Income Partnership requirements

[AHappyLawyer]

I was wondering if anyone at a large firm has experience with what the income partner nomination process and criteria entailed. Was it simply a matter of making it to senior associate, with a good reputation for good work, good table manners, strong hours and some potential for current/future business development chops that may lead to equity partnership in the future? 

[KOMODO]

This is going to be pretty firm dependent, but basically, yes. Most big firms seem to have a collaborative nomination process where the firm (either broadly or through partners in practice groups speaking with potential candidates) asks for interested senior associates to self-identify and discusses the timeline for admission with people who are eligible. The importance of your "business case" will vary by firm - some firms are more restrictive in expecting a solid plan or having metrics for the dollar amount of work you should already have credited to you (either because you have part or all of the client relationship, or because you are the key lawyer managing those files), while I think many firms are just happy to have someone who made it to year 7/8 with target-ish hours, a friendly attitude, and a reputation for excellent work. I suspect the uptake for firms to make income partners is also market-dependent, so we've been in this "war for talent" period recently where firms were keen to make new partners so they didn't lose their senior associates, but I think this may change over the next year if the corporate work continues to abate. In addition to the factors you mentioned above, I think your length of time at the relevant firm also matters - if you join (lateral) in year 5, 6 or 7 it may take longer to build your reputation and be admitted. Ultimately the most important thing is probably just that the equity partners like you and want you to stay - if that's the case and you roughly hit the other requirements, you'll be admitted, and conversely if they don't like you, you'll probably be given some reason why it can't work out despite meeting the markers.

[AHappyLawyer]

Thank you! That's really helpful. 

Is it right to say that the time spent at the income partner level is....2-5 years? And I'm guessing some may be stuck there indefinitely? 

[QueensDenning]

Are income partners just glorified senior associates or is there a difference in terms of responsibility? How long do you typically stay at income before moving to equity? Do most firms promote from senior associate - income partner - equity partner or is it firm dependent (i.e., with some firms going straight from senior associate to equity partner)? 

[QMT20]

7 hours ago, QueensDenning said:

Are income partners just glorified senior associates or is there a difference in terms of responsibility? How long do you typically stay at income before moving to equity? Do most firms promote from senior associate - income partner - equity partner or is it firm dependent (i.e., with some firms going straight from senior associate to equity partner)? 

In the litigation group of the firm where I articled, there were differences in terms of responsibilities. For example, income partners were expected to run their own trials while associates sit second-chair. I don't know as much about the business side, though I've also heard what Komodo said about making a business case. 

How long you stay at income can vary from firm to firm and sometimes from person to person. At the firm where I articled it was generally 3-years. Some firms have 2-years of income partnership and I've seen as high as 4-5. There can also be some people who are exceptionally highly regarded within the firm that are able to jump in line and make equity faster than the formally prescribed timeline. 

Some firms don't have income partnership and go straight to equity partnership from senior associate. Goodmans is one that comes to mind. 

Edited August 4, 2022 by QMT20

[KOMODO]

I agree with @QMT20. There are also differences in how your working relationship can be classified at the income partnership level (in some/many cases you may no longer be an employee and accordingly there are impacts to things like tax filing, health insurance, your phone plan, etc.). In some (most? perhaps even all?) cases income partners will sign a partnership agreement and there may or may not be things they are required to do relating to the potential liabilities of the firm. Income partners may be invited to different meetings and events, and their compensation will usually skew more towards revenue generation than their billable hours. So there are a number of differences from being a senior associate.

Agreed that income partnership often lasts for around 3 years. At firms where there is no income partner level, it is common for people to be senior associates or counsel until year 10 when they are invited to join the equity partnership, so in theory it should all kind of come out in the wash. 

[Mets992]

Depending on the size of the firm, it is my understanding that income partnership pays starts around $250,000 and goes up from there.

[AHappyLawyer]

1 hour ago, Mets992 said:

Depending on the size of the firm, it is my understanding that income partnership pays starts around $250,000 and goes up from there.

I'm surprised. That's lower than what I anticipated ($350-400K).

[Rashabon]

I would be surprised (and think it is likely incorrect) vis a vis most of the Bay Street firms. Associates in lock step at year 7 are getting $245-255K. Partners aren't earning less than that.

[Jaggers]

It sounds kind of low, for that reason. I guess it's possible that it "starts from there" in a small number of cases, but it must be higher in the vast majority. I have actually had one friend tell me that they made less in their first year as an income partner than their last year as an associate.

[Rashabon]

20 minutes ago, Jaggers said:

It sounds kind of low, for that reason. I guess it's possible that it "starts from there" in a small number of cases, but it must be higher in the vast majority. I have actually had one friend tell me that they made less in their first year as an income partner than their last year as an associate.

That was certainly the old conventional wisdom and may still be the case at some firms. But that's largely because the bonus as an associate pushed you slightly over the base draw as an income partner (with less visibility/optionality for bonuses). Also depending on the firm, the tax situation could contribute (Alberta lawyers at certain firms end up paying significantly more in tax than they did as associates). But by and large I think a lot of Bay Street firms made sure income partners made at least as much if not more than the senior associates.

