Rather than continuing with the current trend of laying off associates en masse, DLA Piper has decided to convert its two-tier partnership into a single tier of equity partners. Traditionally, DLA has had two levels within its partnership ranks – income partners, who do not have an ownership stake in the firm, and equity partners, who buy into the partnership with a capital contribution.
While the initial upside comes from an influx of cash from the potential 275 capital contributions, DLA should see continued savings by not having to pay the salaries of non-equity partners. Another direct consequence of this shift will be added pressure on partners to bring in clients; generating business is an enormously significant factor in partner compensation. John Cashman of Major Lindsey & Africa LLC, a legal industry recruiter, says that “it’s very clear to their (junior-level lawyers), it’s either up or out: We want business generators or worker bees. They want to send that message.” And in this economy, that message is all the more crucial, especially to all of us future “worker bees” still in school.
One commentator has taken a positive approach to the restructuring, praising DLA Piper for purusing what appears to be a more pragmatic than reactive solution: “Instead of scapegoating associates, it looks like DLA Piper has taken a hard look at the underlying business model.” I would have to agree.