How do partnership agreements generally work when it comes to your collected revenue from your own clients? Say I bring in 1M collected business do I keep 30% of that plus my base salary? What is the standard % you earn from billing your own clients?

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I represent small law firms as their outside General Counsel and am my firm’s GC, so have quite a bit of experience. There’s really no standard I’ve seen. Assuming you’re talking equity partnership, generally you’re not getting a base salary but instead a draw, which is usually a fixed amount based on last year’s comp with a true-up every quarter or annually. As for the points on the package, it is all over the place (even internally at most firms) but yes, usually you get a piece of the firm’s overall profits and another piece of your origination/cultivation profit. There’s also non-equity partnership (known by many names), which is really more of just an employee with a better title. To the extent that’s not just a W2 salary, there’s usually a contract but the terms are more employee-ish with a base salary and bonus based on collections of your origination/cultivation. DM me if you’d like to chat further!

helpfullike

Echoing everything M1 wrote. It really is in the partnership agreement. I’m my experience (left big law as a junior non-equity partner) but do have experience as M1 does (but only in failed law firms where clawbacks were an issue). Usually, distributions are what the Executive Committee says it is. But it is all in the partnership agreement or side letters.

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I agree it’s all over the place. At my last BigLaw firm my compensation dropped from about 30% to 20% of my collections over a few years and when I switched to NewLaw my compensation has gone from 70% to up to 80%.

To P1, what’s NewLaw? Your own firm?

The tend not to be partnerships. Ours is a professional corporation with offshore subsidiaries. Benefits are happiness - little bureaucracy, no office politics, freedom for a partner to run his or her practice and better compensation.

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