Non-equity partners in top firms are seeking greener pastures due to limited decision-making control and direction
The divide between equity and non-equity partners is a major source of dissatisfaction, according to the 2020 Legal Survey conducted by Pitcher Partners across law firms in Australia and New Zealand.
When it came to questions about the culture of their respective firms, only 17% of the non-equity partners who responded said that they considered the partnership to be a collaborative one; by contrast, 35% of equity partners found the culture to be collaborative.
As a result, 92% of equity partner-respondents are happy to stay with their current employers, whereas over 30% of non-equity partner-respondents are looking to move on.
The level of decision making accorded to non-equity partners is a factor in firms’ ability to retain them, along with a well-outlined direction for advancement.
“We’re seeing non-equity partners dissatisfied, in part because they work extremely hard often without a clear path to equity partnership,” said Pitcher Partners executive director and partner Ben Lethborg.
Lethborg noted that a number of non-equity partners believe that their firms simply use the possibility of equity partnership as bait for retention.
“Many non-equity partners we speak to feel their firm has no real intention to offer equity, and the lure is being used to tie them to the firm for another year or two,” he said. “I feel that equity partnership is sometimes being dangled like a carrot, often with limited commitment, planning or advice from incumbent partners on how to get there.”
The divide between equity and non-equity partners can also be observed in the strategies firms have developed to help partners accumulate wealth over the years. Only half of non-equity partners were likely to have a personal wealth accumulation strategy compared to 75% for equity partners. Moreover, while 91% of equity partners felt that their assets were protected, 42% of non-equity partners did not feel that their assets were protected.
Lethborg said that firms need to close “the gap between aspiration and achievement” in order to better cater to the partners they want to keep on board.