[Mets992]

2 hours ago, Rashabon said:

I would be surprised (and think it is likely incorrect) vis a vis most of the Bay Street firms. Associates in lock step at year 7 are getting $245-255K. Partners aren't earning less than that.

I was surprised myself. But my friend made income partner at her firm and her salary wasn't much more than $250k. But this was before the salary bump.

[Garfield]

Also heard from some first year partners that they started at $250k. That was in mid-2020. Maybe it’s higher now at those Bay Street firms.

[C_Terror]

33 minutes ago, Garfield said:

Also heard from some first year partners that they started at $250k. That was in mid-2020. Maybe it’s higher now at those Bay Street firms.

That’s wild. Like Rashabon said, I expect that to be the base of 6/7th year before bonuses. After bonus I would expect closer to 300k. Unless the first year partners you talk to are like 5/6th year of calls at the smaller firms that offer partnership at those years.

[t3ctonics]

$250k is very surprising to me. That was the baseline for new partners at one Saskatchewan firm 10 years ago. Mind you, they didn't have income partners - it was straight to equity.

[99problems]

On 8/3/2022 at 6:07 AM, KOMODO said:

someone who made it to year 7/8

What if someone joins the firm after, say, 4-5 years of practice? Does it mean that they need to be with the firm 2-3 years to be considered for partnership or does the clock start from zero?

[KOMODO]

4 hours ago, 99problems said:

What if someone joins the firm after, say, 4-5 years of practice? Does it mean that they need to be with the firm 2-3 years to be considered for partnership or does the clock start from zero?

Laterals definitely don’t start at zero - if you lateral in year 4 or 5, you will probably be eligible at the same time as the rest of the associates who are that year of call. However, it may be more difficult to make a business case or know enough partners to have broad support (obviously this totally depends on your specific firm, practice area, etc.) because you just haven’t had enough time to build those relationships - so it’s possible that you could need an extra year (for example) to continue building your reputation and practice (assuming you’re otherwise competitive/eligible based on the firm’s normal requirements). 

[Garfield]

On 8/7/2022 at 9:55 PM, C_Terror said:

That’s wild. Like Rashabon said, I expect that to be the base of 6/7th year before bonuses. After bonus I would expect closer to 300k. Unless the first year partners you talk to are like 5/6th year of calls at the smaller firms that offer partnership at those years.

The firms were big Bay Street firms. It didn’t occur to me to inquire about year of call. 

[Rashabon]

As an example, Davies has historically made their associates income partners earlier than other shops. So a lower draw at that stage wouldn’t surprise me because they are going in in year 5/6 or whatever.

[Ghalm]

Is 250k that surprising for income partners if they are in their 6-7 year of call? Do they not get additional comp. on top of that at all? If they do, seems comparable to associates of the same year of call. I think it would be lame if the income partner was 7+ year of call and makes 250k (and even more lame if there was no additional comp. on top of that...).

[KOMODO]

5 hours ago, Ghalm said:

Is 250k that surprising for income partners if they are in their 6-7 year of call? Do they not get additional comp. on top of that at all? If they do, seems comparable to associates of the same year of call. I think it would be lame if the income partner was 7+ year of call and makes 250k (and even more lame if there was no additional comp. on top of that...).

So if a firm says they make income partners who are 7th year associates / after 7 years of practice (quite common), that typically means that people apply in ~summer/fall of their 7th year and the announcement is made at the end of the fiscal year, so in your first year of being an income partner, you would be in your 8th year of practice (in Ontario you likely would have practiced for 8 years and 4 months because you are a "first" year associate from Sept of the year you start to December of the year following). Some firms have eligibility after 6 years of practice, so a first year income partner would have practiced 7 years 4 months, and any firms who have eligibility earlier would be correspondingly adjusted.

[hiccups]

On 8/12/2022 at 1:50 PM, KOMODO said:

So if a firm says they make income partners who are 7th year associates / after 7 years of practice (quite common), that typically means that people apply in ~summer/fall of their 7th year and the announcement is made at the end of the fiscal year, so in your first year of being an income partner, you would be in your 8th year of practice (in Ontario you likely would have practiced for 8 years and 4 months because you are a "first" year associate from Sept of the year you start to December of the year following). Some firms have eligibility after 6 years of practice, so a first year income partner would have practiced 7 years 4 months, and any firms who have eligibility earlier would be correspondingly adjusted.

Do most firms start making income partners at 7th year? 

[KOMODO]

15 hours ago, hiccups said:

Do most firms start making income partners at 7th year? 

That was traditionally the average, you would apply in 7th year and your 8th would be the first year as a partner. However, there are always exceptions (for example, firms that go straight to equity are more likely to wait till 10th year), and lately I've been seeing more and more firms admit people to income partnership in 6th and even 5th year, which I suppose they do because it's most importantly a title change and perhaps impresses clients to have more people working on their file being "partners". I personally think this could backfire though because a typical 5-6th year associate may not have the knowledge base you would expect of a partner and then clients might be like wow, you're a partner and you don't even know XYZ? So I like the 7 year model.