Kirkland shortens equity partner track to reward best talent in record deal markets
Salaried partners given earlier chance to make coveted equity status in latest reflection of hyper-competitive market for talent
Kirkland & Ellis has shortened its track to equity partner status by a year in a move that reflects the intense battle by leading firms to retain and reward their best talent in booming deal markets.
The move, was which announced internally yesterday (2 December) and first reported by Law.com, means salaried partners can qualify for coveted equity status three years after being promoted and therefore nine years after joining from law school.
‘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,’ a memo obtained by Law.com stated.
The move won’t benefit every salaried partner as a high proportion never make the next step: at the last count, the Chicago giant had 476 equity partners and 682 sitting outside the equity, according to Law.com.
But it does mean that in record deal markets top-performing partners who are being asked to work gruelling hours in difficult circumstances have the opportunity to strike while the iron is hot.
“While partnership is still attractive to many, the relentless pressure to perform that partners face does not necessarily appeal to all despite the high level of earnings that is achievable.” said Tony Williams, principal of Jomati Consultants.
He added: “Generally firms have kept their equity partner ranks static while adding non equity partners, which has helped to boost profit-per-equity-partner (PEP) but probably leaves some concerned that they are performing well but the carrot of equity partnership is seen to be on a very long stick.”
Last year, Kirkland's revenue jumped by 16.3% to $4.83bn, while average profits per partner increased 19.2% to $6.2m, according to Law.com.
This year is likely to be just as lucrative for the world’s largest law firm by revenue, given that last month global M&A smashed through the $5tr barrier for the first time.
Kirkland sat third in the global ranking to that point, according to data supplied by Refinitiv, advising on deals worth $498bn.
Significantly, the volume of deals handled – at 789 – dwarfs the workload of Wall Street rivals like Sullivan & Cromwell, which topped the ranking by value, but advised on far fewer deals (198).
Nick Robbins, founder and director of legal recruiters Nicholas Scott, said: “I am not surprised that Kirland are leading the market again and I see this reflecting the approach of their private equity clients in further aligning themselves with their key assets ie their people.
"Law firms can be opaque about partnership with the key factor often being the state of the economy, which as we all know is less than predictable. While the change won’t benefit everybody at Kirkland it gives the best talent an earlier shot at making equity, which will be welcomed internally at a time when markets are booming.”
Kirkland’s move comes as an associate salary war rages on both sides of the Atlantic as law firms battle to retain their associate talent. Last month, Cravath Swaine & Moore kicked off US bonus season with a 15% increase over last year for its most experienced associates, amounting to $115,000