Summary: In September the partners at BakerHostetler will vote to decide if all partners in the 930-laywer firm will have an equal stake.
The act of turning partners into shareholders is not uncommon in big law firms. In 2012 DLA Piper made a similar change and in 2013 Akin Gump Strauss Hauer & Feld LLP made the change to an all-equity system. Now Baker & Hostetler LLP is considering giving all partners an equity share.
For some law firms a partner is given voice in the operations of the firm and a salary that is influenced by the firm’s yearly profits. Sometimes being a partner means very little and comes with a salary not much higher than a senior associate. Making it so all partners are on even ground is a move that many wish to see.
Baker & Hostetler will vote in September on the proposed idea of eliminating the two-tier partnership for an equal one where all partners have an equal stake. The firm wants to make all the partners invested in the firm’s success by strengthening their culture. This change would not make all partners have the same pay but would just give everyone the same formal ownership of the company.
Just nine years ago, law firms were going in the opposite direction and creating the two-tier system. Seventy-nine percent of the country’s highest grossing firms were using a two-tier partnership system. This system helped boost a firm’s profits-per-equity-partner numbers measured by the American Lawyer publication. Firms would place their smaller-salaried partners into non-equity categories.
While a few larger law firms are trying something new to foster a more unified and invested culture in their firms, not many are looking to make the change to all-partner equity just yet.
Source: http://blogs.wsj.com/law/2015/08/10/baker-hostetler-weighs-giving-all-partners-stake-in-the-firm/
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