The trend of Am Law 200 firms adding or extending nonequity tiers likely won’t slow down anytime soon. But there is a point of diminishing returns, a point where these so-called “profit engines” can start to break down, industry analysts say: when firms fail to monitor salary partners’ performance, allow them to get stagnant and/or leave them in the nonequity branch in perpetuity.
So far, many Am Law 200 firms have reported rapid expansion in their nonequity tiers. Among a sample of 19 firms that have reported 2024 financials so far, nine had nonequity growth that was at least double the amount of equity growth, and 14 in total had more growth in the nonequity than the equity tier, Law.com reported this week.