Kirkland & Ellis’s new equity partners take home $1.5m after partner track shake-up

New equity partners at Kirkland & Ellis will be paid a fixed salary of around $1.5m in their first year after promotion, as a shorter partner track kicks in at the US legal giant.

Those making the jump from non-share to equity partner at the firm will spend a year on around $1.5m in fixed compensation, people familiar with the matter said, before graduating to the firm’s variable profit-sharing pool, which starts at around $2.5m .

Previously, lawyers at Kirkland would be eligible for the firm’s non-share tier of partnership after six years. They would then have four years to move into the firm’s lucrative full-equity partnership or find a job elsewhere under the firm’s ‘up-or-out’ model.

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Kirkland said in December it would shave a year off its partner track, allowing non-share partners to step up to equity after three years rather than four. Partners at the firm saw the move as part of its talent-retention strategy amid high demand for lawyers in a competitive legal market.

One Kirkland partner described the first year, post-promotion for new equity partners, as a “ramp-up-year in terms of economics”, while another described it as a “stepping stone” to the firm’s profit-sharing pool.

“We don’t comment on compensation,” a spokesperson for the firm said.

Kirkland’s full-equity partners get a share of the firm’s profits, with average profit per equity partner coming in at $7.38m in 2021, according to the American Lawyer magazines.

Kirkland became the first $6bn-turnover law firm last year, adding $1.2bn in revenue, a 25% jump, according to the magazine.

The firm has grown rapidly in recent years to become the largest in the world by revenue, thanks to its focus on representing sponsor clients in the booming private equity industry, which raised a staggering $714bn in dry powder last year, according to data provider Preqin .

Talent retention

Promoting partners a year early has been widely viewed in the market as a way of holding on to talent in a competitive market.

Non-share partners were typically told they were going to be promoted to full equity at the end of their third year, but would not receive their promotion until the end of their fourth year, one ex-Kirkland partner said.

“It was a funny system… people would be terrified that it would fall through,” they said.

The ex-partner said the new system would help retain junior partners who might be tempted to look elsewhere amid a hot hiring market.

A current Kirkland partner said the new system “locks in people who are going to make equity”.

“It is backing people at an earlier stage and giving them certainty,” another current Kirkland partner said.

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Non-share partners are typically paid around $600,000 in their fourth year, said the ex-partner and a recruiter, meaning the jump to a $1.5m-plus package for first-year equity partners is a significant one.

Insiders said that there are no further hurdles for equity partners once they have received their promotion, with variable compensation kicking in automatically after their first year.

Kirkland’s move to cut a year from its partner track caused a stir in the legal industry and went against a trend over recent years at some firms to lengthen their partner track in order to keep partner profits high.

In Kirkland’s unusual model, large numbers of non-share partners get promoted — 151 in October last year — but far fewer go on to receive the coveted full-equity badge and the potential to share in the firm’s stellar profitability.

Thanks to the shorter partner track, the rewards for the select few come sooner, but will still remain elusive for most.

“The bar is obviously extremely high,” said another Kirkland partner. “It is a quicker track, but it is not any easier.”

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