The Diamond Law Firm - A New Model or the Pyramid Unraveling?

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The days of the highly leveraged partner-associate pyramid model appear to be coming to a close. Although this may surprise many industry insiders (it surprised us), traditional associate leverage– defined as a simple ratio of associates to partners–peaked nearly a quarter century ago. See Figure 1. Since 2008, there are fewer associates working in National Law Journal (NLJ) 250 law firms than partners. (View pdf for graphic).

Yet, the uptick in the proportion of partners is primarily a function of a broader market movement toward more senior leverage. In the early 1990s, fewer than one out of 20 lawyers in the NLJ 250 were non-equity partners. By 2012, this proportion increased to one in six (16%). See Figure 2. Is this change the result of a deliberate, long-term strategy to reduce the number of associates, or instead the cumulative result of two decades of managing the firm for the current fiscal year? We suspect it is the latter.

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Topics:  Law Practice Management

Published In: Firm Marketing Updates, Professional Practice Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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