By Murray Gottheil | September 10, 2025
In prior parts of this series, I wrote about the advantages and disadvantages of becoming an equity partner in a law firm. In order to complete the picture, I really should address the fantasy of a non-equity partner (“NEP”) as well.
Some years ago, law firms decided that they were not profitable enough to continue to admit new equity partners after six or seven years. However, many associates still considered partnership to be the Holy Grail. In order to keep them somewhat content, law firms had to produce a modern equivalent to the bread and circuses that the Romans used to distract their citizens centuries ago.
Whatever you think of lawyers, you have to give them credit for being creative. And so, the NEP was born. You would think that the concept would have been dead on arrival since the definition of partnership requires that people carry on business with a view to profit, and NEPs neither carry on a business, nor do they strive to earn the profits of a business. Instead, they are salaried or commissioned employees, or contractors.
However, firms needed to provide associates with a distraction, and giving them them the title “partner” and celebrating their achievement served the purpose well. Law firms were able to delay full equity partnership for many more years, thus preserving the incomes of the real partners.
From this humble beginning, many variations of fake partners have been developed. There are now “associate partners”, “tax partners”, “income partners”, and even “salaried partners”. None of these people is actually a partner, although all of them are presented, somewhat dishonestly, to clients as being partners. They are also presented to the income tax department as being partners, and frankly, I have no idea why the income tax department puts up with it.
It may be that there are valid business and professional reasons to delay offering equity partnership to lawyers far beyond the six or seven year period that was traditional when I started practicing so many years ago, although I have my doubts. I am pretty sure that the only reason is to avoid having more people drinking from the compensation pool.
All of the foregoing is provided as background to the advice that I would like to offer for consideration to lawyers who are provided the opportunity to become a NEP. If a non-equity partnership is a stage in your firm’s partnership policy through which you must pass to become an equity partner, it may make sense for you to accept that.
It may also make sense for you to accept a NEP if you have no interest in ever becoming an equity partner.
However, if equity partnership is your goal, realize that becoming a NEP is simply not real partnership, nor is it a guarantee that it will get you to equity partnership. Don’t allow the bread and circuses being offered by your overlords to distract you from your goals.
Murray is a happily retired lawyer who lives in the country, drives a pick-up truck, writes, teaches and mentors. You can reach him at murray@murraygottheil.com or see what he is up to at lawanddisorderinc.com.
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