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Chief
At EY at least, Partners have zero job security. The Partner agreement says you can be terminated for not meeting your metrics. Someone above you sets your metrics. In years like this, more than half the Partners will miss at least one metric and are technically fireable. You get reasonable severance and your equity back. The $ you deposited gained interest so you get more than you put in but it’s not a windfall. I know some you think that once you ‘make it’ you’re set - when the reality is that the target on your back just moves around to your forehead....
Yes, of course.
Per former Big 4 partner I talked to: the answer is yes and the mechanism is that the firm has the right to increase or decrease your units at the discretion of some internal committee. You buy/sell to the firm at face value. Normally that’s used in performance management to increase units if you sell more or level them out if you don’t. In you do particularly poorly, you can be taken down a little. If they want you out, the ability to take you to zero is the trump card, but it’s rarely needed since everyone knows they can do it. So it’s usually a slightly more friendly, “time to move on” conversation, usually with several years of warning.
Absolutely. Partners can get let go, and it happens all the time. However the process is slightly different from how employees are let go, and I am not sure about that process. There are rumors going on about several Partners being put on notice at EY.
It is usually framed as an exit to another opportunity or an early retirement.
In general they at a year end, and they don’t buy back in.
I knew more than a few direct admits where after a few years that they weren’t effective, this happened.
Interested as well. If yes, how? Do you force them to sell their equity? Is that decided through a majority vote?
I’d like to know the answer to this too. Does that mean partners don’t actually have job security?
Can they make a profit on sale of their equity? Assuming it happens during good times where a firm isn't shrinking in size
Rising Star
Not many partners during good years
Chief
I would imagine it's like at law firms. Couple of friends are law firm partners and how it works at their firms is there's an internal management committee (at their firms, it's the name partners plus other partners that are in management roles) that votes to let partners go. When they're let go, they are typically bought out at face value of their units.
If they're being fired vs laid off, I think that process is different, but haven't asked my friends about that.
I was at D before. There was one partner that did nothing for 3 years. It took them that long to fire them
Chief
There are two tiers of partners - ‘new’ ones which maybe newly promoted or direct hires, and ‘protected’ (think government employee).
The B4 have created a mess with their pension systems - they’re now more akin to state governments. The vested partners have extra layers of protection, the new ones do not. So you wind up with a much higher bar for newly admitted Partners because they’re easy to cancel and replace.
Remember a partner is not an employee. They are admitted to the partnership as an owner of the company and have more rights and privileges then you or I as an employee of the firm. While we certainly do exit partners every year and will do so this year, those exits aren’t easy and take more time. So you’ll see more mds or other employees exited then partners based on the rigor to “fire them”