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Compensation gap between equity and non-equity US partners widens

Male partners earn nearly 50 per cent more than female partners, survey finds

19 September 2012

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By Manju Manglani, Editor (@ManjuManglani)

The gap between equity and non-equity US partners is widening both in terms of compensation and compensation satisfaction, a recent survey has found.

It found that compensation for equity partners averaged $896,000 (up ten per cent from 2010), compared to $335,000 for non-equity partners (down 0.3 per cent from 2010).

The gender gap in partner compensation is also widening. On average, responding male partners received $734,000 in 2012 (up nine per cent from 2010), compared to female partners’ $497,000 (down three per cent from 2010).

The survey found that equity partners are three times more likely than non-equity partners to classify themselves as very satisfied, while in 2010 they were almost twice as likely to do so. Similarly, equity partners are much less likely than non-equity partners to classify themselves as not very satisfied.

The report notes that cronyism continues to be, by far, the most significant reason for dissatisfaction with compensation satisfaction, outpacing all of the other enumerated reasons combined.

Compensation systems

The average compensation for all respondents in 2012 was $681,000, up six per cent from 2010. The average billing rate for all respondents was $584, up $29 from 2010.

The report notes that partners in open compensation systems once again reported significantly higher average compensation ($810,000) compared to partners in closed ($465,000) and partially-open systems ($515,000).

The gap between open and closed partner compensation has also widened considerably. In 2010, partners in open systems of compensation outpaced those in closed systems by 45 per cent; this gap increased to 74 per cent in 2012.

The report notes that partners in open compensation systems are also much more likely to classify themselves as very satisfied (34 per cent in 2012 vs. 29 per cent in 2010) than partners in partially open (21 per cent vs. 15 per cent) or closed (13 per cent vs. 16 per cent) compensation systems.

Litigators averaged the highest number of billable hours (1,792), but continued to lag significantly behind corporate partners in compensation ($634,000 vs. $847,000), despite corporate partners reporting significantly lower billable hours (1,518).

The survey found that originations have become increasingly important in determining compensation. Nearly three quarters of all respondents noted that origination is a very important factor in determining compensation, 65 per cent of all respondents perceived it to be the most important factor (working attorney receipts was next closest at 21 per cent), and 55 per cent of all respondents cited origination as becoming more important in the compensation process – more than double the proportion in 2010.

The Major, Lindsey & Africa partner compensation survey canvassed the views of law firm partners in Am Law 200, NLJ 350 and Global 100 firms. It received 2,228 responses, of which 93.5 per cent are from partners practising in the United States.

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