Two-Tier Partnership Growth
The two-tier partnership model in law firms continues its upwards trajectory with WilmerHale joining the growing ranks of big law firms embracing the structure.
Only a handful of Am Law 100 firms now cling to the traditional single-tier model, as the law profession continues to evolve in response to competitive pressures.
The idea is for firms to be able to attract, promote and retain top talent through the advantages of the two-tier model, which include flexibility in talent management, greater ability to compete in lateral hiring and providing advanced pathways for legal talent on the rise – the much-vaunted legal stars.
WilmerHale has assured that its 253 current equity partners will not be affected by the structural change, which is always the issue with these changes.
A Growing Trend
WilmerHale’s move follows in the footsteps of firms like Cravath, Swaine & Moore and Paul, Weiss, Rifkind, Wharton & Garrison, which have recently made similar transitions.
According to a 2023 report, a staggering 86 percent of the nation’s top 200 firms now operate with at least two partnership tiers.
Essentially, non-equity partners occupy a middle ground between associates and full equity partners in terms of compensation, responsibilities and benefits. The specific arrangements can vary significantly between firms.
Non-equity partners do not have a share in the firm equity or participate in profits and nor do they generally have voting rights.
However the upside for them is that they do not need to make a capital contribution to the firm, either. Nor do they share in liability for the firm’s debts.
The Last Bastions of Single-Tier Partnerships
Despite the overwhelming shift towards two-tier structures, a select few firms remain committed to the single-tier model.
Notable holdouts include:
- Wachtell, Lipton, Rosen & Katz
- Covington & Burling
- Skadden, Arps, Slate, Meagher & Flom
- Davis Polk & Wardwell
- Debevoise & Plimpton
These firms holding out argue that maintaining a single-tier, lockstep compensation system aligns better with their firm culture and client service philosophy.
