Law Times

Law Times • November 29, 2010 FOCUS Non-equity partnerships Firms providing options to retain associates BY DARYL-LYNN CARLSON For Law Times thing of the past. Several firms in Ontario have introduced an option for their associate law- yers to become a non-equity partner, which enables them to attain partnership status with- out making an investment into the firm. T The option is largely the re- sult of young lawyers who want to achieve partnership status but don't want their work to consume their life. Many law firms in the United States and Britain have a non-equity partnership op- tion, and several law firms in Canada are beginning to offer it to their associates. Lerners LLP, which intro- duced the option last year, has had a resoundingly positive response from its lawyers. Ian Dantzer, the firm's managing partner at its London, Ont., office, says the non-equity ap- proach gives associates the op- portunity to achieve partner- ship and build their practice by promoting their title. "Once they become non- equity partners, they become legally a partner in the firm," Dantzer says. "They bear the risk and share the profit of the firm and they also get to sell and promote themselves as partners of the firm." Dantzer notes all of the non-equity partners attend the partnership meetings. Al- though they don't vote, they are treated as equals and get updates on the firm's strategies to grow its business. "It expos- es them to the business of law and what it's like to practise as a partner and share profit and risk and what it's like to make decisions that affect the prof- itability and direction of the firm," he says. "The non-equity partners think it's working out very well for them." Lerners introduced the op- tion after recognizing that as- sociates were becoming rela- tively impatient with the wait to become a partner, which can Marketplace LAW PRACTICE FOR SALE GENERAL Law Practice for sale in cottage country. Very lucrative. Turnkey. Call bancroftlawpracticeforsale.ca SHARED OFFICE SPACE OFFICE Share – Toronto, King & Yonge. 2 offices available, terms negotiable. See www.cambridge forums.com/officespace.php for details. To advertise call 905-841-6481 CBIA_LT_Nov29_10.indd 1 www.lawtimesnews.com 11/24/10 3:10:59 PM 613-332-0016. he traditional partner- ship status at law firms may be becoming a take upwards of 10 years. The non-equity approach can en- sure the retention of talented associates who can attain part- nership status earlier in some cases and thereby boost their client files. Robert Denney of Robert Denney Associates Inc., a busi- ness consultancy headquartered in suburban Philadelphia, says the non-equity option caught on in the United States during the recent recession and has be- come widely popular since. "This non-equity trend or status really has gone off and on for years, but in the last few years, it has increased dramati- cally," he says. "You can retain associates or younger lawyers who will not become equity partners by the firm's choice and yet are very viable but who would leave the firm if they didn't have the partner title." 'Once they become non-equity partners, they become legally a partner in the firm,' says Ian Dantzer. According to Denney, the trend is also largely due to younger lawyers who simply don't want to work a 14-hour day to sustain their practice but nevertheless want to achieve partnership status to promote their title. "There are many young lawyers today who just don't want to become partners in the traditional way," says Denney. "There are additional responsibilities, they have to work longer hours and are re- quired to make capital invest- ment. I think a lot of young lawyers just wrap that up and call it quality of life. It's a new generation thing." He adds that the non-equity partnership option could serve to attract good lawyers and provide firms with a means to "keep everyone happy." Adam Pekarsky, founding partner of the Pekarsky Stein law firm consultancy in Cal- gary, says a non-equity option is very beneficial for young lawyers who want to attain partnership without the long wait. "There's nothing disingenu- ous about a non-equity part- ner," he says. "It's just a title, and clients are going to give more credence and likely pay a higher rate to someone who is called a partner rather than associate." However, he acknowledges that in Canada, where few law firms have introduced non- equity partnerships, it can be a tough sell. "If you're not making a capital contribution, some firms won't view the law- yer as a partner," he notes. Yet the title of partner, par- ticularly at large law firms with a recognized name, can facili- tate business that will, in the end, boost the firm's revenue, Pekarsky points out. "When a client says to a lawyer, 'Are you a partner?' that lawyer can look the client in the eye and say yes. That is all that matters to the clients." LT PAGE 11

• Cover
• Relentless Change
• Hollow Victory
• Focus On Business of Law