The trend of creating nonequity partnership tiers in Biglaw firms continues to gain momentum as Cleary Gottlieb, a top 50 law firm in the 2024 Am Law 100 rankings, unveils its new two-tier partnership structure. With profits per equity partner standing at $4.5 million and the firm having generated approximately $1.49 billion in revenue last year, this strategic shift is poised to create enhanced opportunities for attorney talent within the firm.
In an interview, Cleary’s managing partner, Michael Gerstenzang, stated that this move is designed to foster “promotion and development” opportunities as part of a broader initiative aiming at innovation and adaptation within Biglaw. This development follows similar decisions by other prominent firms, such as Paul Weiss and WilmerHale, who have also recently introduced nonequity partnership tracks.
Cleary’s new tier is set to be populated with candidates chosen during the firm’s annual partnership evaluations, currently underway. Historically, the firm had an all-equity partnership model since its inception, but shifting market demands and evolving talent management needs have underscored the necessity for this change. Nonequity partners, Gerstenzang noted, will have salaries aligned with market norms while taking into account specific practice areas and geographic factors.
The introduction of this tier reflects ongoing trends observed in the legal industry, with predictions indicating that 83% of Biglaw firms plan to increase their nonequity partner roles over the next two years. As firms navigate the competitive landscape, nonequity tiers offer a means to recruit and retain talent while accommodating modern career trajectories that differ from traditional partnerships.
For more detailed insights into Cleary Gottlieb’s strategic shift, visit the full article on Above the Law.