Owner of a law firm, salary could vary greatly, and if you are interested in pursuing a career in law, then you must be curious to find more details about the same.
How much does a small and big law firm owner make? How much do partners and associates make? What factors affect the pay of a law firm’s revenue?
Let us explore and find answers to all these questions in this guide!
Types of Compensation for Partners at Law Firms
If a lawyer is a partner at a big law firm, then he/she might be paid in one of the following ways:
Salary
This is the most common and obvious type of compensation. A lot of law firms set an annual salary for their law firm partners.
And the salary might be based on the revenue earned by the firm. Sometimes, a salary might be paid along with one of the other ways of compensation mentioned in this list.
Eat What You Kill Model
Not only law firms but any other types of businesses follow the “Eat What You Kill Model” of compensation.
This is an incentive-type model, and in this, the law firm partner gets paid based on the revenue they bring for the firm.
In other words, if one of the partners brings millions of revenue by landing a bigger client as compared to the other partners, then the one who bought more will be paid more.
Incentive Compensation
This type of pay model is based on the partner’s ability to meet previously set KPIs. What are KPIs or Key Performance Indicators? KPIs are performance goals that one is expected to meet.
So, in this type of compensation, the salary of the law firm partner increases as he/she meets or exceeds the KPI or goals of the company.
Lockstep Model
This compensation model is a way of rewarding the partner by increasing their compensation each year. In this, all the partners in the law firm are paid the same amount.
The only way to earn more money in this model is by remaining a partner for a long time, as salary increases every year.
How Much Money Do Partners At Big Law Firms Make?
According to a survey by a renowned legal search firm, Non-equity partners in a law firm earn about $432,000 in yearly salary.
And equity partners in a law firm earn about $1.39 million per year.
Small Law Firm Owner Salary
According to Glassdoor, the total estimated pay for a small law firm owner in the United States is $93,723, with an average salary of $83,374 annually.
Apart from this, the estimated total additional pay for small law firm owners is $10,350 per year. Additional pay includes commission, cash bonus, tips, and profit sharing.
How Much Do Solo Law Firm Owners Make?
As per the 2020 Martindale-Avvo Attorney Compensation Report, the average compensation for giving billable legal services for a solo law firm was $150,000 per year in 2019. This compensation has reduced slightly from the previous year’s compensation of $159,000.
Since this study came out, a lot has changed, and inflation and interest rates have risen a lot as well. These changes are set to put a lot of pressure on law firm revenues in the coming years.
Interestingly, in 2022, law firm owners expected moderate to high growth in revenue. And many of them also expect higher attorney compensation and productivity.
Owner Of a Law Firm Salary
The salary of a law firm owner varies greatly; however, according to the salary figures of most firms, we can say that a law firm owner makes $215000 a year on average.
Here’s a table showing the salary of some of well-known law firms in the U.S.:
| Row Labels | 1st year salary | 2nd year salary |
| Adam Leitman Bailey | Undisclosed | Undisclosed |
| Akin Gump | $215000 | $225000 |
| Allen & Overy | $215000 | $225000 |
| Alston & Bird | $215000 | Undisclosed |
| Arnold & Porter | $215000 | $225000 |
| Ashurst | $202500 | $202500 |
| Axinn | $215000 | Undisclosed |
| Baker Botts | $215000 | $225000 |
| Bracewell | $215000 | $225000 |
| Brown Rudnick | $215000 | $225000 |
| Cadwalader | $215000 | $225000 |
| Cahill | $215000 | $225000 |
| Choate | $215000 | $225000 |
| Cleary Gottlieb | $215000 | $225000 |
| Clifford Chance | $215000 | $215000 |
| Cooley | $215000 | $225000 |
| Covington & Burling | $215000 | $225000 |
| Cozen O’Connor | $150000-$190000 | Undisclosed |
| Cravath | $215000 | $225000 |
| Crowell & Moring | $185000-$205000 | $195000-$215000 |
| Davis Polk & Wardwell | $215000 | $225000 |
| Debevoise & Plimpton | Undisclosed | Undisclosed |
| Dechert | $215000 | $225000 |
| DLA Piper | $215000 | $225000 |
| Duane Morris | $175000-$205000 | Undisclosed |
((https://www.chambers-associate.com/law-firms/law-firm-salaries))
Law Firm Partner Vs. Associate
While a law firm partner and associate are both lawyers, the two positions can differ from each other in many ways. Let us have a look at the differences between the two:
Experience level
One of the major differences between a law firm partner and an associate is that a law firm partner usually has many years of experience before securing the position of a partner.
In contrast, an associate might have zero or only minimal experience. An associate lawyer is an entry-level job and requires time to hone their skills.
Seniority
It is quite obvious that a law firm partner has some degree of ownership in the company and thus holds seniority as compared to an associate.
An associate, on the other hand, has a lower-level position in a law firm and is involved in a lot of administrative tasks.
Salary
Another way a law firm partner and associate differ from each other is, of course, their salary.
The national average salary for a law firm partner is currently $136,113 yearly. At the same time, the national average salary for an associate is $79,233 yearly.
Factors Affecting a Law Firm’s Revenue
While accessing a law firm’s revenue, there are many factors one must consider that affect the earnings greatly. Let’s have a look at them:
Practice area
The revenue a lawyer can bring in depends a lot on his/her practice area. For example, Corporate law firms have the highest hourly rate of $350 per hour in 2022.
This is very closely followed by bankruptcy law at $343 per hour and intellectual property law at $342 per hour.
Location
Certain states demand a higher rate for attorneys because of factors like the higher cost of living. A higher rate means lawyers in certain cities can bring in more revenue than others.
For example, Massachusetts, California, and the District of Columbia offer some of the highest wages for lawyers.
Type of Client
The revenue of a law firm’s owner or partners greatly depends on the type of clients they have. A law firm’s client could be a business, an individual, or a combination of two.
As per the Martindale-Avvo Attorney Compensation Report, Attorneys who provided legal services to consumers made $181,000 in 2019.
However, those serving businesses earned $238,000 during the same time. During the same year, Attorneys who served a combination of two made $175,000.
Wrap Up
Whether you are a law firm owner or a solo practitioner, your earnings may vary greatly depending on your location, years of experience, technical knowledge, etc.
Consider factors like comparable attorney revenues, current revenue, average hourly rates, and other things to create revenue goals.
And then, take steps to create more channels of revenue to increase your income.
We hope that this article on Owner Of a Law Firm Salary was useful to you.
FAQs
What are the common skills required to become a law firm partner?
Leadership skills, technical knowledge of law, and decision-making are the three most important skills that are required to become a law firm partner.
What is the difference between equity vs. non-equity law firm partner?
In terms of daily roles and responsibilities, equity and non-equity partners are very same. However, the differentiating factor between the two is how they get paid.
In addition to salary, equity partners can also earn from profit shares. While non-equity partners only receive payment through their salaries and payments from clients.
How profitable is starting a law firm?
As per the 2023 Am Law Report, the 100 largest law firms in the United States earned $131 billion in total revenue in 2022, showing an increase of 2.7% from the previous year.