leary Gottlieb Steen & Hamilton LLP has announced the establishment of a new category of non-equity partners, marking a significant shift away from the traditional single-tier partnership model in the U.S. legal landscape. This innovative move aims to enhance the firm’s strategic growth and talent retention efforts.
“This is an important step for Cleary as we continue to strategically grow,” stated a firm spokesperson on Thursday. “Innovating in this way underscores our dedication to developing and retaining talent within our ranks.”
Founded in New York, Cleary currently boasts 180 partners and generated over $1.4 billion in total revenue in 2023, with an impressive average profit per equity partner of $4.5 million, as reported by the American Lawyer. The firm employs approximately 1,100 lawyers worldwide.
The introduction of the non-equity partnership tier aligns Cleary with a growing trend among major U.S. law firms, many of which have adopted this dual structure. Non-equity partners, often promoted from the associate level or hired externally, typically receive lower compensation than full equity partners, whose earnings are directly linked to the firm’s profits.
Effective immediately, Cleary will assess potential candidates for this new non-equity partnership category as part of its ongoing annual promotion process.
Michael Gerstenzang, the firm’s managing partner since 2017, was not immediately available for comment.
This strategic shift follows similar actions by rival firms, such as Wilmer Cutler Pickering Hale and Dorr, which have also introduced non-equity partner tiers. Other firms like Paul, Weiss, Rifkind, Wharton & Garrison and Cravath, Swaine & Moore have established salaried partner positions in recent years. These changes aim to attract and retain top legal talent by granting them the prestige and compensation associated with the partner title while enhancing profits for equity partners.
The trend of single-tier partnerships is declining, with more firms embracing dual-tier structures. According to a client advisory from Citigroup’s Citi Global Wealth at Work Law Firm Group and Hildebrandt Consulting, 85% of large firms with income partner tiers reported an increase in their number of such partners from 2017 to 2022, indicating a shift in the partnership landscape.
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