Can partners afford to leave their BigLaw firms? Some discourage departures by withholding cash
Law Firms
Can partners afford to leave their BigLaw firms? Some discourage departures by withholding cash
July 24, 2024, 8:49 am CDT
Some law firms trying to hold on to their partners are using money to discourage departures. (Photo from Shutterstock)
Some law firms trying to hold on to their partners are using money to discourage departures.
One tactic is to withhold accrued compensation for departing partners.
“It does happen throughout firms in the Am Law 200,” Laura Terrell, an executive coach and a former Big Law partner, told Law.com.
Law.com and Bloomberg Law recently reported, in stories based on anonymous sources, that one BigLaw firm adopted such a policy last week. That led Law.com to speak with experts about financial disincentives.
Withholding accrued compensation is “a real pain point for the partner that’s looking to leave, because unless the new firm is willing to make them whole, they can lose a lot of money by moving laterally,” said consultant Jeffrey Lowe of Jeffrey Lowe Partners, in an interview with Law.com.
Another tactic is to require departing partners to cover unpaid bills, Lowe told the publication.
“So let’s say a partner did work for a client and sent a bill for $250,000, and that bill remains unpaid. I’ve seen firms say they have a claim against that partner’s unpaid compensation and capital amount, in the amount of the uncollected,” Lowe said.
Some firms also require partners to give up their retirement accounts if they leave, according to recruiter Kay Hoppe, who also spoke with Law.com. Not all recruiting firms will pay for the loss. It depends on how much they want the lateral partner, she said.
