US Law firm partners bill fewer hours

A recent survey by Major, Lindsey & Africa (MLA) has revealed a significant increase in US law firm partner compensation, which now averages $1.55 million, marking a 10% rise from last year's $1.4 million. Interestingly, this increase comes alongside a 4% decline in average billable hours, with partners billing around 1,656 hours per year. The survey, which included responses from 1,016 law firm partners across the United States, highlighted a shift in how firms value contributions.

For years, the performance of law firms hinged largely on hours billed. However, the survey indicates that, “Today, it’s increasingly measured in the value firms can command for their expertise,” noted Louis Ramos, a partner in MLA's Partner Practice Group. Partners who originate clients are particularly well rewarded, with those classified as "business builders" earning an average of $1.9 million while billing just 1,166 hours. In contrast, "practice drivers" manage heavier workloads and earn approximately $1.1 million. Those who excel in both client origination and billing report average earnings of $3.9 million, showcasing a clear correlation between skills and compensation.

The factors influencing partner pay have also been analysed, with client originations accounting for about 62% of the variation in compensation. Accordingly, average partner originations grew by 10% to $3.8 million, while median originations increased by 40% to $1.75 million. This indicates that exceptional business generation extended beyond just the largest rainmakers.

The disparity in pay between equity and non-equity partners remains stark. Equity partners reported an average income of $2.17 million, significantly higher than the $611,000 earned by non-equity partners. Furthermore, satisfaction levels reflect this divide, with 83% of equity partners expressing contentment with their pay as opposed to only 57% of non-equity partners, a gap that has widened since 2024.

An intriguing finding from the survey was the connection between compensation system transparency and partner satisfaction. Partners at firms with transparent pay structures reported average earnings nearing $2 million, in contrast to $1.16 million where pay systems are closed. These transparency aspects also correspond with greater satisfaction—73% of partners at transparent firms were satisfied compared to 48% of those at non-transparent firms.

Richard Goldberg, a partner at Resolution Economics, commented, “The most surprising number in this year’s data may be the gap between business generation and pay.” This observation suggests potential shifts in compensation strategies or market dynamics warranting further attention from partners and firms alike.

Despite the rise in compensation, overall satisfaction among partners has remained relatively stagnant since 2024, hovering around 73%. The survey also noted that corporate partners continue to earn the most, averaging over $2.1 million, while the gender pay gap persists, with men earning an average of $1.68 million compared to women's $1.11 million, underscoring ongoing issues of equality within the profession.