Non-Equity Partnership

RJH Consulting

By: Krystal Champlin

How To Increase Law Firm Profit?
In “traditional” old-line law firms, it was typical for a lawyer to join a firm upon graduation from law school. These lawyers work hard as an associate for five to seven years. Then, in most cases, be admitted to equity partnership, staying until death or retirement. Today, many firms, even smaller firms, have two tiers of partners: equity partners and non-equity, income, or contract partners.
Equity partnership typically involves capital invested in the firm, shared liability for the debts of the firm, voting rights regarding the affairs and strategy of the firm, and compensation based on a share of the profits.

Partner Checklist
A Non-equity partner does not have a financial investment in the firm. They aren’t liable for the firm’s debts and do not have voting rights on ownership-related matters.

Why would a firm have non-equity partners?
What are the criteria to attain such a partnership?
What is the appropriate compensation for non-equity partners?
Stay tuned for future discussions. Check out RJH Consulting blog for more updates.

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