Press Release

Law Firm Partner Compensation Study Finds Sharp Disparities Between Cities

Pay transparency closely linked to high partner comp and satisfaction, according to 2,228 lawyers surveyed

NEW YORK – September 19, 2012 – Differences in law firm partner compensation among major U.S. cities are large and growing, according to a new survey conducted jointly by Major, Lindsey & Africa and ALM Legal Intelligence. The wide ranging report, based on responses from 2,228 partners across the country, covers compensation, originations, billing rates, hours, the impact of lateral moves, and partners’ views on compensation and their firms’ compensation systems.

 

A city-by-city analysis in the 2012 Partner Compensation Survey found average compensation ranged from $478,000 in Philadelphia to $1.2 million in Silicon Valley for the 12 metropolitan areas broken out. Compared to 2010, the largest gains were reported for Atlanta, up 48%; Seattle, 45%; and Dallas, 28%. The only declines were in Philadelphia, down 10%, and Los Angeles, down 8%. In terms of partners’ attitudes toward their compensation, Boston stood out with the largest proportion stating they are “Not at all Satisfied” at 13%, up sharply from 2010’s 6%. Nationally, average partner compensation was $681,000, up 6.4% from 2010.

 

Another intriguing survey finding was that firm transparency on partner compensation is linked to higher levels of both partner pay and satisfaction. Compensation in open firms, where partners know or can easily discover what colleagues make, averaged $810,000 per partner, compared to $465,000 in closed firms. Partially open firms, defined as those where partners know only compensation ranges, were only slightly ahead of the closed firms at $515,000. The gap has widened over the last two years, growing from 45% in 2010 to 74% in 2012. Partners in open compensation systems were also much more likely to classify themselves as “Very Satisfied” (34%) than those in partly open (21%) or closed (13%) systems.

 

“In addition to providing reliable baseline figures on average partner compensation, this survey shows how compensation systems can impact partner satisfaction,” said Kevin Iredell, vice president of research and continuing education products at ALM. “The 2012 Partner Compensation Survey provides the objective data that firm leaders need in order to effectively evaluate their own firms’ compensation systems”

 

Other key findings of the survey, which can be downloaded without charge athttp://www.almlegalintel.com/Surveys/MLACompSurvey or http://www.mlaglobal.com/partner-compensation-survey/2012, include:

 

  • Equity partners averaged $896,000 in compensation, compared to $335,000 for non-equity partners, a gulf that grew considerably from 2010’s $811,000 vs. $336,000. Equity partners were three times as likely as non-equity partners to classify themselves “Very Satisfied”; in 2010, they were less than twice as likely to do so.
  • The gender gap is wide and growing. Male partners averaged $734,000 in compensation, females $497,000. In 2010, it was males $675,000, females $513,000.
  • Average hourly partner billing rates increased to $584 from $555 two years ago.
  • As in 2010, cronyism was by far the most frequently cited reason for compensation dissatisfaction, outpacing all other suggested factors combined.

 

“We are very pleased with the response to the Survey,” says Jeffrey Lowe, author of the Survey and the Global Practice Leader of Major, Lindsey & Africa’s Law Firm Practice.  “Prior to our 2010 Survey, partner level compensation and other practice metrics had never been captured on this scale before. Now, with the results of the 2012 Survey, we can begin to identify trends in compensation and compensation systems that will inure to the benefit of both individual partners and firm management.”

 

Founded in 1982, Major, Lindsey & Africa is the world’s largest and most experienced legal search firm. Combining local market knowledge and a global recruiting network, MLA has earned recognition for its track record of successful General Counsel, Corporate Counsel, Partner, Associate and Law Firm Management placements. With offices throughout the U.S., Hong Kong, London and Tokyo, MLA recruiters are dedicated to understanding and meeting clients’ and candidates’ needs while maintaining the highest degree of professionalism and confidentiality.  MLA considers every search a diversity search and has been committed to diversity in the law since its inception. For these reasons, MLA was voted “Best Legal Search Firm in the U.S.” in a recent national survey of America’s top law firms. To learn more about MLA, please visit our website at www.mlaglobal.com.

 

About ALM

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