The assumption that most people make is that big law firm partners earn a lot of money. I also used to think the same when I started working as a rookie associate in a law firm in Mumbai. I thought, wow, these corporate lawyers and partners must be making a ton of money. So glamorous and all.
Then one day something happened. A secretary by mistake shared a folder with me that she should not have. Inside that folder were Income Tax returns of the partners. Before I realised that these were mistakenly shared with me, I had already seen the numbers, and it could not be unseen.
Anyway, the mistake was soon corrected. But the numbers I saw were totally underwhelming. I, of course, won’t tell you what those numbers were, but that day I decided that being a junior partner in a big law firm wasn’t a motivating financial proposition at all.
This happened a good 8 years back. Based on what I hear from my friends, who are now junior partners in many different law firms, things have not changed much.
It takes immense skill, hard work, sleepless nights, dedication and sacrifices of all kinds – even of health and family, to make a partner in a big (or any) law firm. Well, is it worth the money they make? Not always.
Do not get me wrong, there are some partners who rake in money by the bucketloads. They keep buying properties and find it hard to come up with ways to spend or invest what they are making. It becomes such a serious problem that they need to hire professionals to do it for them!
But those people are only a handful. They are all equity partners with significant stakes and definitely not in the pink of their youth when they get there.
There are way too many big law firm partners without much brand name of their own. They aren’t really doing as well financially. There are lawyers at Tis Hazari and other courts in smaller towns who actually earn a lot more, have much more freedom and have the best asset a lawyer can build: their own brand, which basically means people recall their name with respect.
Some law firms put way too many restrictions on their junior partners in order to prevent them from building their own brand. And it makes good business sense, because such partners can easily walk out with their own clients and most of them totally intend to do so. Law firms have to protect themselves.
That’s the worst outcome for the establishment. Managing Partners of law firms know very well that the tag of a partner in a big law firm is sort of a big deal, and at least those who have worked hard for almost a decade to earn it – really value it. However, if a partner walks away with paying clients, and the credibility that comes with being a former partner at a big law firm, the firm does not only lose talent but revenue and profitability shrink.
Also, many lawyers who have left big firms over the last two decades have managed to start their own shops and have done really well. The market values them. There is a lot of work and a tremendous amount of money to be made. Big law firms aren’t able to pay as much as what a good lawyer with the ability to set up and manage a practice well can earn with his own boutique law firm.
Of course, history is replete with lawyers who struck out on their own after a big law firm stint and eventually returned to big law firms because they didn’t manage to do as well on their own, or because big law firms hired them back when they needed to develop niche practice areas, usually at a much better financial arrangement than what they would have gotten if they stayed in big law firms through and through.
And there are some who utterly failed, although in my experience such people are very few.
The only barrier for the lawyer who wants to run his or her own practice instead of working at a big law firm is this: how do I get my own clients and how can I manage to deliver great quality work?
That said, there are some lawyers who are just amazing at their work, and law firms give them the right incentives to stay on board. For such lawyers, it makes sense to stay in big law firms and just focus on growing their brand and practice within big law firms.
However, this is not the best thing for each and everyone.
I just want you to be aware of the fact that you can run a successful independent practice, or a partnership with a few like minded lawyers, and do better than big law firm partners financially as well.
Usually, people who take a business risk and own their work rather than renting it out, tend to make more money. Risk comes with rewards. The people who own the risk also take the majority of the profits, that’s how our economy is structured.
Also, how much is the risk really? Have you assessed these risks? What skills and knowledge do you need in place to beat those risks?
What would it take to build your own law firm? Or is the right option to build a successful solo practice instead? Do you need partners? What are the practice areas you should focus on? How are you going to find prospective clients and engage with them for the next 20 years? How can you build an organization that will enable you to deliver superlative legal work at a scale?
These problems are worth figuring out.
We have a course on Legal Practice Development and Management, which attacks questions like these, and can help you to find your way thanks to market tested proven methodologies to develop and manage your practice.
Check it out. I promise that simply reading the course page from top to bottom will also be a rewarding experience. Make sure you go through the list of weekly exercises, class topics and syllabus. You will not regret the 15-20 minutes you will spend on this page.