The path to partnership may sometimes seem to run through a dark wood, complete with forked paths where the correct way forward is anything but clear. Thankfully, firm metrics can serve as a handy flashlight to guide aspirational associates on their way, as recruiters at Lateral Link explain…
We get it, firm metrics and structure aren’t always the most riveting; people don’t generally go into law for the stats. But when looking at the chances of making partner, metrics are an invaluable tool to help make the important decision on whether a lateral move will boost the chances of becoming partner later down the line.
“I wish I had paid more attention to the metrics,” says Gloria Sandrino, managing principal at Lateral Link, reflecting on her time as an associate, “having the ability to understand the importance of things like origination credit before you get to salary is helpful.” When weighing up whether to stay at your current firm or make a lateral move, “the key thing is to think about your ultimate goal,” says senior principal Robin Wexler. If an associate decides to go for partnership, there are a few ways where lateralling might increase their chances.
Firstly, and perhaps most obviously, some firms promote more associates to partner than others. Wexler advises associates to look at a firm’s press releases to find this information. “If you see only ten associates make non-equity partner at a firm that has over 4,000 lawyers, that’ll be a good tell for you” that partnership promotions are relatively rare at that firm. This might be all well and good for associates looking for a few years of training in BigLaw before pivoting to work in-house, in the government, or elsewhere, but those aiming for partnership might want to reconsider their options. Luckily for those folks, we caught up with Gloria Sandrino, Robin Wexler, Nick Pappas, and J’lene Mortimer at Lateral Link to better understand the key considerations for those on the lookout for strategic lateral moves towards partnership.
Different routes
To understand the benefits of paying attention to metrics, it’s important to know a bit about the different partnership models. “The path from associate to partner is generally straightforward,” consisting of hard work and gaining expertise and clients, senior director Nick Pappas informs us. “But once you land in the partnership, things vary dramatically from firm to firm” when it comes to what that title really means.
"...the top firms are becoming two-tier firms with equity and non-equity."
In the last few years, “we’ve seen something that has never happened: the top firms are becoming two-tier firms with equity and non-equity,” says Pappas. He highlights the importance of working out “if you would rather have the comfort” of being in a firm with one tier of partnership, or whether the benefits of a non-equity tier are more appealing. “The single tier is very good for associates who really want to build a practice,” argues Pappas, whereas at a firm with two tiers, “it may be easier to make partner,” albeit at the non-equity level, “so it depends on what your ultimate objective will be.” To decide if a one-tier or two-tier model is the more likely path to success, “whatever is best for you to get those clients in the door is probably going to be the best choice for you,” suggests senior director J’lene Mortimer.
If the firm has two tiers, there are “further barriers to entry to achieve equity partner status” than in the more traditional one-tier model, explains Pappas, “usually that's having a sufficiently high level of originations or a large book of business.” To go from non-equity to equity partnership, as Mortimer explains, “you will have to work very hard to be able to build your client base and be able to bring in revenue to the firm.” When currently at or considering a move to a firm with two tiers, Sandrino suggests associates ask: “What does it take to go from non-equity to equity? And are you as an associate on that path, getting that work, being put in front of the top-tier clients?”
Partnership compensation models are also worth considering. Black box systems “can allow a law firm to make competitive offers without disrupting a culture within their firm, but they won't be advertising pay disparities between partners,” says Pappas. This means “a lateral considering a firm with black box partnership compensation might be able to secure a very high offer, whereas at a lockstep firm, you know what you're going to get.”
But more relevant to the question of making partner is how credit factors into compensation. Formulaic compensation models use a collection of pre-selected metrics (such as billable hours and origination credit) to determine compensation. Multi-factor models, in contrast, are based on a wider range of factors, including ones that are hard to quantify, such as contributions to firm culture. Firms using this latter model will “divide credit for a matter into the person who brought in the client, into the person who brought the matter in, and the attorneys who are responsible for handling the matter,” says Pappas. How exactly a firm divides up credit has pretty significant implications for career progression, in particular, whether or not the attorney who originally brought the client to the firm receives credit for each subsequent matter for that client (instead of lawyers bringing in those later matters).
Taking credit
Origination credit and matter credit are among the most revealing metrics, but also some of the hardest to uncover. “As we say often at Lateral Link, this is the information that cannot be Googled!” Mortimer tells us. “You cannot easily look up origination credit, or compensation formula for firms,” but a firm’s leadership might share this info with recruiters to help them attract strong candidates to the firm. “Accumulating origination credit tends to be a key factor for getting to the partnership level,” explains Mortimer, “and if that credit is not being shared by more senior partners, then you're going to have a harder time showing that you're at the level where you're bringing in revenue that's attributable to your contribution.”
Some firms don’t track origination credit, which can be a positive factor for attorneys who work with a lot of institutional clients. According to Sandrino, at such firms, “it’s the work you do, whether it’s for an institutional client or someone else’s client, the whole idea is that you get rewarded for working together.” More generally, knowing what kind of credit is given for institutional clients is another significant part of the puzzle.
