The pros and cons of having nonequity partners

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Abstract: For many years, law firms were governed by the old “up or out” rule in regard to admission to the partnership. But such inflexibility caused firms to get rid of some highly productive and profitable associates who probably didn’t make partner simply because they weren’t successful rainmakers. In an era in which partners have become more willing to pull up stakes and move their practices to another firm — or aren’t even interested in becoming equity partners at all — many firms have adopted the “two-tier” structure of equity and nonequity partners. However, while the criteria may not be quite as high as for equity partners, it’s still important to select nonequity partners carefully.