Over the past decade, and more notably in the four years after the pandemic, the remuneration of experienced partners in support practices of law firms, such as those in tax or debt finance, has gotten disproportionately high when compared to their market value. This shift has led to certain partners earning significantly more than what they could achieve through a lateral move, in some cases, staggeringly so. This situation, whilst not inherently problematic, creates an imbalance as the funds paid to these over-compensated partners come at the expense of client relationship partners who are, as a result, under-compensated.
This systemic disparity, which often plays out slowly over a decade, can lead to these under-compensated partners quitting their present firms to accept better remuneration offered by rivals. Such a phenomenon has been seen with London’s Magic Circle and appears to be currently unfolding at Cravath, Swaine & Moore. Navigating this situation becomes a challenging but crucial task for law firm leaders who must find a way to reduce the compensation of these support partners to balance the firm’s profits.
For a more comprehensive picture, here is an article by Hugh Simons on The Leadership Implications of Overpaid Service Partners, however, do note that it is behind a paywall.