New Zealand Law Society - Strong growth in US law partner compensation

Strong growth in US law partner compensation

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A survey of over 2,000 United States large law firm partners has shown strong gains in compensation since 2014, with average compensation US$877,000 - up 22% from 2014 (US$716,000).

The 2016 Partner Compensation Survey was conducted by legal industry analysts Major, Lindsey & Africa LLC, in association with ALM Legal Intelligence. The survey - carried out every two years since 2010 - was sent to nearly 77,000 law firm partners in Am Law 200-, NLJ 350- and Global 100-size firms across the United States. There were 2,153 responses.

The results showed that the average billing rate for all respondents was US$685/hour. This was up US$77 from 2014 (US$608).

Equity partners continued to significantly outpace non-equity partners in compensation. Average compensation for equity partners jumped 13% from US$971,000 in 2014 to US$1.10 million in 2016. Average compensation for non-equity partners rose 9% from US$338,000 in 2014 to US$367,000.

The report says this means equity partners now average around three times the total compensation of their non-equity colleagues, up from 2.9 times in 2014. Median compensation for equity partners in 2016 was US$775,000 compared to US$325,000 for non-equity partners.

The survey had 32 questions on a wide range of matters. Among the seven practice areas grouped for the report, Labour and Employment partners continued to report the lowest average compensation (US$597,000), compared to a high of US$1,055,000 for Corporate partners.

Real Estate (up 43%), Litigation (up 25%), Labour and Employment (up 19%) and Corporate (up 18%) partners showed the largest percentage increases from 2014, while IP (up 3%) and Tax and ERISA (up 8%) partners showed "more modest increases".

Male partners continued to significantly outpace female partners in compensation, with males earning an average of US$949,000 (up 22% from 2014) and females an average of US$659,000 (up 24%). Overall, there was a 44% difference in average compensation, which was slightly better than th3 47% differential reported in the 2014 survey.

The average compensation of White partners was US$876,000 (up 19% from 2014), Hispanic US$956,000 (up 100%), Black US$797,000 (up 39%) and Asian Pacific US$875,000 (up 36%). Partners who characterised themselves as Mixed Race showed a decrease of 4% from 2014, at US$704,000.

Around 24% of the respondents attributed their lack of compensation satisfaction to cronyism, which was ahead of all the other enumerated reasons. However, 31% of respondents indicated that their firm did not exercise any such bias.