Kirkland & Ellis’ move to knock one year off its equity partnership track could make the firm more competitive in the battle for legal talent, industry experts said.
The firm, which reportedly posted nearly $5 billion in revenue in 2020, announced internally on Wednesday that partners will be considered for ownership status after their ninth year out of law school, instead of their 10th. A Kirkland spokesperson on Wednesday confirmed the authenticity of the memo, which was first reported by Law.com, but declined to comment on the reasons for the change.
“Given the talent of our partnership and the increased responsibilities and experience gained in today’s environment, we believe that consideration for equity a year sooner is appropriate,” the memo said.
The rewards for those who make equity partner are significant. Kirkland had the third-highest profits-per-equity partner of any U.S. law firm in 2020 at about $6.2 million, according to The American Lawyer. It has topped the magazine’s annual revenue rankings for the last four years.
A shorter partnership track may bolster Kirkland’s appeal to senior associates at other firms and may prompt senior associates and non-equity partners already at Kirkland to think twice before leaving, said Kate Reder Sheikh, managing director of the associate practice group at legal recruiter Major, Lindsey & Africa.
Law firms have been locked in competition for associates this year, raising salaries and doling out large bonuses to keep from falling behind. Partners, depending on their practices and books of business, have also been in high demand.
“I think every firm right now should be thinking about ways to make themselves appealing,” Sheikh said. “The partnership track is one of those levers they can pull.”
Kirkland already has the youngest partnership among the 200 top-grossing U.S. law firms, according to a recent analysis by legal data intelligence provider Leopard Solutions. Three-quarters of its partners got their law degrees in the 2000s, compared to an average of 41% for other top 200 firms.
Kirkland’s partnership structure is somewhat unique among major firms, Sheikh noted. Lawyers become salaried partners after six years, then are eligible for equity partnership after 10 years, which has now been reduced to nine years.
“This is a great way of retaining talent, attracting talent, and remaining competitive,” said Robert Kamins, a law firm consultant with Vertex Advisors. “It will force the market.”