The Big Law compensation landscape is shifting faster than a lawyer’s billable hours during tax season. If you thought partner pay was already in the stratosphere, the liftoff has only just begun awith changes like the ‘black box’ compensation structure, new nonequity tiers, different bonus pools and other changes that bring the profession into a new galaxy of green.
Gone are the days when lockstep compensation was the gold standard. Now, it’s all about flexibility, performance, and cold, hard cash. More than a third of nearly 200 AMLaw firms are planning to shake up their equity partner compensation models in the next two years according to reports from sources like American Lawyer.
We’re talking stretching pay spreads wider than a judge’s robe and scrutinizing performance criteria with the intensity of a cross-examination.
To quote the 2025 Citi Hildebrandt Client Advisory: “more than one-third plan to make changes to their equity partner compensation models, either by stretching the spread of compensation or reviewing the criteria used to assess compensation levels” over the next two years.”
The Compensation Arms Race
Top-tier partners are now eyeing paydays of $25 million to $30 million and that is a bubble that most analysts and advisors do not see popping any time soon.
The trend towards ‘black box’ pay compensation has continued to grow notwithstanding its lack of transparency and criticisms relating to its impact on firm culture.
The ‘millionaire-making’ partner pay packages are helping with the disruption of the top level recruitment market.
Firms are creating “super” tiers and nonequity levels at speed. Consider that the ultimate white shoes biglaw firm – and top in the LawFuel Prestige Rankings, Cravath Swaine & Moore, have gone into a nonequity tier after breaking the unbreakable – the lockstep partner pay model that rewards consistent, loyal service.
Where Cravaths go, others follow – Wilmer Cutler Pickering Hale and Dorr and Cleary Gottlieb Steen & Hamilton have gone the nonequity route. Even the recent biglaw merger creating A&O Shearman is seeing a shakeup to the firm’s pay structure.
Simpson Thacher & Bartlett have spread their partner earnings with its highest-paid partners hitting the $20 million payday rate. Davis Polk & Wardwell are moving towards a restructured pay system, which Weil, Gotshal & Manges have already revised.
And over at Latham & Watkins, one of the biggest of the big law firms, there is talk of a new level of ‘super points’ to reward the top partners such as one of the few London-based top tier partners, Richard Trobman, (pictured)who take home the Lathams’ big money payouts with most of the other top Latham earners being US-based.
According to a report in Legal Business 20 Latham & Watkins partners are in the ‘super points’ band. A L&W spokesperson said of the new big law pay scale for the firm: ‘Changes to the firm’s equity compensation structure were made after an in-depth review and extensive discussions and meetings in each office to ensure a transparent and thorough process. This provided the firm’s leadership with the opportunity to receive direct feedback from the partnership before moving forward. The changes to the firm’s compensation structure allows the firm to reward more partners in its year-end bonus process.’
Part of the reason for these changes – indeed perhaps the main reason – is the partner poaching that is increasing as partners leave for better pay at other firms. Many of the partner pay changes occur with firms that have lost partners to rival firms.
Show Me the Money: Bonus Pools and Black Boxes
Bonus pools are no longer just a drop in the bucket. They’re swelling to oceanic proportions, with some firms allocating up to 25 percent of net income for bonuses. It’s like Christmas every day for top performers!
While some firms are embracing the “black box” approach (we’re looking at you, Paul Weiss), others are setting crystal-clear benchmarks.
Want to play in the big leagues? Better be bringing in at least $5 million in business, or you might find your partner points disappearing faster than evidence in a shredder.
Big Paying Big Law Firms
Top US Big Law Firms by Profits Per Equity Partner
The ranking below highlights the leading American law firms based on their profits per equity partner (PPEP) for the 2023 year taken from American Lawyer stats – PPEP being a key metric often used to evaluate a firm’s financial performance.
The list focuses on the 100 largest law firms by gross revenue, meaning firms with higher PPEP may not appear here if they are not part of the Global 100 by revenue.
2023 Rankings: Profits Per Equity Partner
| Rank | Firm | 2023 PPEP | Equity Partners |
|---|---|---|---|
| 1 | Wachtell, Lipton, Rosen & Katz | $8,507,000 | 90 |
| 2 | Kirkland & Ellis | $7,955,000 | 539 |
| 3 | Quinn Emanuel Urquhart & Sullivan | $7,270,000 | 185 |
| 4 | Susman Godfrey | $6,989,000 | 90 |
| 5 | Paul, Weiss, Rifkind, Wharton & Garrison | $6,574,000 | 178 |
| 6 | Simpson Thacher & Bartlett | $6,433,000 | 198 |
| 7 | Sullivan & Cromwell | $6,250,000 | 173 |
| 8 | Davis Polk & Wardwell | $6,200,000 | 174 |
| 9 | Cravath, Swaine & Moore | $6,050,000 | 92 |
| 10 | Gibson, Dunn & Crutcher | $5,587,000 | 317 |
| 11 | Latham & Watkins | $5,516,000 | 544 |
| 12 | Skadden, Arps, Slate, Meagher & Flom | $5,403,000 | 334 |
| 13 | Paul Hastings | $5,395,000 | 166 |
| 14 | King & Spalding | $5,331,000 | 191 |
| 15 | Milbank | $5,114,000 | 166 |
| 16 | Weil, Gotshal & Manges | $4,645,000 | 180 |
| 17 | Sidley Austin | $4,592,000 | 266 |
| 18 | Ropes & Gray | $4,514,000 | 291 |
| 19 | Cleary Gottlieb Steen & Hamilton | $4,509,000 | 180 |
| 20 | Fried Frank | $4,355,000 | 114 |
This table underscores the financial strength and profitability of these elite law firms in the U.S.
The Lateral Shuffle: Dance or Die
The lateral market is hotter than a summer associate’s coffee order. Firms are bending over backwards to lure top talent, offering fixed compensation packages and equity shares that would make a Wall Street banker blush.
Capital Contributions: The Price of Admission
But it’s not all champagne and caviar. Partners might need to dig deeper into their Armani pockets for capital contributions. After all, if you want to play, you’ve got to pay.
The Bottom Line
As Jon Lindsey of Major, Lindsey & Africa puts it, “there’s basically no firm that’s immune from market pressure, with very rare exceptions”. The legal world is changing faster than a witness under cross-examination, and those who can’t keep up might find themselves objecting to their own obsolescence.
As you navigate this brave new world of partner compensation, remember: in the game of Big Law, you either win or you lateral. May the odds be ever in your favor.
