Ballard Spahr Andrews & Ingersoll Chairman Arthur Makadon told a room full of recruiters this month that compensation models for all nonpartners will see “an absolute change” as partner compensation shifts as well.
And his firm is no exception to that trend.
Makadon told The Legal Intelligencer last week that the model his firm uses to pay nonpartners is “going out the door” to be replaced with a new system in 2010. The details haven’t been finalized yet, but Makadon intimated that the focus would be on merit, not seniority.
“It literally makes no sense to run a business where your basic compensation, no matter how good you are, is the same,” he said.
And coming off of a year where equity partner profits fell by nearly 25 percent, Ballard Spahr is making some changes to its partnership model, too. Starting this year, the firm will no longer have nonequity partners.
Makadon has long said that there never really were two partnership tiers at Ballard Spahr because nonequity partners had voting rights, contributed capital and didn’t have to face another vote before becoming an equity partner. The only difference was that the nonequity partners were on a fixed income. That is no more.
“There will be no fixed income, even for the newest partner,” he said.
Instead all partners will be based on a draw and bonus system, Makadon said. Many firms found themselves in a bad situation, he said, because people became equity or nonequity partners and began to feel entitled to their salaries. Now firms have to “separate the wheat from the chaff,” he said.
Firms across the country have begun to roll back associate salaries. Drinker Biddle & Reath cut first-year associate salaries by $40,000 for the first six months in order to train the attorneys and make them more marketable to clients.