Note to all big law-firm partners who thought that losing your job was the only bad employment action that could be taken against you: Think again!
A Chicago-based litigation firm has announced that it is going to "de-equitize" 15-20 partners, according to an article posted today on Law.com. (See "Jenner & Block Will De-Equitize Partners.")
Here is an interesting quote from the Law.com article: "Jenner is the latest Chicago firm to push some of its equity partners out the door and follows similar moves by firms across the country. Mayer, Brown, Rowe & Maw downsized its partner group in March, saying that it was looking to eliminate 45 equity partners to boost its profit-per-equity-partner ratio. Some recruiters and lawyers say the strategy is likely to become more common amid rising competition."
The idea is that the selected partners essentially go back to being more like associates. A nonequity partner receives only a salary while an equity partner also receives a share of the firm's profits. Only equity partners can vote on firm matters, the Law.com article explains.
Nonequity partners have existed locally for sometime. However, I am not aware of any large group of Minnesota equity partners who have been simultaneously stripped of their equity status in order to increase firm profitability. Unfortunately, this may be a trend of the future as firms continue to look for new ways to increase their bottom lines.
Personally, I am not crazy about the phrase "partner de-equitization," but I suppose that it's better than calling it "equity partner liquidation," which some might find offensive. How about calling it equity partner euthanasia? Guess not.
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