Revenue per lawyer (RPL) is perhaps the other most important metric for associates to understand. It’s “a benchmark for each attorney; a marker of where they should be in terms of revenue,” says Mortimer. Essentially, an associate looking to make partner should be “somewhere in the ballpark” of the firm’s RPL. If not, it’s harder to be seen as productive and thus makes it harder to get assigned to work, which becomes a downward spiral of lower hours leading to less work, leading to lower hours, and on and on. Looking at a practice area’s overall RPL is also indicative. As Pappas explains, “if the rates are lower and the RPL numbers for the practice group are lower than the firm average, it is a way to see that the firm doesn't value that practice in the same way that will value others,” meaning partnership opportunities in that practice area will probably be lower than in more profitable groups.
“RPL is a factor, but it’s not the end."
As an associate in a group that has a high RPL, “you’re going to be put on high-value projects,” adds Mortimer. However, this metric shouldn’t be taken in isolation. “RPL is a factor, but it’s not the end. There are other factors that you need to think about,” she says. A group with a high RPL still might not be the best place to be an associate looking to build a practice, since a firm with a high RPL will tend to have higher rates. So, “if you want to bring in a practice of your own and you are at the point where you have connections and so forth, it may be easier to be at a firm that has a lower rate structure,” especially if that practice is a bit more niche and clients may not be willing or able to pay Big Law rates.
While profit per partner (PPP) is another commonly referenced metric, “it’s not necessarily relevant with the path towards partner unless you’re in an all-equity firm because that’s what the profits per partner are as there are no other tiers,” explains Sandrino, so “if you’re thinking, if I stay in this all-equity firm and want to know what my compensation will be, that’s when it’s relevant.” If there’s a huge difference between a firm’s RPL and PPP, “it means there are a lot of little lawyers that need to work to get that huge comp,” she continues. As a result, “the path to equity might be difficult or non-existent,” adds Pappas, “PPP is important insofar as it can help you understand some of the dynamics between the equity partners and the rest of the firm.”
Moreover, trends in firm revenue and profit margins are indicative of the financial health of a firm or practice area. If the trajectory is downwards, Mortimer advises associates ask why that is. “Sometimes there’s a really reasonable answer,” she explains, “for example: we wanted to open an office in London, we’re focusing on investing in the international offices, there’s been a merger…”
Ultimately, when evaluating metrics, there are some potential pitfalls to avoid. If a firm has a Swiss Verein structure, as opposed to being an LLP, metrics “can be inaccurate because they encompass everything at the firm,” rather than separating stats by country, says Wexler. For example, if US operations are significantly stronger, that won’t be reflected in the PPP. Mergers can also skew the stats, most obviously in headcount and profits. While firms often merge with the aim of becoming more profitable, “there can be a ramp-up time and so I think it's really good to look at data over the course of five years,” advises Mortimer. Equally, explore the composition of the headcount: “be mindful of a firm’s recent mergers or small firm acquisitions because if they have recently merged with another firm, but also lost a whole group to another firm, the end result is that their total headcount is still the same.” Comparing a particular practice group to the firm as a whole is also important: is the practice group’s headcount increasing or decreasing relative to the firm? What is the group’s RPL compared to the average across the firm?
But, as Pappas reminds us, “there are wonderful smaller firms out there that don’t report and are surprisingly very financially successful.” In this case, important questions to ask include: “How’s the firm doing? What would it entail to make partner here? What do I need to achieve? And what are the average partner profits?” Recruiters can help associates with this, as sometimes such firms will share these metrics with recruiters.
One final element to consider at any firm is transparency. If the partner origination credit model, compensation system, and/or their tier system are not transparent, it’ll be much harder to know what to do to progress.
Optimizing for success
With so many factors to consider, it can be hard to know where it’s best to focus for maximum effect. Mortimer suggests, “as an associate, it is key to ask yourself ‘how can I ultimately bring in revenue to the firm?’” because everything else is downstream of that.
But how does an associate get into a position to bring in clients and build a book of business? “As you progress, having a mentor who will bring you to client meetings, or who will get you involved in the business development aspect of law is hugely helpful,” says Mortimer. Some firms will also encourage and train associates on how to do their own client development, such as supporting their joining a board or organization that provides client-facing opportunities. For Mortimer, these opportunities are “really one of the ways that people can get out of the nest and fly with their own clients.” Pappas also emphasizes the importance of finding partner mentors, as they’re “going to be the ones who will sponsor you in your quest for partnership and advocate for you when you're up for partner.”
If a firm has a collaborative origination system, “that seems to align partners to want to work with you more and bill with you more” as a mid-level or senior associate, reckons Pappas. In turn, that helps associates bill above average RPL, and “when you’re over that RPL, you can’t help but be noticed – you’re a hard worker.”
"...take a close look at the makeup of that firm and what they can offer their specific practice.”
There’s also the bigger picture. “Even if you’re at a firm that does the exact practice area you like to do but the culture doesn’t align with the way you like to practice, maybe that’s when a lateral move makes sense,” suggests Pappas. Similarly, he reminds associates to look at “whether or not their law firm does the highest calibre work in that sub practice area” which interests them, and factor that into their decision. As Mortimer summarizes, it’s important to “not necessarily go to a firm that has the highest PPP, but to take a close look at the makeup of that firm and what they can offer their specific practice” before taking the leap to a new firm. “As recruiters, we regularly advise our candidates on exactly this type of analysis to help them find the best fit,” she concludes.
