorneys with business to keep the firm profitable,
  • Making advertising and promotion decisions about the law firm,
  • Creating budgets, one- and five-year plans for the law firm,
  • Supervising the creation of content on the law firm's website,
  • Assisting public relations for the firm when issues come up,
  • Negotiating and finding office space for the law firm and supervising build-outs,
  • Keeping files secure and overseeing the firm's IT department and record keeping.
 

In general, being an equity partner comes with the responsibilities of running a business. The average equity partner is not going to be involved in each of these things – but they will be involved in some.

Most equity partners need to have something more than just the ability to do legal work. They need to not just have the ability to bring in clients; they need to also have a spark and often an ability to inspire those working with them. In addition, they need to take an interest in the practice of law as a business as well. Obviously, this is not something everyone is cut out for.

In order to maintain the position of equity partner, an attorney generally needs to consistently have work to do and keep associates and others ranking beneath them busy. Equity partners are traditionally evaluated based on their contribution to the firm—but can be evaluated on a variety of other factors as well. Click here for an example of a partnership agreement from the firm Foley & Lardner.

Every partnership agreement is different and every law firm evaluates and emphasizes different things. Some value business more than others as part of an ultimate compensation formula and others value other types of contributions. It all depends on the given firm.

In general, once an equity partner in a large law firm has a lot of business ($2 million or more) his job becomes very secure. He is very marketable to scores of other large law firms if he is not treated to his satisfaction. It is not uncommon for these partners to continually move every three to five years when they get bored or annoyed with their colleagues. A law firm partner recruiter often helps these types of partners make a move to another law firm. A partner with a lot of business is generally the "big fish" in the pond.

In general, an equity partner will bill out at a similar rate to a non-equity partner and take home about three times as much money.

 
Conclusions
 

Law firms are fascinating environments offering many opportunities for attorneys of different skills, motivations, and business-getting abilities. Ultimately, the most important thing to rise up the food chain and stay there is the amount of business the attorney has.

See the following articles for more information:

 
Resources

Take a look at the following list of major firms with a two-tiered partnership (firms with the most non-equity partners are listed first):
   
Here is a list of firms with just one tier of partnership:
 

 

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