Steve Nelson was quoted in an article written by Abigail Adcox, reporter at the American Law Media.
The top end of partner compensation in the Capital region now reaches between $15 million to $20 million.
Partner pay across law firms in the Washington, D.C., market continues to climb, with multimillion-dollar comp packages becoming increasingly common in the district, recruiters and industry analysts say.
The demands of high-performing and lateral partners, as well as the presence of highly profitable New York firms in D.C., have driven up compensation across the board in the region, as firms want to stay competitive to keep their most productive partners, according to Lauren Drake, a partner in the Washington, D.C., office of trans-Atlantic legal recruiting firm Macrae.
The majority of partners in D.C. fall under the $5 million mark for compensation. That includes many in the high six figures to $3 million range.
A small but growing percentage is also above the $5 million range, according to industry observers. With many of the Am Law 100′s most profitable firms having an office in D.C., the top end of partner compensation in the Capital region reaches figures between $15 million to $20 million for a select few.
“We’ve seen people getting paid multiple millions, not in the double-digit millions, but certainly like four to eight million, which I think we haven’t seen as much of that before. It used to be more of a rarity. It’s not such a rarity now,” said Drake. ”It’s partners who have a particular practice and area of expertise that’s very much in demand.”
Kirkland & Ellis; Paul, Weiss, Rifkind, Wharton & Garrison; Hogan Lovells; and Quinn Emanuel Urquhart & Sullivan are among the Big Law firms in D.C. offering some of the highest compensation. And with New York-based Cravath, Swaine & Moore entering the area, compensation continues to stay competitive in D.C.
Steve Nelson, managing principal at recruitment firm The McCormick Group, added that as law firms profits have increased, a “$2 or $3 million compensation package is not that rare.”
“The top end of compensation can really be different at different firms and if your top end is lower than your competition, you are in danger of losing partners,” said Nelson. “There’s an effort to try to increase the high end of the band as much as possible.”
Dan Binstock, partner with D.C.-based search firm Garrison, said the most in-demand partners are “able to command a premium in a way that wasn’t so pronounced five or 10 years ago.”
Practice areas in demand in the D.C. market at the moment include antitrust, financial services regulation, securities enforcement, corporate, investment management, among others, according to several recruiters.
“There’s an acceptance that the top generators need to be paid competitively, even if that number is far outside the norm of other partners in D.C,” said Binstock.
Pressure to modify compensation systems comes from high-performing partners inside law firms, who are wondering if they’re leaving too much on the table when a competing firm knocks on their door with a commanding offer, law firm consultant Kent Zimmermann told Law.com last month.
“Some of the high-performing partners are the biggest drivers of change,” Zimmermann said.
Billing Rate Flexibility
Still, for some partners, such as those with regulatory practices, billing flexibility also comes into play when they are planning a move. And when law firms raise partner pay scales, they are under increased pressure to raise billing rates further.
“A candidate might not want to be at a New York firm because they’re not going to be able to raise their rates to match the New York rates without losing their clients,” said Drake. “Rate flexibility is an important consideration when a partner is considering changing firms.”
Jeffrey Lowe, a law firm recruiter and managing partner at Jeffrey Lowe Partners, added that it can be difficult to move to a firm “where you’re going to feel immediately this need for upward pressure on your rates.”
In 2022, partner billing rates surged across the country across all tiers of law firms and in all practice areas, according to trends report from LexisNexis CounselLink. In D.C., median partner rate growth climbed 6.6% to $925 per hour.
Meanwhile, across Big Law, partner pay has generally increased over the past two years. Pay for U.S. law firm partners averages $1.12 million, the highest amount ever recorded, according to a Major, Lindsey & Africa’s 2022 partner compensation survey published last October.
Per the survey, average partner compensation in D.C. rose nearly 23% to $1.411 million. However, other markets such as Dallas, Atlanta and Houston saw higher percentage gains in average partner pay.
