January 10, 2011 6:00 AM
Survey: Partners Generally Satisfied with What They Earn
Posted by Nate Raymond
For years, partners at big law firms have only had crude methods for figuring out whether they were paid well. Many partners have access to pay data at their own firms, and data from the Am Law 200 surveys has provided a general sense of what the average compensation was at other firms. But at the end of the day, if big-firm partners wanted to know what their peers across town were earning, they were stuck calling a headhunter or talking to law school pals.
"One of the biggest questions we ever get is, 'Are we being paid what we should be paid?'," says Jeffrey Lowe, the managing partner of Major, Lindsey & Africa's Washington, D.C., office. So after years of fielding those questions, Major Lindsey decided to provide a definite answer. The recruiting company hired ADF Research and in June sent a compensation satisfaction survey to 30,000 law firm partners across the country. The findings, based on responses from 1,873 partners, provide information about the ranges in partner compensation, the criteria firms use in setting it, and whether partners are happy with what they earn.
The answer to the last question is yes, generally. Of respondents nationwide, 24 percent said they were "very satisfied" with their pay, and another 52 percent said they were "somewhat satisfied." Another 17 percent said they were "not very satisfied," and 6 percent said they were "not at all satisfied." Still, 61 percent of the respondents said they thought they should be paid more.
The respondents' compensation ranged from less than $100,000 to, in one case, more than $6.1 million. The average was $640,000. That’s significantly lower than the reported compensation–all partners for The Am Law 100 and The Am Law 200 in 2009, which was $843,400.
One reason for the discrepancy is that the Major Lindsey data set included some partners from boutiques that are too small be on The Am Law 200, although 78 percent of survey respondents identified themselves as members of firms of 200 or more lawyers. A majority were at firms of 500 or more lawyers. Firm size made a big difference financially. On average, respondents at firms with fewer than 50 lawyers earned $388,000, while respondents at firms with more than 1,000 lawyers earned $881,000.
Compensation was strongly related to a firm's overall profitability. Respondents from firms with average profits per partner of $250,000–$500,000 reported average pay of $346,000, while respondents from firms with profits per partner of $2 million or more reported receiving an average of $1.6 million.
Respondents in New York reported earning more than in any of the other ten cities surveyed, with average compensation of $938,000 coming in 29 percent greater than the next highest, Los Angeles, and 155 percent more than the lowest, Seattle. But despite the spread, partners in the Big Apple and the Rain City shared a relative dissatisfaction with their pay: Of the 11 cities surveyed, New York and Seattle ranked tenth and eleventh, respectively, in the percentage of respondents who said they were "very satisfied" or "somewhat satisfied" with their compensation.
Fewer than a quarter of respondents from New York (22 percent) said they were "very satisfied" with their compensation. Other cities with low scores on this metric were Atlanta, with average compensation of $463,000, at 20 percent; Chicago, with average compensation of $524,000, at 19 percent; and Boston, with average compensation of $618,000, at 18 percent. The percent of "very satisfied" respondents was highest, at 29 percent, in Houston and San Francisco, where average compensation was $704,000 and $667,000, respectively.
Satisfaction also varied according to practice area. Labor and employment partners both had the lowest level of compensation ($470,000) and, at 15 percent, were the least likely of respondents in seven specialties to call themselves "very satisfied." Corporate partners raked in the most at $759,000, followed by litigation partners with $679,000. Intellectual property partners landed in the middle with $601,000 in pay, but, at 27 percent, were most likely to call themselves “very satisfied” with their compensation. (Twenty-three percent of corporate practitioners and 24 percent of litigators said they were "very satisfied" with their pay.)
Of the survey's respondents, 47 percent said they had lateraled to their firms. Lateral respondents tended to be a bit more satisfied with their pay (79 percent of laterals said they were "very" or "somewhat" satisfied with their pay versus 73 percent for homegrown partners). About 57 percent of laterals said they’d seen their pay increase as a result of their move, while about a third said their pay had remained about the same.
This was the first year Major Lindsey conducted the survey, but Lowe, who authored the survey and an accompanying report, hopes to make it an annual occurrence. "Our hope," he says, "is by doing this yearly we can see trends in the data." Until then, that old law school network will need to fill the bill.
This story is an excerpt of a report that will be published in the February 2011 issue of The American Lawyer magazine.
For additional information about this survey and to access the results, click here.Make a comment