The landscape of the lateral partner market is evolving, with more firms creating flexible partnership rules to attract top talent. However, the inverse side of this development is equally significant. Kirkland & Ellis, the world’s wealthiest law firm, has shifted its strategy to retain its partners by implementing new policies that could make leaving the firm financially burdensome.
According to a report by Law.com, Kirkland & Ellis now retains up to 55% of a departing equity partner’s compensation. This new policy builds upon an existing practice where 55% of annual compensation is deferred to the following year, adding a discretionary element that allows the firm to withhold accrued compensation entirely. Furthermore, Kirkland has reduced the notice period for resignation from 120 days to 60 days and decreased the timeline for returning capital contributions from 12 months to three months.
This policy change significantly alters the equation for partners considering an exit. The withheld compensation could amount to millions of dollars, creating a substantial financial impediment for any move. As noted by Sabina Lippman, co-founder of recruiting firm Lippman Jungers, “It suggests a little more insecurity on the part of the firm, and a very transactional relationship to have with a partner.” Lippman further explained that firms generally aim to foster a culture where partners stay voluntarily, rather than feeling financially tethered.
While Kirkland has at least expedited the return of capital contributions for departing partners, the overall impact of this new policy is likely to make partners reconsider any move due to the potential financial strain. For more insights, refer to the reporting by Above the Law.