Biglaw Faces Surge in Partner De-Equitizations as Profit Margins Tighten

As law firms aim to maintain profit margins, 2025 may see a rise in partner de-equitizations, targeting those with declining performance.

The financial health of law firms remains a pressing issue, and there’s a significant chance that some partners may find themselves in a precarious position.

The trend of de-equitization continues, suggesting that while a massive exodus isn’t on the horizon, firms will likely see a consistent trickle of these changes as they strive to tighten their budgets.

Looking Ahead to 2025

As we turn our gaze toward 2025, law firms appear set for an especially bustling year.

Yet, one priority will remain constant: protecting profit margins per equity partner will take precedence.

Consequently, partners whose contributions have declined—whether through fewer billable hours or a loss of client engagements—may find themselves at risk of losing their equity status.

Trends in Partner Compensation

In a recent conversation with the American Lawyer, recruiter Kate Reder Sheikh of Major, Lindsey & Africa shed light on this evolving situation.

She pointed out that the adjustments in partner compensation and the trend of de-equitization have become increasingly routine in the Biglaw environment.

This reflection reveals a sector in transition, where financial realities are prompting firms to reconsider the structure of their partnerships.

Source: Above the Law