Paying the piper

The notion of partners earning less than their associates has always been the stuff of legend. In the terrible slump of the 1990s there was a number of firms where, it was whispered, the senior associates took home more than their bosses.

But Blake Lapthorn, one of the stalwarts of The Lawyer’s top 100, is the first firm in this recession to admit that this is indeed the case.

To be fair, there’s only a handful of associates at the firm who earn more than the partner average. The bigger underlying story is the fact that most of the fixed-share partners (whose remuneration is understood to range from some £80,000 to £150,000) are on more than their senior colleagues in the full equity, whose average profit this year will be £65,000 once the cost of redundancies and property has been factored in.

For Blake Lapthorn, as for a number of other firms this year, it’s been a perfect storm. A series of mergers and big property investments that were decided upon at the height of the boom need to be paid for, as well as a subsequent redundancy ­programme. Part of that cost has been funded by a series of cash
Perhaps this recession will finally expose the cracks in the tight eq

uity model that has been ­characteristic of the boom. Junior partners are great in a bull market because they’re cheap to run and their presence inflates the average profit per equity partner (PEP). That’s the theory. However, in a downturn they’re an enormous cost and can often be more vulnerable than the senior associates, who are a damn sight cheaper. It may not sound a ­comfortable place for fixed-share partners to be, but as we can see in Blake Lapthorn’s extreme case, most of them can end up earning more than the full ­equity partners. Pity the more recent recruits to the equity who have barely had time to enjoy the fruits of their promotion to the upper ranks.

I’m not convinced that the majority of firms in The Lawyer UK200 will be moving back to an all-equity model. At least Blake Lapthorn’s ­employees are seeing their senior partners take the pain of the recession. After all, that’s what an equity partnership is supposed to mean, isn’t it?

catrin.griffiths@thelawyer.com