Big Law Non Equity Partnership Compensation Explained

ITS MOTIVATION TIME

Big Law Non Equity Partnership Compensation Explained   If you’re a Big Law associate, you probably heard that the transition to non-equity partnership can take a toll on your finances for the first couple of years.  Let’s see how non-equity partnership compensation works at big law firms and how you can prepare ahead so you don’t feel the cash crunch.   #biglaw #biglawpartnership #financialplanning  --------------------------------------------------------------- SharpEdge Financial is an independent financial planning firm helping Millennial and Gen Z attorneys navigate the complex financial decisions that they face daily. Whether you’re just starting off in Big Law, about to make partner, or considering moving to an in-house role, we can help.   *This post is for general education only, not financial, tax, or legal advice*

Transcript

00:00if you're a big law associate you've probably heard that the transition to non-equity partner

00:04can take a big toll on your finances in the first couple years let's dive into how it works and how

00:09you can prepare ahead in the one-tier partnership model the typical path for an attorney at a law

00:14firm is to grind for eight to ten years as an associate and then buy into the partnership at

00:20that point you can share the firm's profits but the promotion typically comes with the expectation

00:25then you bring a new business in the two-tier partnership model associates typically move to

00:30non-equity or income partner after eight years from there some will become eligible for equity

00:36partnership after another few years while some will remain service partners with no business

00:41development expectations from a tax standpoint all partners at law firms are considered owners

00:47even if you don't share the profits this means that as a non-equity partner you will now be required to

00:52make quarterly estimated tax payments pay the self-employment tax and your employee benefits

00:57are no longer subsidized this often results in junior partners taking home actually less than

01:03they were as senior associates offsetting any bump in pay and that's why i recommend that my clients

01:08build a transition fund before they make partner the idea is to save the equivalent of your first two

01:14quarterly estimated payments which will give you a little breathing room to adjust to your new cash flow

01:18if you're looking for more tips on tackling the transition to partner follow me

Category

Transcript

Be the first to comment

Recommended